Find out what things you need to know before becoming a landlord, written by our CEO Steve who has over 25 years of experience!
Property is typically considered a solid investment. When you become a landlord, you can increase that investment’s potential. Your tenants pay for the use of the rental property each month – in essence, your rental property is covering its own costs, and maybe a little more. Paying off your mortgage each month with the money you receive as rent is a great way to see a return on your investment.
It’s easy to see why people want to own rental properties. However, being a landlord comes with many responsibilities – in fact, securing your buy-to-let mortgage is only the start of the journey. These are the key things you need to know about becoming a landlord.
Invest in a property that’s in good condition. Quite simply, you can command a higher rent for a desirable property because it will be more attractive to tenants. Don’t underestimate the value of location and all-round condition, even if it’s a large property with four or five bedrooms.
Take a look around the area and research comparable properties in the area to see how your potential rental matches up. Think carefully about whether you want to buy a rental property that’s in walk-in condition or a property you need to renovate.
If you’re learning the ropes of how to become a landlord, are you prepared to commit to refurbishments before you start finding tenants? Make sure the property matches your expectations before committing to a buy-to-let mortgage.
If you want a property that’s already in good condition, search for recently refurbished properties, new builds, or homes that have perhaps only previously housed families.
Location can affect how popular your rental property is with prospective tenants. You can renovate a property to bring it up to standard but you can’t change its location. Selecting the right area can make it easier to generate a return on your investment. It influences the amount of rent your tenants are willing to pay, and the overall value of your investment property.
There’s more to the decision than good area versus bad area. In any location, it’s worth looking for a property that’s close to convenience stores, local shops and supermarkets. Before you take on a buy-to-let you should also consider which properties and locations will appeal to your potential tenants.
A city centre location will often attract interest because of the convenience factor. A wealth of amenities, transport links and a sought-after location can often drive demand for a city centre apartment.
A spacious house in the suburbs will typically appeal to families. A quiet suburban area may also appeal to older tenants who want to live away from the hustle and bustle.
As a landlord you want to see a good return on your investment – but you need to stay competitive. You want to charge enough to cover the mortgage and see a profit each month. If the rent is too high you run the risk of putting off prospective tenants.
Can you find a way to compete with rental prices in the area? Some landlords offer to includes bills in the total. This can be popular if there is more than one tenant living in the property as they don’t need to work out everyone’s share, or decide who is named on the bill. The convenience factor can be appealing.
As a well established agent in Brighton & Hove can help you to get the best returns on your investments in this field.
Your local council and landlord insurance will both have rules that landlords follow, on top of national guidelines. You need to do your research to avoid falling foul of the regulations.
The health and safety regulations for rental properties are different from the standards for an owner-occupied home. If the rental property is a house of multiple occupation (HMO) you need to follow a stricter than the rules for a single tenant or family home, particularly if you own a larger HMO.
Financial obligations are an important part of the landlord’s rulebook. You need to follow best practice when you handle a security deposit, for example.
Your tenants have the right to quiet enjoyment of the property in England and Wales. As a landlord you need to know the rules and take them into account when you enter the property. Unfortunately you should also know what to do if you need to evict your tenants.
Your buy-to-let mortgage and landlord insurance may require you to make modifications before renting out your property.
When you take on the job of being a landlord, you have to bring your property into line with health and safety regulations. Your responsibilities can vary. You may need to install fire doors, fire alarms, fire extinguishers, fire blankets and carbon monoxide alarms in specific locations throughout the property.
Before you become a landlord you need to consider your licensing rules and responsibilities. Here are some of the things you should know about before you start renting out your property:
A key thing you need to know about how to become a landlord is that there are annual, monthly and unexpected expenses. When you become a landlord you may need to pay income tax on your rental properties. You should also prepare to pay for your rental property’s maintenance as well as regular electrical and gas safety checks.
However, you can predict some regular payments and budget for these in advance. Here are several the regular landlord costs you can expect: buy-to-let mortgage costs, letting agent fees, landlord insurance fees.
For many landlords their property’s buy-to-let mortgage is the biggest monthly cost. Explore the options on offer such as fixed or tracker mortgages. Many lenders ask for an average 25% deposit, but the size of deposit and type of deal you choose can affect your monthly expenses.
Letting agent fees are typically between 10 and 15% of the monthly rent on your property. Good letting agents can make it easier to be a landlord, since they have the benefit of expertise. If you’re starting out in property rental then your agent’s knowledge can go a long way, from finding tenants and preparing the paperwork to handling communications.
When you become a landlord, most buy-to-let mortgages and home insurance policies will require valid landlord insurance. There isn’t a one size fits all landlord insurance policy. The costs and cover will vary depending on your property’s age and condition, your tenants, and the policy you choose.
Read more about landlord insurance in our article. If you’re a new landlord in Brighton and Hove then contact us to talk through any questions you have.
Boilers break, keys get lost, and leaks happen, and usually at midnight on a Sunday night! If you manage your property yourself, you must be prepared to make yourself available to your tenants when they need you.
Alternatively, if you’re in Brighton and Hove then our property management team makes it easier to be a landlord. At The Property Shop, we have a 24/7 emergency line available to all our tenants and landlords. Our Full Management Letting Scheme is designed to take the stress and burden of property management off your hands to make the whole rental process much easier to cope with.
When entering into a tenancy no one intends to go into rental arrears. But things happen. And even evicting a tenant can take months which could result in thousands of pounds lost income.
We are also the only letting agent in Brighton & Hove that gives FULL RENTAL GUARANTEE to all our landlords that are on our Full Management service. This means all the time you have a tenant in your property, we will guarantee to pay the rent! Even if the tenant has not paid we will step in and still pay, and this will continue until you get possession back of your property!
For more information on this point please see our article “What to do when your tenant is not paying rent?”.
Before you decide to purchase a property to rent out, think about the points above. Being a landlord can be a very lucrative process, however, not everyone makes the most of their investment. For friendly, professional advice and expert property management give us a contact us today.
Do you have any questions about the topic above? Our team of experts is here to help in answering any query you may have.
Fueled by his desire to be the best, most reputable estate and lettings agent in town, Steve has spent his career cultivating The Property Shop. Steve prides himself on his authenticity, honesty, and knowledge-base which is emulated by The Property Shop and his team.
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