Becoming a Landlord: What Steps You Should Follow?
Becoming a landlord:
Foremost, do you want to rent out your rental properties?
Well, you need to follow the legal tips for becoming a landlord.
So, we have a guide for you. Basically, this guide will show you what becoming a landlord means.
Also, it will highlight how to become a homeowner.
Foremost, who is a landlord?
A landlord is an individual that offers accommodation to others.
Nonetheless, the landlord may be a business entity.
The landlord offers accommodation for money.
Resultantly, the renter pays the landlord on a contractual basis.
Resultantly, here are some important tips for house owners in the UK:
1. Responsibilities of landlords in the UK
Generally, the responsibilities of landlords include:
- Security deposits
- Keep your deposit in any of the government-approved schemes. Notably, the government approves three schemes. They are the Tenancy Deposit Scheme, Deposit Protection Service, and MyDeposits. Failure to deposit into a scheme can lead to punishments. Also, you may be unable to go evict any renters.
- Then, inform your tenants of the scheme you are using. If possible, provide this information when signing an agreement. Alternatively, offer the information within 30 days of signing.
- Sometimes, fees may be necessary for depositing into the scheme. If you want to hire an agent, ask if they can handle this. If you need a letting agent, contact us at Reneza. We have experienced and skilled professionals at our disposal.
- The schemes are not for holding deposits to protect a rental property. Rather, they are for maintenance and repairs.
- Importantly, have financial records. You can handle it yourself or hire an account. You may need the records when filling self-assessment tax returns.
- Did you not use a buy-to-let mortgage for the property? If no, contact your mortgage company. Therefore, explain your situation. With this, you can have an agreement with them.
- Then, keep inventories for items in the units.
- Income tax payment and Class 2 NI contributions may be necessary. However, this is only necessary if your rental is considered a business.
- Furthermore, you are in charge of all the repairs. These include the exterior and structure. Generally, you are to maintain the property and make it liveable and safe. Hence, you need to install bathrooms, heating, and hot water systems, etc.
- You must repair any issues quickly. Nevertheless, the importance of the repair may determine the response. Anyway, you must give the renters a 24-hour notice before going into the unit.
- If you hire letting agents, you are responsible for their actions. Therefore, you must bear this in mind.
- Possibly, your property may be a vacancy for over 45 days. Nonetheless, you must get unoccupied property insurance.
- You may need to adjust your rentals. This is necessary when renting to an individual with a disability. Conversely, the adjustment may not need structural changes. Generally, it includes installing a walk-in shower, handrails, etc.
- Energy performance certificate (EPC). You must get this certification before advertising your rentals. Basically, the rates range from A (best) to G (worst). Legally, rentals must have a rating of at least E.
- For a rental with gas appliances, an annual gas safety check is vital. However, you need a registered Gas-Safe engineer for this check.
- Also, fire safety is your responsibility. So, you must put fire escape routes and smoke alarms in place. Additionally, ensure compliance with fire safety laws for the furniture.
- Likewise, electrical safety is your responsibility. So, you should ensure the safety of electrical equipment and gadgets. The gadgets and equipment must meet the European CE electrical standard.
- Notably, functional, fitted carbon monoxide alarm is a must.
- It is your responsibility to ensure the appliances are maintained. Therefore, offer your tenants guides and manuals for these appliances.
- In the case of health or safety challenges, your renters can report. In general, the challenges can include gas leak or vermin. They should report to the local environmental health department.
- You must ensure health and safety inspections. If necessary or required, the local council can issue these.
- You must understand that every citizen has the right to rent. So, you must carry out a proper screening process.
- It is possible that someone above 18 will be staying in the unit with your renter. Therefore, conduct checks for those individuals too.
- Do not rent to anyone that is unlawful to rent in the country. If you fail to comply, the penalty can be as much as £3,000.
- Furthermore, there are different types of tenancy. They include an assured shorthold tenancy (AST) and regulated tenancy. Basically, each tenancy offers some advantages for landlords and tenants. As a result, think about their advantages before choosing a tenancy.
- At the start of the tenancy, you must provide certain things. These things include gas safety certificate (if gas appliances are in the rentals) and EPC. You need to offer the latest copy of How to rent government guide. The guide is for ASTs that began on or after October 1, 2015.
- Each country has a varying eviction process. However, the process involves sending written notice. Also, it includes acquiring a court order to evict renters.
- For AST renters, a government-approved scheme is necessary for their deposit.
- Tenants are responsible for cleaning the property and making it liveable. Therefore, let your tenants know their responsibility.
2. Landlord registration and regulation
The location of the property determines the registration and regulation processes.
In England, your local council will decide the regulations.
If you are in Northern Ireland, Wales, and Scotland, your local assembly or parliament will decide.
Generally, you must have specialist landlord insurance.
The insurance protects your property and its contents.
Also, it offers assistance in case of emergency.
In England, it is not compulsory to join any organization.
However, joining these organizations offer lots of advantages for landlords.
You can join the National Landlords Association (NLA) or Residential Landlords Association (RLA).
The Declaration Act 2015
Things to know about this act:
Tenancy deposit scheme. You must keep deposits in a government-approved scheme.
Section 21. Primarily, this determines the process of tenant eviction.
Prescribed information. Give the renters a copy of the How to rent: the checklist for renting in England booklet.
Retaliatory eviction. The local council can serve a landlord with an improvement notice. Notably, the notice is for outstanding repairs. Such a landlord cannot evict a renter within 6 months.
3. Cost and profits
When becoming a landlord, consider the amount of rent and potential income.
Simply put, his is the amount you will spend on the property.
It includes mortgage repayments, letting agency fees, and insurance premiums.
Also, consider having occasional repairs and refurbishment.
Basically, this is the amount you will charge your tenants.
There are certain factors you should consider.
Firstly, consider the average cost of similar properties in the area.
Secondly, think about the extra features of the unit.
Then, consider whether the property is furnished or not.
In many cases, the government requires a tax from your profit.
However, several issues can complicate property law and tax.
Therefore, you can hire the services of a professional for legal tips.
Furthermore, learn how to manage your profit.
Typically, this can help you improve your property portfolio.
Similarly, you should make plans for any unfavorable situations.
These situations include damage of your property or tenant leaving unannounced.
Would you like to manage the property yourself?
Are you hiring a letting agency?
So, you must decide this ahead.
Mostly, the agencies charge 10% of the rent as their fees.
For the best services, hire professionals at Reneza.
We will manage your property and offer great tips for landlords.
4. Finding renters
Moreover, consider what it takes to find tenants.
Firstly, make your property liveable and suitable for renting.
You can get a buy-to-let property in a highly demanding area.
Do you have a property already?
If yes, make it more liveable or conducive for your tenants.
Majorly, the amenities and facilities nearby can play a pivotal role.
For instance, consider shopping centres and public transport system.
Then, focus on your target renters.
These are the tenants that the property is best suitable for.
Notably, the property will often determine the target renters.
Again, you need to be proactive here.
Next, advertise your properties.
Typically, you can use conventional media or websites.
There are various websites that advertise properties.
Also, you can work with letting agencies.
Undoubtedly, they can help you avoid certain pitfalls.
Would you like to become a landlord?
If yes, speak to us at Reneza today.
We can help you become a successful landlord.