Whether you’re considering investing in a Buy-to-Let property, or you’ve inherited a property and are not sure what to do with it, with all the legislation, red tape and intricacies surrounding the lettings industry, it’s easy to feel overwhelmed.
In this article, we’ll be walking you through everything you need to know in order to feel confident as a First-Time Landlord. As one of the leading Estate Agents in Leeds, Wetherby and Wakefield, we’ve worked with thousands of First-Time Landlord’s - and over the years, we’ve established a keen understanding on what the most common concerns are.
No matter what stage of the process you’re at, this article contains some handy tips for you. Including everything from how to decorate your property - to how to work out yields, whether you should work with a Lettings Agency to what you need to keep in mind when your Tenants move out. We’ve highlighted the various sections clearly, so feel free to skip ahead to the most relevant section for you.
Table of contents:
• Most common ways of becoming a Landlord
• Working out “Yield” and where to invest
• Decorating and Furnishing
• Finding the best quality Tenants
• Private vs Letting Agent Managed
• How to protect yourself
• Pre-Tenancy Checklist
• Ways a Tenancy can end
• End of Tenancy Checklist
• Making Improvements after Tenancy
Most common ways of becoming a Landlord
The process of becoming a Landlord often (but not exclusively) begins with a property investment. The types of investments available to prospective Landlord’s vary greatly.
Some of the most common investments include Buy-to-Let, Buying at Auction with the view of renovation and even the purchase of land for a development project. Each of these routes has its own intricacies and each carries its own respective costs.
We’re not going into detail on this topic in this particular blog post, however, we publish regular content covering a wide range of subjects relating to the Lettings industry, so consider registering your details with us to receive our regular Landlord updates.
Working out potential Yield’s and where you should be investing
If you’re just starting your journey to becoming a Landlord and don’t already own a property, the best place for you to start is by investigating the current rental market and the trends in your local area. Property remains one of the soundest investments you can make, but it’s important to remember that not all investments are created equal.
One of the most important statistics to be aware of when considering your investment options is the “Yield” a property will deliver.
The Yield is a simple calculation which tells you the percentage of your overall investment that you can expect to “Yield” in a year of ownership. For example, if you purchase a Buy-to-Let property for £100,000 and the rent for the property amounts to £5,000 per year – that’s a 5% Yield.
However, Yield alone isn’t an entirely reliable indicator of a good investment. Although it’s a telling number, there’s more to take into account before you make one of the biggest investments you’re likely to ever make.
Do some research into the area’s where you could potentially invest, different area’s offer different opportunities. For example, some areas will have cheaper properties, and although the Yield might not be as substantial as you might ideally want, house prices are likely to increase quicker than in other areas, which will give you a bigger return on investment if you would like to sell the property at some stage. Other areas might be occupied by a large student population, in this case, you’re likely to see much higher yields.
Although this might feel overwhelming, especially if you’re not a data-savvy investor, property professional like Manning Stainton can help. We have dedicated teams who are experts in current understanding market trends, identifying which areas are up-and-coming and where the rental market is strongest. We’ll be more than happy to help guide you through the process and find the perfect property to suit your personal circumstances.
Legislation, Legislation, Legislation
It’s no secret that Landlords are subject to a lot of legislative requirements. In recent years, it seems that every government budget, the rental market comes under scrutiny with new rules and regulations designed to protect Tenants from irresponsible Landlords. Legislation such as the Fitness for Habitation Act (2019) is designed to hold Landlords to account if they don’t provide the standards of living that are required by law.
It’s perhaps the most daunting part of becoming a Landlord – and for good reason. The consequences of not upholding appropriate standards can be severe in many cases. Regular checks, improvements and upkeep of a rented property is required by law. If you’re not in a position to manage this yourself, many Estate Agents have Property Management departments which will look after all this for you, ensuring you don’t get stung.
Here’s a list of just a few of the legislation requirements that you should be aware of as a Landlord:
• Right to Rent
• Furniture & Furnishings (Fire & Safety) Regulations 1988
• Electrical equipment and PAT Testing
• Electrical Installations
• Smoke & Carbon Monoxide Alarm (England) Regulations 2015
• Central Heating, Boilers and All Gas Appliances
• EPCS & Minimum Energy Efficiency Standards
• Deposits & Tenancy Deposit Protection
Decorating and furnishing – What do Tenants want?
