Having a property that is ready to let and be rented out to tenants can be a profitable venture for many. It is exciting, and with many people choosing to rent rather than get a mortgage, it is a lucrative business model for those lucky enough to find themselves in the situation of being able to become a landlord.
There is a lot to do and understand, though. Becoming a landlord is not as simple as buying a property, finding tenants, and being done with it. You have to ensure that the building is up-to-code, and that you are abiding by your legal responsibilities. You also need to understand the costs associated with being a landlord.
Are you taking your first steps on the property ladder and hoping to rent? If so, this complete guide to becoming a landlord is sure to help you.
1. Being a landlord is a business
The UK rental sector has doubled, meaning more people are having to rent rather than buy their own properties. While this may be frustrating for the younger generation (aptly named ‘Generation Rent’), for those who wish to make a passive income from their property, becoming a landlord can be a great business opportunity.
Remember, though, that being a landlord is a commitment. You have responsibilities such as ensuring the property is in good working order, your tenants are happy, and that you have enough time, energy and resources to manage the property. Of course, you can outsource most of the responsibility to an agent, but there are additional costs associated with this option.
Being a landlord is not always easy, and it is in your best interests to remember that.
2. What does being a landlord actually mean?
Many people believe that being a landlord is an easy job. This is not always the case. You may find yourself with a difficult tenant who refuses to pay for certain bills or damages the property before skipping town. This can leave the landlord with unpaid bills and maintenance costs. You may also have a tenant who sub-lets. The best way to counter these common issues is to conduct quarterly inspections so that you can ensure the property is being looked after and that the right person is living within your four walls.
You will also need to understand that even if you are using a letting agency, the responsibility of any issues with the property or tenant will always fall back on to you. This could see you having to pay for any unforeseen costs.
3. Abide by the legal responsibilities
There are many legal responsibilities you will have to understand and meet before you start letting your property and moving in a tenant. For instance, you will have to ensure that your property is ‘fit for human habitation.’ This means that the property will have to meet certain standards such as ensuring that the property is stable, does not have an unsafe amount of damp, has proper ventilation, etc. Head to the government website for the full list of rights that are under the new Homes (Fitness for Human Habitation) Act.
You will also need to ensure that all gas appliances within the property are well-maintained and up-to-code. It is required that a landlord conducts a gas safety check annually by a certified Gas Safe engineer. The costs of doing this are not typically that high.
Other regulations you need to ensure your property meets include:
- An Energy Performance Certificate (EPC) – All tenancies must have a minimum ECP rating of ‘E’.
- Smoke and carbon monoxide alarms
- Deposit schemes – Although a deposit isn’t necessary, it is recommended. However, if you do take a deposit, you will need to ensure it is stored in one of three deposit schemes available to landlords.
4. Have the proper insurance
Landlord insurance is essential for all UK landlords. As mentioned above, there can be financial obligations and costs associated with being a landlord – and sometimes, these costs are through the fault of the tenant. Landlord insurance can help protect you from the potential risks that are associated with renting out a property, offering you a safety net and peace of mind.
You will want to find good, cheap landlord insurance that covers you for a range of possibilities such as damage to your property as well as rent guarantee insurance. The best way to find the perfect landlord insurance for you is to head to a comparison website.
Renting out your property and becoming a landlord can be exciting and profitable. However, it is no easy ride and comes with a lot of responsibility. Before you rent out your property, ensure your property meets with the rules and regulations set out by the government and that you are financially and mentally prepared to handle tenants.