Renting out a property guide for first timers

People explore the buy-to-let market for a range of reasons. The most common being to make profitable revenue. While investing in property is a popular way to generate a passive source of income and enable financial freedom. With the many rules and regulations involved, it can be daunting too. In our property guide for first time landlords. We break down the key considerations for anyone thinking of renting out a property for the first time.

So, whether you’ve found yourself an accidental landlord, or have aspirations of building a buy-to-let portfolio. The following property guide tips and advice can help you manage your property successfully.

FIRE SAFETY

• A smoke alarm must be installed on each floor of the property. All alarms should be in good working order at the start date of each new tenancy.
• A carbon monoxide alarm must be provided in any room with a solid fuel burning appliance such as a coal fire or wood stove.
• All furniture should meet fire safety standards and should display the appropriate labels.

GAS AND ELECTRICAL SAFETY

All gas and electrical equipment should be safely installed and maintained by a Gas Safe registered engineer. It is also recommended that all appliances are checked annually via Portable Appliance Testing (PAT). To ensure you are meeting your legal safety obligations.

By law, landlords must also get a Gas Safety certificate every year and ensure a copy of this is provided to new and existing tenants within 28 days of the check.

ENERGY PERFORMANCE CERTIFICATES

An Energy Performance Certificate (EPC) gives the property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years.

It is a legal requirement to have a valid EPC for a property when marketing it for lettings, and from April 1^st, 2018, any property which does not have a minimum rating of E on its EPC, will be unfit for rental accommodation.

Any rented property which breaches this requirement could find its owner facing fines of up to £4,000.

By law, landlords must also get a Gas Safety certificate every year and ensure a copy of this is provided to new and existing tenants within 28 days of the check.

RIGHT TO RENT

As well as abiding by a range of health and safety obligations, landlords are also responsible for checking that their tenants are legally allowed to reside in the UK. Failure to carry out these checks could result in an unlimited fine and up to 5 years in prison.

Landlords must also provide their tenants with a copy of the Government’s How to Rent Guide. Which gives practical advice about renting in England.

PROTECTING YOUR TENANT’S DEPOSIT

As a landlord, you must protect your tenants’ deposit with a UK Government-approved deposit protection scheme.

All deposits must then be returned in full when the tenant moves out of the property. Unless there is a dispute about unpaid rent or damage caused to the property. There are three such schemes in England and Wales:

• Deposit Protection
• My Deposits
• Tenancy Deposit Scheme

The above legislation is by no means an exhaustive list; more details about the legal obligations of landlords can be found on the GOV.UK website.

Landlords must also provide their tenants with a copy of the Government’s How to Rent Property Guide, which gives practical advice about renting in England.

FINDING THE RIGHT TENANTS

Proper tenant checks should be carried out before a tenancy is in agreement. These thorough checks in our property guide will help to unearth any issues with credit or previous landlords and should include:

• Financial documents – These are documents that prove that the tenant can afford to pay rent and may include: an employment contract, recent bank statement, pay slip or a letter from an employer confirming they are currently in work.
• Credit checks – Credit checks are a common way to establish the financial behaviour of prospective tenants and will show any outstanding loans and debts as well as any missed or late payments. 
• References – Once you know a tenant has the financial means to rent your property, obtaining references from previous landlords can help to confirm the tenants’ reliability.

SECURE A GUARANTOR

A guarantor is responsible for paying rent on behalf of a tenant should they not be able to pay it. Obtaining a guarantor for your tenants can be useful if they do not have a credit history or are renting for the first time.

Whilst guarantors are usually a relative or close friend of the tenant, this is not a necessary measure – the important thing is that they have a good credit history and savings above a certain amount.

COLLECTING RENT

Once contracts are signed and the tenant has moved into the property, you will need to ensure that rent is recieved each month. There are a number of ways in which you can choose to do this:

• Cash – Cash payments are relatively uncommon in the property world. It is also time consuming to collect rent each month. Particularly for landlords with large property portfolios and can cause tax implications if not properly managed.
• Standing Order – A standing order is the preferred method of many landlords as it is easy to set up, manage and track.
• Direct Debit – Direct debits can be a little difficult to set up at first. However, it does ensure the money will automatically come out of their account every month. This can be especially useful for landlords with multiple properties and due dates.