Fri 21 Apr 2017
Letting out a property can provide you with an additional income, and if done right, it can be a very lucrative long-term investment. However, with the government imposing regulations on landlords, it is important to get your rental property in order before you start letting it out.
Simple steps to renting out your property
SEEK OUT A GOOD LETTING AGENT
A good letting agent can be worth their weight in gold, especially to 1st time or inexperienced landlords. They can help you decide what monthly rent to charge, find and screen tenants, draw up contracts and other important documents, take deposits, and conduct inventories when your tenants move in and out.
If you only require the lettings agent to find tenants and draw up relevant documents, you might be charged one-off let only fee. But if you want them to manage the property too, fees can be in the region of 10% of the monthly rent (plus vat). Agents standard of service can vary, therefore the most important thing for you to do is to use an agent you can trust and also check for hidden/ongoing fees and charges.
THINK ABOUT THE TYPE OF TENANTS YOU WANT
This will depend on the size of your property and also who you’d be happy to let it out to. Are you happy with small children, for example? What about tenants who work from home or work nights? And will you allow smokers or pets? We’d always recommend where possible that you meet your tenants before you sign the contract, especially if you have gone for a let only service.
KNOW YOUR LEGAL REQUIREMENTS
Whilst this responsibility will fall to a lettings agent on full management, it’s still worth knowing that your property will need a Gas Safety Certificate, a Legionella risk assessment and an Energy Performance Certificate. Your tenants will also need to be presented with the government’s downloadable How to Rent Guide. And the deposit will need to put into a recognised Tenancy Deposit Scheme. New ‘right to rent’ checks also mean it’s now the landlord/agent's responsibility to check tenants have the right to be in the UK.
THINK ABOUT TENANCY TERMS
The standard contract between a landlord and tenant is called an Assured Shorthold Tenancy Agreement (AST). Your lettings agent will draw it up for you but make sure you are happy with key points such as the length of the tenancy and the notice to leave that is required from either party.
WEIGH UP COSTS VS HASSLE
You’ll need to decide if you want to manage the property yourself or get a lettings agent to manage it for you. If you won’t be living locally or you're a first time landlord or have a busy job, the latter option might well be worth the money.
Make sure you give the property a deep clean – which means windows, shower heads, ovens, fridges and down behind the radiators. This is a must when setting standards.
COLLECT ALL INSTRUCTION MANUALS
Dig out all instruction manuals – such as for the boiler, alarm system, cooker and white goods – so the tenant has them to hand. And leave any keys they might need for gas and electricity meters to be read. Another thing you could do to help your tenant is to leave a page of handy hints, whether it’s to recommend a local window cleaner or give the contact details of a friendly neighbour; your tenants will really appreciate this.
GET UP TO SPEED ON NEW TAX RULES
As a landlord, you’ll need to know about some recent tax changes which could have an impact on you now and in the future. The rent you get from your property will be classed as taxable income. If you are letting a furnished property, currently you will no longer be able to claim 10% ‘wear and tear’ costs against your tax bill. And as of this month (April 2017) relief on mortgage interest will start to be capped for all landlords at the basic rate of 20%, even if you pay tax at 45%.
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