In this new landlord checklist, we outline 15 steps every landlord needs to consider to successfully let their investment property.
Becoming a landlord isn’t as easy as it once was. There are a plethora of laws and regulations that need to be understood and abided by, and these laws and regulations are constantly changing.
In this new landlord checklist, we outline 15 steps and considerations that every landlord needs to go through in order to prepare their investment property and successfully let it.
Depending on the kind of property that you own, you may need a licence in order to rent it out. For example, if you are renting out a single property to five or more people that are not from one household then you may need an HMO licence (houses of multiple occupations), many councils operate additional HMO licencing.
Even if your property is rented to fewer people than five you may still need a licence. This particular form of licencing was introduced in 2006 to crack down on landlords which were overfilling their properties without supplying the necessary amenities required for the number of people living in the property.
Before you can rent out your property, you need to have a valid energy performance certificate (EPC). The EPC certificate is graded from A to G and as of 2020 all tenancies in the UK need to have a minimum of a band E. Landlords need to get a new EPC at least every 10 years.
However, the UK government is looking at raising this minimum EPC band to a C as early as 2025.
You need to arrange for a Gas Safe registered engineer to conduct a gas safety inspection on your property each year.
Any defects that are specified need to be rectified immediately. Your gas safety certificate will detail the results of your yearly check and you should supply your tenants with a copy of the certificate.
In the UK, according to electrical safety regulations, you need to have an electrical inspection of your property every five years to ensure that it is safe and habitable. Should any work need to be carried out it must be done so within 28 days of the inspection Additionally, any electrical appliances that you provide in the property should be PAT tested every year by a qualified electrician.
In regards to fire safety regualtions landlords must provide fire extinguishers if the property is an HMO, and ensure access to escape routes. As of the fire and furnishings regulations act of 1988, all furnishings provided in the property must be fire-resistant. If you do not follow fire regulations you could face fines or even prison.
All rental properties must have working smoke and carbon monoxide detection equipment. There must be at least one smoke alarm on every floor of the property. However, in HMOs, this could be more. You will also need to instal a carbon monoxide detector in any room containing a solid fuel-burning appliance. These include oil or gas boilers and gas or wood fires.
Although there are no legal requirements for landlords to have landlord insurance, a normal home policy won’t cover your buy to let and not having a quality landlord insurance policy is an unnecessary risk. Additionally, a landlord insurance policy is often required by your mortgage provider.
On top of this policy, you may want to take out contents insurance to cover any items that you supply in the property as even if you’re letting an unfurnished property as this small amount will be used to cover such things as carpets, curtains and white appliances.
Additionally, you may want to get rent guarantee insurance. This covers any lost revenue due to missed or late rent payments. For example, if you were to go through an eviction process, a rent guarantee insurance policy would be able to cover the rent that you would otherwise expect during this time even though the tenant isn’t paying.
Before marketing your property to tenants. You need to know exactly how much rent you can charge for your property. You want to do a thorough market analysis to understand the current rental rates for similar properties in the area. You will also want to analyse your property’s financials to ensure that the rent amount you’re looking to charge will in fact cover costs and become profitable.
It’s important to charge a fair rent amount. Charging too much rent will put off prospective tenants, and charging too little could negatively impact your cash flow and result in your business not being profitable.
Marketing your property once all of the above is completed, you can market your property.
To do this, you’ll want to create a rental listing on websites like Rightmove or Facebook marketplace you’ll want to write an excellent description making sure to stay within compliance with fair housing laws.
Under the Equality Act 2010, a person who is letting out or managing accommodation must not unlawfully discriminate against a person on the basis of their protected characteristic which includes:
Before going any further, you will need to check that any applicants legally have the right to rent in the UK. Tenants must be aged 18 or over to legally rent in England. Landlords must check all new tenants.
Select the best tenant by running your tenants through a tenant referencing process. This process should ascertain whether or not they can and will pay rent on time, every single month.
Factors that you can look at include their current income level, the credit score as an indication of financial responsibility, and their previous rental history.
If necessary, you can check previous landlord references to see what kind of tenant they’ve been in the past as an indicator of the kind of tenant they’ll be in the future.
Make sure you’ve got a quality tenancy agreement drew up a proper and legally binding tenancy agreement so that for you and your tenant to sign you can do this through sites such as Rocket Lawyer, through a lawyer, or you can download and use the model agreement for a shorthold assured tenancy from the UK Government website.
A word of advice: be sure to discuss the reasons for eviction. And, just to be safe, you should review the types of eviction notice forms you’ll need if eviction is necessary.
Collect and protect your tenant’s deposit. You don’t have to take a security deposit at the beginning of your tenant beginning of the tenancy but it is recommended to do so to cover any potential damages or lost revenue through unpaid rent. Generally speaking, a deposit equals about one month’s rent the deposit that you collect must be placed in a government-approved tenancy deposit protection scheme. You can choose from one of the following:
Once you’ve placed it in this protection scheme, you must then inform your tenant of which scheme you’re using.
It’s important to note that security deposits are capped at a total of five weeks rent where the annual rent is less than £50,000 and six weeks rent where the annual rent is at £50,000 or more.
Landlords must supply a copy of the “How To Rent Guide” to tenants when they move in. Failing to do so and you could find it very difficult to take any legal action against your tenants should they fail to pay rent or break their tenancy agreement in other ways.
Before the tenant moves in, you want to make sure that the property is ready for them. Do any final DIY tasks that you haven’t got to yet, and make sure the property is dusted, hoovered, clean.
You want to take an inventory of the condition of the property before your tenant moves in. This should include written notes and detailed photographs of every aspect of the property. This inventory should be checked and signed by the tenant and by yourself.
Upon move out, you will be you want to conduct a second inventory and this will act as proof of any damages caused by the tenant during their stay.
Once the tenant has moved in you need systems in place to keep detailed records of all of your important documents such as Gas and Electrical Safety certificates, your EPC, the lease document, and any communications from the tenant.
Additionally, you want to keep accurate and up to date records of your income and expenses throughout the tax year. This is essential if you want to claim any of your allowable expenses at the end of the year to mitigate your tax liability.
With regulation changes around making tax digital coming into play in April 2024. Landlords should be looking at digital systems for tracking the income and expenses such as Landlord Studio. The final reason to be implementing systems for detailed income and expense tracking is so that you can gain insights into your portfolio’s finances.
Running a buy to let takes a lot of work and it can quickly become overwhelming, especially as the UK government frequently changes the rules, like with MTD, EPC regulations, and section 24 tax changes amongst others. Thankfully, there are plenty of free resources and professional tools available designed to make the management of your investment properties easier.
Landlord Studio is a cloud-based financial tracking tool that enables you to accurately keep up to date records of your lets from the app or via our desktop portal. Easily digitise receipts at the point of sale, connect your bank accounts, and run our selection of accountant approved reports that are perfect for tax time and designed to give you complete oversight of your growing portfolio.
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