Starting out as a new landlord can be overwhelming. Navigating laws, regulations, and insurance is just the beginning- you also need to manage your property and ensure the safety and well-being of your tenants.
However, the appeal of the private landlord life is undeniable. With high demand for rental properties across the UK, especially in urban areas, you can quickly find tenants and potentially charge higher rents in areas with limited supply.
Owning and renting properties can provide a reliable source of income, offering flexibility and is an attractive option for those seeking extra income or considering a career change to equalize the work-life balance.
But before embarking on your new career as a landlord, it’s essential to take note of a few valuable tips before you get started on your new career.
When it comes to your legal responsibilities, like maintaining properties and complying with regulations, these are (naturally) not up for debate! But on the other hand, some best practices are optional, however, they will go a long way to making your life as a private landlord much easier.
Here are eight tips for UK landlords that will help guide and support you as you embark on your new venture.
1. Research the Market
It’s true that investing in rental property can be lucrative, but it requires careful planning and research. One of the first steps to take is to research the local market thoroughly. This will help you determine the absolute best location for your rental property, the types of properties that are in demand (and those that aren’t), and the rental yield you can expect.
A good way to get started researching the market is to study rental listings in the area. Look at the property portals, like Rightmove, Zoopla and OnTheMarket, to get an idea of what other landlords are charging, what features are included, and which properties are desirable for renters. You can also check out local lettings websites, attend viewings and talk to agents to get a better sense of the market.
Once you’ve identified your target market – the location, not the people – it is then essential to tailor your property to the tenant’s preferences if you haven’t already done so. Depending on your budget, consider things like supplied white goods. These things can really help you stand out in a competitive market.
It’s also important to keep in mind that the market is always changing, so you need to adapt if you want to stay competitive. One of the best ways to do this is to speak with your tenants, but more on that later.
Keeping an eye on market trends and changes to the law – like the upcoming renters reform bill – will help you to remain one step ahead of your competition and enable you to adjust your strategy and business model accordingly.
2. Screen Tenants Carefully
The screening process provides valuable insight into a potential tenant’s background. Before signing an agreement, do your due diligence, especially if you’re not using a managing agent. This not only protects you as a landlord but also ensures that you are renting to a responsible and trustworthy tenant.
It’s important to be consistent with your screening process and avoid discriminating against any potential tenant based on race, religion, gender or sexual orientation. This not only protects you legally but also ensures that you treat everyone equally.
If you are unsure about the legalities of your screening process, seek the advice of an agent, professional referencing service or trade association like NRLA. They can provide you with guidance on what you can and cannot ask potential tenants and how to avoid any legal issues.
It’s better to find a responsible and trustworthy tenant from the start than to deal with the consequences of a bad tenant later on.
3. Outline the Terms of Your Tenancy
The tenancy agreement is an essential document that outlines the terms and conditions of your rental agreement with the tenant. It is a legally binding contract that protects both the landlord and the tenant. However, this might be changing with the upcoming Renters’ Reform Bill.
Before drafting the agreement, it is important to consult a professional. After you’ve got the tenancy agreement, it is crucial that you and the tenant both sign and date it, showing that both parties acknowledge and agree to the terms.
Don’t forget to provide the tenant with a copy of the agreement, and take the time to review the agreement with the tenant to ensure that they understand their rights and obligations. This will help to prevent disputes and misunderstandings further down the line.
4. Conduct an Inventory Report
An inventory report is a crucial document that helps landlords and agents establish the condition of a property before a tenant moves in and after they move out. It is a detailed report that lists all the items and fixtures present in the property and their condition.
Before conducting an inventory report, it is important to ensure that the property is clean and all appliances are in working order. The report should include a detailed description of the property, including the number of rooms, bathrooms, and external areas too.
The inventory report should also contain a list of all the items present inside the property, including furniture, appliances and any other fixtures. Each item should be described in detail, including its condition and any preexisting damage. You should also photographs of each item to provide visual evidence of their condition.
Performing an inventory report is essential to compare the state of the property at the start of the tenancy with the end of the term. This helps to minimise the risk of disputes over damage deposits and sets clear expectations for the tenant to care for the property.
Be warned, the old-fashioned pen and paper way can be incredibly time-consuming. It’s recommended that you use technology to carry out an inventory check, using apps like Inventory Base to save time inputting all the manual information yourself.
5. Use a Deposit Scheme
In the UK, there are three government-approved tenancy deposit protection (TDP) schemes that landlords and letting agents can use to protect their tenants’ deposits. These schemes ensure that tenants get their deposits back at the end of the tenancy. The three schemes are:
- Deposit Protection Service (DPS): The DPS is the largest of the three schemes and is available to landlords and letting agents in England and Wales. It offers a free custodial service, where the deposit is held by the DPS for the duration of the tenancy.
- MyDeposits: MyDeposits is available to landlords and letting agents in England, Wales, and Scotland. It offers both a custodial and an insurance-based service, where the landlord or agent holds the deposit but pays a fee to MyDeposits to insure it.
- Tenancy Deposit Scheme (TDS): TDS is available to landlords and letting agents in England, Wales, and Northern Ireland. It offers both a custodial and an insurance-based service, where the deposit is either held by TDS or by the landlord or agent, who pays a fee to TDS to insure it.
Landlords and letting agents are required by law to protect their tenants’ deposits using one of these schemes within 30 days of receiving the deposit. They must also provide their tenants with information about the scheme used and how their deposit is protected.
A word of caution here – if a landlord fails to protect the tenant’s deposit, they could be liable to pay compensation of up to three times the amount of the deposit.
6. Improve the Energy Efficiency of Your Property
The more energy efficient your property is, the more money you can save over time. Consider installing energy-efficient lights, programmable thermostats and double glazing, if they’re within your budget. It’s doubly important in this day and age, not least because of the cost of living crisis.
Also, for residential properties, an EPC is required for all properties that are newly built, sold or rented, and landlords are required to provide an EPC to their tenants before the start of the tenancy. The EPC must also be displayed on any property advertisement. By 2028, it is expected that all rented properties must have an EPC rating of C at the very least, so it’s good to make a start now.
7. Prioritise Maintenance
A lack of maintenance can hurt the value of your property and lead to costly repairs down the line. Not only that, it can be off-putting for potential tenants and could lead to disputes with current tenants. Make sure you attend to repairs swiftly and maintain a consistent schedule for routine inspections and maintenance.
As a landlord, it is your responsibility to maintain the property and ensure that it is habitable for the tenant. If you keep the property in good repair and promptly address any maintenance issues that may arise, your tenants are more likely to stick around.
Don’t forget to respect the tenant’s privacy and give them reasonable notice before entering the property. This can help to build a positive relationship between you and the tenant and foster a sense of trust and respect.
8. Communicate with Your Tenant
When all is said and done, effective communication is key to a good landlord-tenant relationship, no matter what the issue is that you’re dealing with. Always be on hand to answer questions or concerns that your tenant may have. Remember, being a landlord can be a 24/7 job!
Communicate with your tenant if you need to conduct a periodic inspection, and ensure you make them aware of any changes to the agreement, in writing, within the legally defined time frame.
Being a good landlord takes a lot of commitment and effort. Following these eight tips will help you reduce risks that come with the territory of being a landlord, helping you to improve your property value in the long term.
Remember, always follow the laws and regulations that apply to your area and be considerate and professional when dealing with tenants. Good communication, regular maintenance and careful screening will help with creating a positive landlord-tenant relationship.
To help you manage your time-consuming landlord tasks, check out Inventory Base!