Becoming a landlord can be a great investment and a rewarding experience. Since 2001, the rental sector in the UK has risen from 2.3 million to 5.4 million privately rented homes; that’s more than double! What better time to consider renting out a property? Renting is also becoming increasingly popular, certainly with the younger generation, because they simply cannot afford the deposits required to buy. Furthermore, with renting, you aren’t as tied down as you are when you buy; this can be an attractive quality for people who are looking to move around frequently. In this blog, we take a look at everything you need to know to become a successful landlord.
First of all, you need to consider the current state of the property you are looking to rent out. If it is a relatively old property, it may be in need of some TLC or renovation. Whereas, if the property is new or perhaps you previously lived in it, it’s likely that it is almost instantly ready to go onto the market. Furthermore, you want to see what the rental demand is like in your area; this way, you can see how likely you are to find tenants. You can discover this information on websites such as Rightmove and Zoopla, where you will be able to see how fast rental properties are shifting. For more information, take a look at our previous blog that looks at some tips for new landlords.
- Will you allow pets?
- Will your property be rented furnished or unfurnished?
- Will you allow tenants to smoke in the property?
- Will you hire a letting agency?
Once you have answered these questions and your property is ready to go, you will need to register yourself as a business owner. To ensure you don’t get in trouble with the taxman, you will need to register for a self-assessment with HMRC. As you are doing this, it is a good time to start getting into contact with experienced landlords and gain some more advice. They can offer some guidance on a few decisions, such as whether you should be a hands-on landlord or if you should hire a letting agency. They can also share their experiences, so you can better prepare yourself.
Although you will be receiving rent payments monthly, you will also have some regular outgoings as a landlord, as well as some one-off payments.
If anything goes wrong in the property or breaks, depending on your agreement, it could be down to you to sort it out. For example, this could include the costs for a plumber to repair a leak or replace a broken appliance. Something to be aware of: keep all your receipts for any repairs you have paid for because it could be tax-deductible.
If you have decided to rent your property furnished, you will need to replace any furniture that becomes old, not suitable, or broken.
- Energy Performance Certificate (EPC)
It is a legal requirement to have an Energy Performance Certificate when renting or selling a property. The certificate lasts ten years so you will not be required to purchase a new one for every new tenant. An Energy Performance Certificate will usually cost between £50 to £100.
- Mortgage Repayments
If you don’t own the property outright, you will still need to pay for your mortgage.
- Agency Fees
If you decide to use a letting agency, you will need to pay agency fees. The benefit of using an agency is that they can handle your property. This means you don’t have to be ‘on-call’ for your tenants, and it eliminates some of the administration work that comes with being a landlord.
You will need to conduct some research on the local market to gauge what sort of price you should be renting your property for. When looking at other properties in your area, you need to consider what your property is like compared to them. For example, if yours is recently refurnished, has a large garden or a master en-suite, these are desirable factors and you can, therefore, bump up the price a little. You will also want to do some calculations; how much will the property cost you a month? This figure will need to be taken into consideration when forming a rental price because you want these costs to be covered and then have a little extra on top for profit.
There are many factors to consider when becoming a landlord, and it is useful to have some support and information. Here at Godfrey, Short and Squire, we are Dartmoor estate agents and can offer you expert advice on becoming a landlord. If you have a busy schedule or simply don’t have the time to manage your rental property yourself, we offer letting services including full management of the home. If you are interested in using our services, please do not hesitate to get in contact! Give us a call on 01837 54504 or head over to our Contact Us page and drop us a line.