If you’ve suddenly found yourself letting out a property without actually planning to, then you’re an accidental landlord. This isn’t as chaotic or unusual as it sounds, with around one in 12 landlords in the UK letting out a property because they inherited it, or a sale fell through, or because they moved in with a significant other.
Suddenly finding yourself a landlord can be a shock and also something of a serious learning curve. There’s a lot to take onboard and so these 11 tips will come in very handy.
Get landlord building insurance
Landlord insurance is a must, as any letting agent or tenant worth their salt won’t entertain you for a moment. However, you should also get building insurance for landlords just in case your tenant burns the place down. Your regular building insurance won’t cover you if it’s residential only, so check and change if necessary.
Use contents insurance if your property is furnished
If you’re supplying the furniture and other accoutrements, then you’re best-advised to use contents insurance as well as buildings. For unfurnished, it’s the responsibility of the tenant.
Change to a BTL mortgage
Buy-to-let mortgages differ from residential mortgages and so you’ll need to tell your provider that you no longer need s residential product but a BTL one. They’ll do the rest.
Choose the right letting agent
If you’re going to be living quite a way away from the property then you’ll need someone to look after it for you. Choose a letting agent carefully – read reviews, ask around, find out what’s included in the commission and what different levels of care the agent offers. Most importantly, read the reviews of tenants – you need to feel that you’re on the same page as the agent.
Charge the right amount of rent
Always charge the going rate for the postcode and property type. If you overprice, you’re more likely to have void periods, as well as tenants who feel ripped off and angry. Play fair and you’ll actually end up making more money in the long run, so don’t be tempted to tack another £50 or £100 on the agent’s valuation.
Take a deposit
Typically, a deposit is one month’s rent in advance, or six weeks’ if the property is furnished or if the tenant has a pet. You’ll need to place the deposit in a deposit scheme.
Take the time to find the right tenant
Just jumping at the first applicants to show interest doesn’t always work out well. Yes, having a vacant BTL can feel like you’re setting fire to £20 notes every day, but having the wrong people in can be much more expensive – and much more stressful. Go over references with a fine-toothed comb and if you planned to rent to postgraduate students initially, don’t cave in and rent to a load of undergraduates; just wait.
Keep looking until the ink is dry…
…and the deposit and first month is in your account. Even the best-intentioned tenants can have job plans fall through, or they can split up suddenly, and they’re no longer able to move in. Have a plan B and even C lined up.
Make utility bills the tenant’s responsibility
Chasing tenants up for bills that are in your name, or getting a lovely, high-priced surprise on your doormat doesn’t make for much fun. Make sure the utilities have been transferred, even if you’re keeping the same provider at the property.
Unfurnished is best
The more furniture in the place, the more maintenance and replacement you’ll have to do. There’s also the additional agency cost of inventory with each changeover. In many cases, it’s cheaper and less hassle to put furniture into storage; tenants often come with their own items anyway. Just remember, that white goods – fridge, dishwasher and so on – aren’t furniture and most tenants expect you to provide these appliances.
Register for your Self Assessment tax return
Even if most of the rental money goes on the mortgage, you’re still earning an income and so you’ll have to let the taxman know. The good news is that your letting agent fees, accountant fees, insurance and council tax, among other expenses, are tax-deductible.