What to do for first time landlords?
Are you a first-time landlord?
Avoid common mistakes first-time landlords make
Being a first-time landlord, especially with the recent legislation and tax changes has become less attractive and more complicated.
Get a good tenant
You may want to find a tenant quickly so rent starts to roll in, however take it slow and ensure you carry out credit & referencing before letting your property.
Get the tenant to complete an application form that provides you with detailed information to enable you to obtain a credit and referencing report. The credit and referencing check may show a history of late payments, many accounts, etc. Take your time to verify references including employers and former landlords references.
Even if the tenant wants to move in quickly still ensure you carry out the checks above. Do not feel rushed or pressured into making a decision until you have all the information so you can make the best decision.
Allow 10% margin for voids
Do not calculate your figures based on anticipation the property will always be let. Allow 10% void, the market rent, less 10%.
Do not underestimate repairs and maintenance costs
You have a legal obligation to maintain the property in good order. You need to factor in cost of repairs and replacement in your calculations. Be prepared to use money from your business from your personal funds in the event that you don’t have the cash needed for major works. Consider allowing 15% for repairs and replacement costs out of the rent.
Being a landlord is not a hobby
Owning rental properties is a business and in order to turn a profit you’ll need to operate it as such. You will need separate bank accounts for deposits and expenses, using a bookkeeping system and consulting a tax professional to ensure you are correctly handling taxes on the rental income.
Good tenancy agreement
To avoid potential problems it’s essential that your tenants sign a comprehensive tenancy agreement. If you have any problems with your tenant than you will need a written, binding tenancy agreement in order to obtain a possession order easily.
The property you are renting out is your responsibility. It needs to be regularly checked, to be aware of any damage to the property or any repairs or maintenance that may be required. Some tenants do not report problems and consequently further damage is caused due to unreported problems. Ensure to confirm your visits with the tenant to protect their privacy.
Keep up to speed with new legislations
Make sure you are aware of new legislations that come into force. As a landlord you’re required to make sure the property meets health and safety standards.
Delaying an eviction
If your tenant has rent arrears do not delay and take legal action as soon as possible. Not beginning eviction proceedings in a timely fashion may become a costly mistake. If you run into problems with a tenant and do not know how to proceed, contact an eviction company as soon as possible. landlordadvice.co.uk is one of the leading national tenant eviction companies.
Ensure you enforce a breach of the terms of the tenancy Agreement
If you outlined that late rent payments would incur a penalty, charge it. If you want no pets in your property, and your new tenant buys a pet, enforce the penalty. When your tenants realise you do not enforce the terms of the lease they will likely push boundaries. Set the standards you want to uphold.
It is important that you keep a written account of all interactions with your tenants in the event that you need to take your tenant to court. Note all phone conversations and keep copies of emails, voicemails or text messages, etc. to be able to support your claim. Where ever possible try communicating by emails in order to have a record of communication.