New Landlord

[JayHoe]

Hi,

I have been thrust into the position of becoming a landlord in the near future. It is actually something I have wanted to get into previously but not been in the financial position to.

It is a likely to be 4 bed family home worth around 400k with 0 mortgage. I would like to avoid management company if possible, can carry out decorating and sort minor DIY myself. However I am a Landlord noob and need some help!

1. Where can I get suitable contracts from? I want long term family renters, is there any particular 'type' of agreement I should be looking into.

2. Deposit protection, how do I sort this?

3. What is the best way to find tenants?

4.. Tax / expenses. How do I sort this?

5. What other things do I need to look into? Told you I was a noob!!!!!

Just some general guidance would be great (all though the more info the better )

Cheers

JayHoe

[MyNameIsUrl]

Books have been written on this subject, but here's my two-penn'orth:

Use an agent, at least for the first tenant, and at least for finding if not for ongoing management. Your property is high-end, and (in my experience) high-end tenants like to use an agent and can be a bit reluctant to deal direct. As a first-timer it will help to have some of the problems taken off your hands (such as finding the tenant, credit checks, creating the AST).

How to find a good agent? Start doing a bit of mystery shopping as a prospective tenant to get a feel of how an agent might treat your customers. Go and talk to a few, look at their online presence (eg quality of photos).

What a pity you can't go and browse the TMF Property Board - there were some real gurus on there.

[Clitheroekid]

Use an agent, at least for the first tenant, and at least for finding if not for ongoing management.

I entirely agree. These days, for all the government's constant promises to cut red tape residential letting is far more bureaucratic and hazardous than ever.

A good letting agent is geared up to deal with all the tedious paperwork like gas safety certificates, deposit protection etc, so if you're doing it as a one-off rather than professionally I can't see that the amount of time and effort you'd have to expend would be proportionate.

Once the tenancy's up and running you can do it yourself more easily, as if they're a good tenant this should consist of little more than rent collection.

If you do want a greater degree of involvement I'd strongly recommend that you join the RLA - https://www.rla.org.uk/ It's not expensive, and I've always found them an excellent source of information and guidance.

[kanga]

When I looked at doing this 3 years ago I found this site offering a wealth of information -
Sorry apparently I cannot post the full link -
propertyhawk.co.uk
index.php?advice-for-landlords-renting-property-in-the-uk

Most of your questions are answered somewhere on the site and from memory links to further info. Personally I think the easiest bit you asked about specifically is the taxes and expenses! If after reading everything you have some more specific questions I would be happy to try and help.

In the end I went with an agent but that was mainly because I am not UK based. If I had been in the UK I think I would have tried doing it myself.

One of the most important bits is finding the "right tenants" and the checking of references/credit checking before deciding whether to go ahead.

[Hariseldon58]

NLA National Landlords Association is very good, lot of free info but paid membership was very worthwhile for me, I used the tenant referencing service and the rent protect insurance, which was very cheap and a source of great comfort !

Regular meetings throughout the country and training etc pretty impressive.

I did it myself but is a lot of hassle and you have to do a lot of research first and finding a good agent has much to be said for it.

I found tenants through HouseSImple online, effective and cheap. Gumtree was pretty good and free too.

[Mike88]

If you decide to manage the property yourself there is a model shorthold tanancy agreement on a government website here:

https://www.gov.uk/government/publicati ... ed-tenancy

However, being a former landlord myself I agree with previous advice that, in the first instance, it would be prudent to use an agent providing you can find a good one. Remember that the cost of an agent is tax deductable.

This HMRC form https://www.gov.uk/government/uploads/s ... s-2017.pdf

covers the items you can claim for when filling out your tax return.

[DiamondEcho]

FWIW, Cost of joining the NLA/RLA is also tax deductible for landlords.

[UncleEbenezer]

How to find a good agent? Start doing a bit of mystery shopping as a prospective tenant to get a feel of how an agent might treat your customers.

Better than nothing, and could weed out quite a few bad agents.

But agents at that stage are doing a sales job ("see, we're fundamentally fair and decent"). It doesn't tell you how the agent will behave when the prospect has become the tenant. That's when the psychopathic bully could emerge, and they get away with it because so many tenants are vulnerable and scared to assert themselves. And landlords rarely get to hear of it - they're just left with unhappy tenants and a higher churn than is in the interests of anyone but agents' fees.

[GSD82]

Hi,

I have been managing my own properties for a few years now.

I use National Landlord Association for their contracts.

Most recently I use openrent which will also offer rent insurance and referencing. They offer advertisement on gumtree, rightmove etc.

I use DPS - deposit protection service for the deposit.

Always take a months rent in advance and ask for 6 weeks deposit. Take your time and ensure you are happy with your tenant - dont take any risks with this.

Guppy

[JayHoe]

Hi all and thanks for the advice so far. We have just today heard that we have exchanged on properties and due to complete in 10 days. At that point I need to do all the decorating etc.

This leads to the next couple of questions:

1. Insurance - obviously buildings but what about contents? I will be providing white goods and nothing else. Will cover for damage to those be the responsibility of the tenant?

2. Pets - yay or nay? If yes then wider audience but risk of damage (I assume larger deposit or such like to cover this). What do fools recommend.

