Guide to Letting a Property
There are lots of considerations to be made when letting out a property, which can feel a little daunting if you are becoming a landlord for the first time. Whether you are considering purchasing a property to let, or renting out your own home, we’ve put together this guide to help you navigate the financial, legal and practical elements of letting a property.
Check Your Mortgage
If you plan to let the property you are currently living in, the first thing to do is inform your mortgage lender of your intention to let. You are legally required to do this, as some mortgages contain clauses that won’t allow you to let out the property, and others require you to obtain ‘consent to let’ from the lender.
There may be a fee involved or an adjustment of your interest rate, and limitations on the type of tenancy permitted. If you are on a tracker mortgage, you are free to switch to a buy to let mortgage at any time.
Work Out Your Tax Obligations
As well as your mortgage lender, you are also obliged to inform HMRC of your intention to let a property, as you may be liable to pay tax on your rental income and for capital gains tax when you come to sell. This will enable you to work out whether it is financially viable for you to let out your property. An accountant is best placed to do this, and one specialising in property can often be recommended to you by a letting agent.
Understand Your Legal Responsibilities
As a landlord, you are responsible for ensuring your property is in a safe condition to be lived in and for its general maintenance and upkeep, including emergency repairs. If you let privately rather than through a letting agent, this means you will need to be on hand to receive calls from your tenants at any time of day (or night) should any issues arise.
There are also various laws and regulations that you must abide by as a landlord, which a letting agent can help you navigate. Firstly, credit rating and right to rent checks (in line with immigration laws) must be carried out on any prospective tenants. This not only minimises any risk to you from rental voids, but you could also be fined if your tenant does not have the right to reside in the UK.
Next, before your property is let you will need to have the right safety checks and paperwork in place, such as a Gas Safety check, an Energy Performance Certificate, and working smoke and carbon monoxide alarms. Once you have a tenant ready to move in, their deposit must be kept in a government approved Tenancy Deposit Protection scheme.
You can find out more about these and other legal responsibilities of landlords on the government’s website.
Prepare The Property
Before you make your property available to rent, you will need to decide if you will let it furnished or unfurnished. You will be able to charge a higher rent for a furnished property, and depending on your target market, this can be done from a basic to a high standard.
If you choose to let unfurnished, using a neutral colour scheme will help prospective tenants better picture themselves living there with their own possessions. It may be the case that your property needs redecorating before it can be let out, for example if the carpets are looking worn and the walls are marked.
It may also be worth doing some larger renovation work such as replacing the bathroom or kitchen, your letting agent will be able to advise on the return you’d get on such an investment.
Your tenants should arrange their own contents insurance for their belongings, but you will need to take out specialist landlords insurance for the building and any of the contents remaining there that you own.
Even if your property is let unfurnished, you will still need to cover things like carpets, kitchen and bathroom units and white goods. Your policy should cover accidental damage and any injury to tenants or visitors.
As well as buildings and contents cover, you can also take out insurance to protect you against any loss of rent and breach of the tenancy agreement.
Choose a Letting Agent
Using a letting agent to let your property can be well worth the fees, as it will relieve you of much of the day to day time requirements and pressure on yourself. If you decide to let with an agent, be sure to select one that follows best practice, has professional accreditations and works to the highest of industry standards.
The other advantage of using a letting agent is that they can get your property much more exposure than you could yourself - such as on property websites like Rightmove and Zoopla, on their own website and social media accounts, and in their office window.
Decide on a Rental Price and Term
Once your property is ready to be promoted and let, you will need to decide on the rent you will charge and how long to offer tenancy agreements for. Your mortgage lender may dictate the minimum length of a contract, and you will also need to consider your target market and how long they will be prepared to be tied into a rental agreement.
Apartments in city centres that attract young professionals are often offered on relatively short lets of six to twelve months, whereas a family home may be let for a number of years at a time. When it comes to price, a letting agent can help you set this at a level that will attract interest from renters but also provide you with a decent rental yield.
Whether you are a first time landlord or already have a portfolio of properties, Forum Sales & Lettings can make letting a property a breeze thanks to our team of professional agents who have many years of letting experience. Contact us today.