Everything you need to know to get the best return on your investment.
There are now approximately a million buy-to-let landlords in the UK. Low interest rates on savings have forced more and more of us to invest in bricks and mortar but there's more to it than just return on investment. The process of letting a property can be a complex and time-consuming one, but the rewards can be considerable when you get everything right.
How is the current value of your home assessed?
When you first decide to put your property on the market, the value of it needs to be assessed. This is important for potential buyers to have confidence in the asking price, and so that you understand how you will finance your move.
Becoming a landlord can be a daunting prospect. With so much you need to know and consider before taking the leap, it’s a step that should not be taken lightly. It can be very rewarding though; a well-performing portfolio, carefully managed, can provide an income now, and a pension pot in years to come. Getting it right from the beginning can save you time, money and a lot of sleepless nights!
With Daniel James Estate Agents managing your properties, you can relax, reassured in the knowledge that we have your best interests at heart. We don’t select the first tenant that applies for your property; we take the right tenant. The one that will look after your property as if it were their own home, and of course, pay on time, every time. Our experience of hundreds of lets means that our instincts in selecting the perfect tenant are second to none. The peace of mind having the right tenant in your property can give you, is priceless.
Why should you choose us?
Daniel James Estate Agents is one of South West London’s leading and most innovative Estate and Letting agents.
Daniel James is an owner led company, headed up by Daniel White himself and supported by a superb team of experienced property professionals.
What makes us different is our passion and enthusiasm for selling and letting homes. The key to our success is our approachability and willingness to listen, understand and respond to our client’s needs.
We are known for our authority on the local market and straight talking good advice which clients appreciate. Experience has taught us a unique empathy with clients and we always apply discretion, humour and integrity as any situation dictates.
We are extremely flexible and always try to accommodate our client's busy lifestyles and commitments and can do valuations or accompany viewings out of office hours seven days a week.
Our attractive office is located opposite Tooting Bec station on Balham High Road. Please feel free to visit us at any time for an informal chat about any aspect of selling, letting or buying a property.
Call 020 8767 7001 or email firstname.lastname@example.org or
click here for our full contact details.
How to start with your first let
Whilst letting out a property sounds as if it should be easy, the headlines and discussion threads prove otherwise. Becoming a landlord can be lucrative if done properly, but can also turn out to be a nightmare if you make what may seem like a simple mistake.
There are two ways to become a landlord: you can either buy a property and manage the let and maintenance yourself, or else you can hand over the responsibility of letting it to a professional property management company.
If you decide to adopt the DIY on approach then you get to keep all the rent. However, depending on the age and condition of your property, quality of your tenant, and the market conditions, you may find yourself devoting far more time, energy and emotion on maintaining the property than you ever intended.
Rules and Regulations
Landlords are required by law to service all gas-related equipment at least once every 12 months. Landlords must also keep a record of regular checks and the condition of equipment at all times. You must also provide tenants with an annual gas safety certificate. If you do not provide your tenant with an annual gas safety certificate, you are breaking the law. Even more serious, you could risk your tenants’ lives by gas explosion or carbon monoxide poisoning.
Tenancy Agreement and inventory
The Tenancy Agreement is the legally binding contract between you and the tenants. It sets out the rights you both have, such as the tenants' right to live in the property for the agreed term and your right to receive rent for letting the property.
The most common form of tenancy agreement is the Assured Shorthold Tenancy Agreement (AST) and sets out the obligations of both tenant and landlord. The most important aspect of this agreement is that the landlord has the right to repossess the property at the end of the agreed term. There is no minimum term specified, either, although the tenant has the right to remain in the property for at least six months.
There are specific requirements linked to an AST that include:
- The tenant must be an individual (i.e. not a company)
- The property must be the main home of the occupant
- The property must be let as separate accommodation.
The landlord is normally obliged to provide the tenant with two months' notice if they want to terminate the agreement.
The landlord inventory
This is one of the most important documents in to both the landlord and the tenant. It describes any contents of the property their condition. It also details the condition of the property itself, such as how recently it has been decorated, and any existing defects or damage. It will be used to compare with the checkout report on the day the tenant vacates. On the day the tenant moves in, both the tenant and landlord or agent need to agree the exact condition of the contents of the property. All parties need to initial each page and sign it, and each keeps a copy of signed document. This helps to avoid any unnecessary disputes about any damage that may be caused by the tenant during the tenancy.
We suggest the property is checked every three months in order to make sure the property is being looked after. The tenant should have at least 24 hours’ notice of each visit.
- In order to protect the landlord from costly damage and unpaid rent, the landlord should take a deposit from the tenants. This is usually the equivalent of one to two months’ rent.
- The tenant should be provided with Prescribed Information, which is a document detailing what the deposit is for and the conditions for its full return.
- The landlord must protect the tenant’s deposit in a recognised scheme, such as MyDeposits or The Deposit Protection Scheme. This must be done within thirty days’ of receiving the deposit, or the may have to pay the tenant three times the value of the deposit.
Getting the best rent
First impressions count for everything, so it's important your property looks its best for potential tenants. A well-presented property will attract the best tenants: those who will look after it well and pay the best rent. Here are our top tips to present your property for rent:
Does it have ‘kerb appeal’?
- Tidy the front and back garden. Ask a gardener to give it a once over, adding new plants if necessary, and ensuring the lawn looks its best.
