The life of a buy-to-let investor or professional landlord can be a tough one. Defaulting tenants, precarious mortgage arrangements, and the constant fluctuations of the housing market all combine to create a pretty challenging situation.
As a landlord you should therefore take suitable steps to make your life as easy and hassle-free as possible, while ensuring that you provide a great service to your tenants. To get there, try sticking to these 10 commandments for good letting on a buy-to-let property.
1. Get a good tenancy agreement
The tenancy agreement is the most important document in the landlord’s arsenal. This sets out your rights and those of your tenant, and must be properly drafted.
Most tenancies are Assured Shortholds. It is possible to find standard format agreements on the internet, but you should always seek personalised advice from a solicitor where possible. A well drafted tenancy agreement might cost you money now, but it will save you a lot of hassle later.
2. Check out your tenants’ background and references
Many private landlords do not perform any checks on prospective tenants. You must protect yourself from defaulted payments, so make sure your tenants can afford the rent by carrying out credit checks, asking for employment details and requesting references.
3. Get landlord insurance
Conventional home insurance policies will not cover you if you are renting out a property. You need dedicated landlord insurance to protect your investment and your bank balance if something goes wrong. You might also think about taking out cover against defaulted payments, particularly if you rely on rental income to pay a buy-to-let mortgage.
4. Do an inventory
Make sure that you complete an inventory and ‘snagging list’ when each tenant moves in and moves out. Get this signed by the tenant, and take pictures where relevant. This will help to minimise the potential for arguments about damage at the end of a tenancy.
5. Choose your property manager carefully
Make sure you do some proper research before choosing a property manager or lettings agent. This individual will be your point of contact with the tenant; if they do their job poorly it reflects badly on you, and is likely to create more work in the future. Where possible, choose a property manager based on a trusted personal recommendation.
6. Handle deposits properly
Tenants’ deposits should be lodged with a dedicated organisation like the Deposit Protection Service. You have a legal responsibility to use a government-authorised scheme, and tenants can demand significant financial compensation if you fail to do so.
7. Don’t overspend on lettings agents
Unscrupulous letting agents often take advantage of new or inexperienced landlords. Do not be conned into overspending, particularly if they are not carrying out any property management tasks. You may also wish to look at the recent High Court ruling against estate agent Foxtons, outlining what judges have deemed to be fair practice amongst agents.
8. Chase debts early
Make sure you chase payments as soon as they become overdue. The longer you allow debts to mount up, the less likely you are to see the cash. You should also make sure that you familiarise yourself with the procedures for seeking eviction in the event that a tenant continuously fails to pay.
9. Choose your buy-to-let property carefully
If you are yet to choose a property, there are several important factors that you should consider. Location, availability of potential tenants, and proximity to your home are all aspects that should be looked at. You may wish to read our article on choosing a buy-to-let property for more information.
10. Inform your lender
Finally, it is vital that you tell your lender if you intend to rent out your property. Conventional mortgage arrangements may not be sufficient for buy-to-let, so you should seek guidance from your mortgage provider before beginning.