Becoming a landlord for the first time can be an exciting but daunting prospect. For many, the idea of renting out an unused property sounds great but the processes, procedures and legal obligations can leave them feeling overwhelmed and uncertain. At Paige & Petrook, we want to ensure that your first experience as a landlord is a positive one, so here are some of the things you’ll need to know if you plan to embark on life as a landlord!
What type of support do you need?
As a landlord, you can be directly involved or choose to have minimal interaction in the process. Most landlords tend to choose a ‘Managed Service’ with a provider such as Paige & Petrook, as this requires the least involvement. It’s ideal for those who don’t have the time, expertise or inclination to be a full-time landlord. Another option for those who want to be more involved is a ‘Rent Collection’ service, where you employ a provider to market the property and collect the rent. This means that you would be responsible for all repairs, inspections and deposit negotiations. A ‘Let Only’ service is for more experienced landlords who would like assistance in sourcing suitable tenants, processing legal documentation, registering the deposit and checking tenants in and out. Some landlords may simply want to ensure that their property is occupied, in which case the ‘Tenant Find’ service enables a provider to market your property and find you a suitable tenant, after which you take care of the rest .
Do you have the time to handle tenancy switchovers?
Finding a tenant for your property is all well and good, but in the rental market people are often moving around, so it is likely that you’ll have multiple tenants over the course of your time as a landlord. Each time the property is vacated it will need to be checked over and returned to the required standard prior to the new letting commencing. If you do not have the time or capacity to manage this process, opting for a full Property and Improvement Refurbishment Service ensures that a provider like Paige & Petrook can source, quote and manage the entire project on your behalf.
Do you understand all the rules and regulations?
Becoming a landlord for the first time means that you’ll have to get to grips with a staggering list of rules and regulations. Here is a brief list of the main areas to consider and you can find more details about these in our Landlord’s Guide.
- GAS SAFETY – Legally, landlords have to provide an annual Gas Safety Certificate for each gas appliance in the property. This must be issued by an engineer who is registered with the Gas Safety Register.
- SMOKE AND CARBON MONOXIDE ALARMS – Smoke detectors must be installed on each occupied floor of a rental property. Carbon monoxide detectors are required in any rooms containing a solid fuel burning appliance.
- ENERGY PERFORMANCE CERTIFICATE – An Energy Performance Certificate (EPC) tells applicants and tenants about your property’s energy efficiency. If you don’t have an EPC you may be fined by your local Council.
- ELECTRICAL EQUIPMENT (SAFETY) REGULATIONS 1994 – The law is changing and soon landlords will need to provide an Electrical Installation Condition Report (EICR) for their property. This must be issued by a qualified electrician.
- FURNITURE AND FIRE REGULATIONS – All upholstered furniture and furnishings – including loose fittings, permanent and loose covers (but not carpets) – must comply with 1988 fire resistance regulations on fire resistance.
- LEGIONNAIRES’ DISEASE – Landlords are strongly advised to carry out a Legionnaires assessment at their property before letting, especially if there are open water tanks, cooling systems or a swimming pool on the premises.
- THE TENANCY AGREEMENT – If your tenant is an individual, your agreement with them will be an Assured Shorthold Tenancy Agreement and will be in line with the Housing Act of 1988 and this is acceptable to Building Societies and Banks.However; if your tenant is a company, you will need to use a Fixed Term Company Let Agreement.
- OBTAINING CONSENTS – If you don’t have a Buy To Let loan, you need to obtain your mortgage lender’s permission to let your property. If the property is leasehold, you’ll also need permission from the head lessor or freeholder.
- INSURANCE – You will need to take out Landlords’ Building Insurance and, in some cases, contents insurance. You’ll also need to inform your usual home insurer you intend to let your property.
- THIRD PARTY LIABILITY INSURANCE – Your Landlord’s insurance policy will need to include Third Party Liability insurance to cover any claims made by the tenant or anyone who may be affected by a defect resulting in personal injury.
Do you understand the taxation implications?
Broadly speaking, if you are a landlord and you live in the UK, the net income from your investment property is subject to income tax, and the level of tax payable is dependent on your income. There are also strict rules for landlords who rent out property in the UK and spend more than six months of the tax year living overseas. If you are treated as a non-resident landlord, you still have to pay UK income tax on rental income from your UK property.
In summary, becoming a landlord can be an enjoyable and financially rewarding move providing you are fully equipped with all the knowledge to ensure you remain safe and compliant. If you would like advice with any of the issues raised above, please do get in touch with us as we have extensive experience in helping both experienced and first-time landlords.