- Repair cracks, holes or damage in the driveway or walls
- Give the window frames and door a lick of paint if they need it
- Make sure the house number or name is clearly visible
- If your property is furnished, make sure it’s clean and placed to make each room look as spacious as possible. Clear out cupboards and wardrobes of non-essential items.
- Make minor repairs - fix leaky taps and cracks in the walls, replace broken or crooked tiles, replace burned-out light bulbs - make sure everything works!
- Clean thoroughly from top to bottom - carpets, floors, windows, fixtures and fittings, etc. A professional cleaning company is the best option here.
- A quick coat of new paint can really help freshen up tired rooms and will encourage tenants to keep them in good condition.
A word on Decor
- So far as décor is concerned, we recommend neutral, with good quality furniture and furnishings, suitable for the type of tenant you intend to let to. There are several furniture companies that specialise in selling ‘packs’ of furniture to landlords. We at Daniel James can advise you on those small changes that make all the difference to finding the right tenant, and achieving the best rental prices.
Finding the right tenants
With time, energy and even a bit of money spent now, it could really make the difference to how quickly you let your property and how much rent you can charge.
Consider what type of accommodation you are going to let and also how you are going to find your tenants:
- How will it be advertised - for example, two bedrooms with a study, or three bedrooms? The first may well appeal to a professional couple, whereas a family will be attracted to three bedrooms. Families tend to stay longer, but your property will suffer more wear and tear, especially if your tenants have young children. You’ll need to weigh up the pros and cons of each.
- What are your circumstances – if you live a long distance away, or even abroad, you need to take this into account. Having someone ‘on the ground’ who can take care of any emergencies and general maintenance issues can give you and your tenant peace of mind.
- These different considerations can affect how much time, effort and expense will be incurred in the let and management of your rental property and it’s worth spending some time planning before you even buy the property.
Preparing for your tenants to move in
Once you have bought your rental property, you need to prepare it for your tenants. Here’s what you need to do to get it ready:
Before the tenants move in:
- Make sure the property is clean and presentable
- Arrange for all utility accounts to be transferred to the tenant
- Arrange for the Council Tax to be paid by the new tenant
- Make sure instructions are on all relevant appliances
- Make sure all relevant equipment is labelled correctly
- Prepare a number of spare keys for your tenants
On the day your tenants move in:
- Take final meter readings and give them to the tenants
- Conduct, agree and sign the inventory with the tenants
- Provide your tenants with the gas safety certificate and maintenance book
- Demonstrate the workings of relevant equipment - alarms, locks, etc.
- Provide emergency contact numbers and written explanations of how to deal with an emergency in the property
- Hand over the keys.
Who needs to be informed?
Before you can let your property, you need to advise or get permission from:
- Your mortgage lender - your lender may ask that you let your property on an Assured Shorthold basis
- Your insurance company - if you don't inform your insurance company know that you have let your property, you may not be covered in the event of damage, fire or theft.
- Your freeholder (if you have one) - important if you wish to let a leasehold flat, for example.
The cost of letting your property
The monthly income from a rental property may be the main motivation behind becoming a landlord, but it’s important to plan for the costs you may incur when letting your property, including:
- Mortgage repayments
- Any expenses involved in bringing the property up to the required standards, both physically and in terms of the regulatory safety standards of furniture, utility equipment and appliances (we can advise you of these)
- Solicitor's fees
- Letting agent/management fees
- Insurance costs
- Contingency budget for ad hoc repairs and maintenance.
It’s wise to plan in advance and perhaps keep an emergency fund separately, just in case.
Complete management = complete peace of mind
As well as securing the best tenants for our landlords, Daniel James also offers a complete tenancy management service. This means we:
- Assess potential tenants by obtaining references from previous landlords, carrying out credit checks and if necessary, checking employment references.
- Draw up all legally required documents, such as the Tenancy Agreement and Tenancy Inventory.
- Manage the check-in and check-out at the property.
- Collect the rent and pass it to you.
- Be on hand for any repairs and maintenance issues throughout the tenancy. At Daniel James we work with a team of excellent tradesmen to make sure work is carried out efficiently and as cost-effectively as possible.
- Carry out interim inspections at the property to make sure it’s being looked after.
- Provide you with professional advice and guidance at any stage of the tenancy.
The DIY approach to letting your property
There are many aspects to consider when deciding on whether to let and manage the property yourself, or using an agent. Here are a few questions we at Daniel James have found useful to ask our landlords to help them make their decision:
Do you live near to the property?
It’s not particularly easy to manage a property that is not local to you. Having someone ‘on the ground’ when things go wrong can be invaluable. If you live abroad, it may give you peace of mind to know that someone local is available to deal with any issue that arises.
How much time do you have?
Landlords are often busy people, working full-time, looking after their family, or both. If you find your time is already committed leaving you little spare time, you may want to think about the time you could commit to your rental property. Managing a rental can be very time-consuming and is often under-estimated.
How organised are you?
Renting a property is heavily regulated. Compliance issues, contracts and landlord commitments all need careful management and efficient organisation. If paperwork is not your strongpoint, it’s probably better to use a professional letting agent. Let Daniel James take the strain!
Do you like dealing with people?
The letting business is essentially a people business. You need to be really good at managing people in often difficult or heated situations. A tenant with no heating on a cold day is not the easiest person to deal with! At Daniel James, we understand the frustrations a tenant can experience if they feel they are not being listened to or taken seriously, even if it is no fault at all of the landlord. We can smooth any ruffled feathers and reassure them that everything is being done to resolve the issue as quickly and effectively as possible, leaving you with a happy tenant that wants to stay!