With property investment remaining a great way to make your money work for you, most landlords come to the rental market by design.
However there are those who find themselves with a property due to circumstance.
This could be someone who has inherited a property, or been forced to rent out their own home due to employment, marital or financial changes.
It is landlords who have ‘accidentally’ found themselves in this position that we will happily spend time with offering advice and guidance.
If the rental sector is where you have found yourself by accident, there is no doubt that you will have a lot of questions. You might even talk yourself out of what could be a viable business opportunity before you have had time to really analyse the benefits.
This said, we know only too well that the legislation and compliance regulations are quite daunting to a newcomer to the industry, but that is what Letting and Property Management companies, such as our own, address to ensure that your new venture will excite rather that overwhelm you.
Here, we’ve looked at some of the most important things you’ll need to know when renting out a property for the first time…
So lets talk..
At Carrick Johnson we are all about personal service and this starts with a good old fashioned conversation, which will help us iron out all of your concerns before you take the plunge into what is likely to be the best financial decision you make.
Let’s face it you’re in a sector that you have no knowledge or experience of, so breaking down the various elements you/we need to be mindful off should provide great peace of mind.
As well as help you find and screen tenants, we will guide you through the mountain of compliance when renting out your property.
Research on rent
It might be tempting to seek out more rent than is achievable; however don’t be tempted to price your property above others in the area unless your property really stands out against the crowd and is worth the extra money.
If your property is priced too high, your tenant might quickly establish this and look to move on, leading to void periods that might cost you more than the extra rent could have in a year!
So we strongly advise that you talk to local and professional people in the property industry to guide you on potential rental income – after all they/we have the experience and local knowledge.
Tenant referencing and screening is arguably the most important stage when renting out your home.
Bad tenants cost money and add huge stress – it’s that simple!
But tenant referencing and screening is a complex business that professional letting agents carry our every day; not just from the tenant interview/viewing stage, but through unbiased credit control, right to rent checks and Guarantor checks, if they are required.
This is something, we at Carrick Johnson Lettings and Property Management take very seriously and leave no stone unturned when finding your tenant.
This is the area where most new landlords may struggle.
And it is also the area which is most dangerous unless you get it right.
We’ve listed some of the most important areas of landlord legislation below, but we can advise on these and more to ensure you are fully compliant when renting out your home.
If you decide to manage your rental property yourself, you’ll need to ensure your tenant’s deposit is lodged with one of the three government-approved tenancy deposit schemes in the UK.
- The Deposit Protection Service (DPS)
- My Deposits
- The Tenancy Deposit Scheme (TDS)
Failing to do this is breaking the law and should your tenant discover you have not registered their deposit, they can apply to have it refunded and for up to three times the amount in compensation.
As a landlord, you must ensure all gas appliances, pipes and flues are maintained.
You must also supply each of your tenants with a copy of your property’s gas safety certificate, a test for which should be carried out by a Gas Safe registered engineer before the start of the tenancy.
Furniture and fire safety
If you rent out your property as furnished, you must ensure all items meet fire resistance regulations.
Such items might include:
- Sofas and chairs
- Garden furniture
All furniture made since 1989 usually complies with these regulations, but check, check and double check.
Not only will doing so help protect your tenants, but it will also protect you from a potential fine of £5,000 and six months in prison.
Fitness for habitation
As a landlord, you must ensure your property is fit to be lived in.
It sounds obvious, but there is more to this area of compliance than meets the eye.
You must ensure the following:
- The building is in good condition
- The property is stable
- It is free from damp
- The layout is safe
- Your property has enough natural light
- It is well ventilated
- Hot and cold water are supplied
- Drainage and sanitation are adequate
- Food preparation areas and waste water disposal are in place
Electrical Safety is now a legal requirement and all new rented property must have an Electrical Installation Condition Report (EICR) compiled by a qualified electrician.
This will ensure that your property’s electrics, including sockets and wiring, are safe.
Accidental landlord tax
One of the biggest changes for landlords to absorb in recent years has been to taxation on rental income and we highly recommend that you seek advice from a tax accountant before renting out your home.
Minimum Energy Efficiency Standards (MEES)
Landlords must provide a copy of their property’s Energy Performance Certificate to tenants before a tenancy begins.
And since April 2018, properties rented out in the UK must have an Energy Performance Certificate rating of E or above.
An assessment must show any steps have been taken to prevent the risk of legionnaires disease through water contamination.
This is usually carried out immediately prior to a tenant taking up residency and is something, we as the management company carry out as standard.
The General Data Protection Regulation (GDPR) came into force in 2018 and means landlords must be fully transparent with tenants on how they use their data and information.
- Outlining what information is kept
- Why it is kept
- How it might be used
- How long it is kept
The Deregulation Act
This piece of legislation became active in 2015 and now applies to all tenancies.
Essentially, the Act outlines the consequences of not complying with some of the legislation we’ve already outlined above.
So, as a landlord you must:
- Lodge your tenant’s deposit within 30 days
- Supply a gas safety certificate before the tenancy starts
- Supply Electrical Installation Condition Report
- Supply a copy of the government’s ‘How to Rent’ guide
- Supply an Energy Performance Certificate
As your agent, we ensure that ALL of the above are addressed immediately prior to your tenant taking occupancy
Failing to comply with these points means you would be unable to issue a section 21 eviction notice to a tenant.
And this means, unless you are able to issue a section 8 notice for breach of the tenancy agreement, you will be unable to gain possession of your property should you need to.
Other pieces of legislation
As well as the compliance outlined above, you’ll face the following regulations if your property is in England:
- Right to Rent immigration checks
- Smoke alarm and carbon monoxide alarm laws
Tenancy agreements and inventories
Even if you are self-managing your property, use a written tenancy agreement for complete avoidance of doubt.
The best way to ensure you are covered within your tenancy agreement is to a professional managing agent, like ourselves, who will be able to draw up an agreement that is legally sound and up-to-date with the latest legislation.
As an agent we can also arrange a professional inventory to be carried out – which an additional protection should there be damage to your property during a tenancy.
Your property should be run like a business
You may be emotionally attached to the property in question, but adapting a businesslike approach will serve you best.
Think of your new venture as a new career, where a well thought out contract and strong employment law policies will protect everyone concerned.
Keep a maintenance fund
Landlords will no doubt enjoy a good income from their property and if using a management agency, this will be relatively hassle free; however always be prepared for the inevitable maintenance and repair that will rear its head. However by keeping a contingency fund in place you will weather the storm of unexpected repairs and maintenance – and the unexpected void period.
We hope you have found some of these points useful and please do call us to discuss your plans, even if in their infancy, we would love to hear from you.