When it comes to the decoration and furnishing of your property, there are various things to consider.
Unlike your own home, it’s important to remember that you’re not the one who’s going to be living there, so your personal tastes could potentially be off-putting to potential Tenants.
The best advice we can give when it comes to decorating a rental property is to keep things neutral. Avoid using any bright colours that although might look great, won’t be to everyone’s tastes, thereby shortening the number of potential Tenants for your property.
Whether or not you give a Tenant permission to redecorate, is entirely up to you. On one hand, small decorative changes can lead Tenants to stay in your property for longer, meaning you won’t have to worry about finding new Tenants often. What’s more, if it’s simply a case of painting a wall or two to their own preference, it will be relatively easy to reverse these changes when it comes to acquiring a new Tenant.
We recommend keeping your rental property modern throughout. This will attract a wider range of Tenants and will potentially lead to higher rental prices. There are lots of easy ways to add value to your property through good, modern decoration. If you’d like more advice, here are some handy guides to help you along the way:
• Bathroom Makeovers
• Home Renovations That Can Potentially Add Value
• How to Work With Colour Palettes In The Home
Whether or not you furnish your rental property is another consideration, as with decoration, it’s largely up to you. Whether or not you provide things like sofa’s, beds, kitchen appliances and other things. Similarly to decoration, different levels of furnishing will appeal to different types of Tenants.
When deciding the best option for you, you should start by considering the area that your property is in, and the types of Tenants it’s likely to attract. Does the area have a younger demographic? If so, it’s likely that offering a furnished property will be more attractive, as they might not want to invest in new furniture.
Alternatively, if your property is likely to attract older tenants with families, they are more inclined to want to furnish the property themselves.
There are also other implications when it comes to letting a furnished property that you should be aware of. It’ll require you to take regular inventories, get contents insurance and abide by the various safety standards set out by law.
Finding the Best Quality Tenants
Every Landlord wants good quality Tenants. You don’t want to have to chase for rental payments, deal with noise complaints or have to invest in refurbishing a property after the tenancy ends. That’s why the process of finding a Tenant is so important. Although it’s possible to find a Tenant on your own, working with a registered Letting Agent will take a lot of the headache out of the process.
For example, at Manning Stainton, our Lettings department is experienced in finding the best possible tenants for your property.
Through creative property marketing methods and stringent Tenant checks upon application, we have established an effective process, which is why the length of Tenancy with Manning Stainton clients is higher than the industry standard. So, if you’re based in Leeds, Wetherby or Wakefield, why not get in touch and see how we can help you with this side of the process.
Working with a Lettings Agency vs being a private Landlord
The intricacies of being a Landlord in today’s heavily regulated market mean that there are a seemingly endless number of rules and regulations surrounding owning a rental property. In an article from the Telegraph on whether a Landlord really needs a Letting Agency stated “Today the choice for landlords is to either take on the full responsibility of the 400+ rules and regulations to let a property and all the fines for breaches or noncompliance that go with it – up to £30,000 from April – or to consider outsourcing this to a qualified letting agent.. “
Working with a professional, reputable Letting Agency can not only help you with the management of your property but can help you maximise the rental value, too. There are varying levels of service when it comes to working with a Letting agent. To give you an idea of the kind of service you should expect from a Fully Managed Service, here are some of the area’s that we offer all our Landlord’s.
• Professional Lettings Market Appraisal and Advice
• Comprehensive Marketing to find you the best Tenant
• Access to My Manning Stainton – Digital Property Tracker
• Carrying out viewings
• Tenant referencing and identity checks
• Preparation and signing of the tenancy agreement
• Preparation of inventory
• Arrangement of initial gas/electric safety certificate
• Security deposit protection registration
• Rent collection
• Prepare and send inland Revenue approved Landlord statements
• Proactive credit control and arrears management (should you need it)
• Dedicated property manager
• Access to a panel of vetted contractors
• Arranging quotes, repairs and maintenance
• Routine property visits
• Managing the checkout process and deposit handling
• Manning Stainton court attendance fees (Terms and Conditions apply)
• Rent guarantee (additional fee)
• Ongoing legislation compliance guidance
How to protect yourself as a First Time Landlord
Occasionally, there will be unforeseen circumstances that are outside your control. These could be anything from a Tenant missing payments or the destruction of your furnishings. Although this is rare, it’s important that as a Landlord you’re protected from falling victim to these kinds of circumstances. That’s why it’s important to be insured.
There are various kinds of insurance available to Landlord’s, offering various degrees of cover. Cover that we recommend Landlord’s taking out includes Rent Guarantee. This ensures that if your Tenant refuses to pay, you’ll still receive payment. The package that we recommend includes:
• Monthly rent up to the maximum AST (Assured Shorthold Tenancy) with a limit of £8,333 per month
• Legal expenses for the purpose of eviction up to £50,000
• The policy covers the property, so still stands when tenants change
• Attendance at court by Manning Stainton
Another important cover is a comprehensive insurance plan. The cover we recommend includes everything from Buildings accidental damage included as standard, nil excess options, legal liability, malicious and accidental damage by Tenant, contents cover and various others.
Getting ready for your tenants – A Handy Checklist
All too often, the moving out process is given more focus than the move in. Of course, both are important, but with a strong move in process in place, it’ll save you time, effort, stress and money in the long run. As previously stated, reputable Letting Agencies should be able to assist you with the entire move in. In terms of the tasks involved in pre-move-in, here are some of the key areas to make sure you’ve checked off.
• Check the Tenants have the “Right to Rent”
• Protect the deposit
• Make sure your property is Fire Safe
• Make sure any and all Gas Safety Certificates are up to date
• Get an up to date EPC
• Give your Tenants your rules and regulations
• Make sure appliances are working
• Reference your Tenants
• Get a Tenancy agreement
• Prepare an inventory
• Take meter readings
• Update utility suppliers
• Provide emergency contact numbers
• Change the locks
The complexity of a move in shouldn’t be underestimated, not only does it give you a solid foundation in terms of a relationship with your Tenants, but it helps to weed out any of the most common issues that you might face otherwise. If you’re in any doubt about the process and want help or advice – get in touch with us and we can help.
Ways a Tenancy Can End
There are three different ways that a Tenancy can be ended. Firstly when a Landlord wants the property back after a fixed term ends, they can issue a Section 21 notice. A Section 21 is commonly used when a Landlord wishes to sell the property.
Secondly, a “Section 8” notice can be used by Landlords to evict Tenants for breaking the terms of the Tenancy, this can be for anything from unpaid rent to excessive noise pollution.
The third and most common option is that the Tenant wants to move out after a fixed term end, this simply involves giving a notice period and can happen for any number of reasons. The Tenant might be buying their first home, or they might be moving away – either way, it’s perfectly legitimate.
End of Tenancy Checklist
Once you’ve received notice, there are a few things you’ll need to do. Alternatively, as with most of the complex processes in this roundup, a reputable Letting Agent such as Manning Stainton is able to manage the process for you. Some of the tasks required upon move out include:
• A move out letter has been provided
• Landlords(or acting agent) must thoroughly inspect the property
• Identify remedial action that the Tenant needs to do before they leave (Cleaning ovens, fridges, making any minor repairs)
• Checking electric and gas appliances still work and are to a reasonable standard
• Check cleanliness
• Check for carbon monoxide and fire risks
• When the Tenant has moved out conduct final inspection
• Make relevant deductions and release the deposit within 10 days of departure
• Receive the final month’s rent and settle outstanding bills including carrying out a meter reading and confirming council tax is in order
• If the property is due to be vacant, you may be eligible for an unoccupied property exemption on council tax
Use each move out as an opportunity to understand if there are any improvements you can make
When your Tenant has given notice to move out, you’ll need to begin marketing your property again, in order to find a new Tenant. If everything has gone well with your previous Tenant, you will be able to remarket as is.
However, when a Tenant has given notice, it’s a golden opportunity to understand if there was anything within your control which has led to the move-out – so you can make improvements and keep your next Tenants longer. Perhaps the property has dated decoration, and they wanted something more modern – this is a good indicator that it might be time to redecorate or even remodel.
Don’t be intimidated by this, there are countless ways that you can update your property without it being a substantial job. Replacing kitchen cupboard doors with a more modern style, to applying a fresh lick of paint go a long way. There are lots of potential options. See some of our decoration guides below:
• 3 DIY Home Decor Hacks
• 2019 Interior Design Trends
• 5 Top Tips To Boost Your Property On a Budget
If you are thinking of becoming a landlord and would like more information, please contact your local Manning Stainton Branch.