3. Any other / specialist insurance required when renting out?

I am sure I will have more!

TIA

John

[MyNameIsUrl]

1. Landlord insurance is no longer a specialist product – have a look on one of the comparison websites. You’ll probably find a suitable combined buildings and contents policy and can set contents at a low figure like £1000. Who is responsible is a legal question – but if the tenant damages all your white goods the deposit may not be enough. If you have a fire you are unlikely to get the tenant to replace all your white goods, so insurance may be a good idea.

2. Whether you accept pets is a personal decision – I don’t have any animals in my own home but I do allow pets in rental properties, especially if it avoids having the place empty. Apart from my aversion to have voids, I’ve found that tenants sometimes acquire pets anyway even if they’ve said they won’t. Once after a ‘no pets’ tenancy I was left with a cat flap in the back door. My experience of tenants with pets has shown that there is more cleaning required at the end of the tenancy, so you need to factor that into your decision as well.

3. No other specialist insurance that I know of – I don’t insure against voids or anything like that.

[JayHoe]

URL,

many thanks, have a rec.

John

[DiamondEcho]

1. Insurance - obviously buildings but what about contents? I will be providing white goods and nothing else. Will cover for damage to those be the responsibility of the tenant?
2. Pets - yay or nay? If yes then wider audience but risk of damage (I assume larger deposit or such like to cover this). What do fools recommend.
3. Any other / specialist insurance required when renting out?

1). I've never had contents insurance for rentals. The tenants are on the hook for what they do. Also doubt I could take out insurance on my furnishings in 'their home' and it would cover damage caused by them.
2) The tougher the lettings market is the more flexible I get towards pets. Default is no pets but I'll listen if someone has a proposition to make. When I have taken pets IIRC I take an extra 1-2 weeks deposit. IDR having any notable problems with them so far.
3) Depends on your risk tolerance. At the start I had British Gas boiler contracts - but that ended up as money for old rope. Haven't had any insurance, outside of overall buildings insurance, for over 20 years now, and am fine with it.

[UncleEbenezer]

1. Insurance - obviously buildings but what about contents? I will be providing white goods and nothing else. Will cover for damage to those be the responsibility of the tenant?
2. Pets - yay or nay? If yes then wider audience but risk of damage (I assume larger deposit or such like to cover this). What do fools recommend.
3. Any other / specialist insurance required when renting out?

2) The tougher the lettings market is the more flexible I get towards pets. Default is no pets but I'll listen if someone has a proposition to make. When I have taken pets IIRC I take an extra 1-2 weeks deposit. IDR having any notable problems with them so far.

Interesting. Do your properties listings on zoopla/rightmove show the usual "no pets"? I see those everywhere, even when it's a detached house in the middle of open land.

I'm actually right now in the process of buying a house, not because I want to, but to escape "no pets" landlords (especially now that having a friend at home has become "doctor's orders"). In these days of deposit protection I'd have no problem with an additional deposit - even if it's substantially more than you're asking - but the barrier is having to get through an agent's reflex action to put that to any prospective landlord.

[UncleEbenezer]

A good letting agent is geared up to deal with all the tedious paperwork like gas safety certificates, deposit protection etc, so if you're doing it as a one-off rather than professionally I can't see that the amount of time and effort you'd have to expend would be proportionate.

A good letting agent is a rare thing indeed. My experience (as tenant) suggests the more rural an area, the more likely you are to find one.

If you find one, a huge advantage all round is that they'll have local tradesmen on their books for all kinds of repairs and maintenance that might be required from time to time, including but not limited to the statutory red tape. And because they're a big/important/regular client, the tradesmen are going to prioritise keeping them happy!

[baldchap]

You seem quite keen and might enjoy it.

But just to mix things up a bit, my suggestion is to sell it.
Then invest half the money in a rental property/properties, and the rest in a selection of REIT's.
Report back in a year with your findings

[DiamondEcho]

2) The tougher the lettings market is the more flexible I get towards pets. Default is no pets but I'll listen if someone has a proposition to make. When I have taken pets IIRC I take an extra 1-2 weeks deposit. IDR having any notable problems with them so far.

Interesting. Do your properties listings on zoopla/rightmove show the usual "no pets"? I see those everywhere, even when it's a detached house in the middle of open land. I'm actually right now in the process of buying a house, not because I want to, but to escape "no pets" landlords (especially now that having a friend at home has become "doctor's orders"). In these days of deposit protection I'd have no problem with an additional deposit - even if it's substantially more than you're asking - but the barrier is having to get through an agent's reflex action to put that to any prospective landlord.

My property is listed via my high-street letting agent. They co-list via various on-line agents such as those you mention, though TBH relettings come up infrequently enough I don't recall now how those listings are phrased.
As landlord, if it's leasehold property, I'd strongly suggest reading the lease for any clauses such as no 'No dog, bird [etc] allowed in the property such it it might case a nuisance'. I've wondered at times how much scope for personal interpretation there is within such a clause. Anyway, last thing I'd want is to let to a tenant with a pet, having assured them it was ok, only to have a neighbour declaring I was breaching the lease.
I think you need to consider the overall arrangement. If it's let unfurnished then it might just be the tenants furniture that might be vulnerable to their 'scratchy' cat. If a pet is left alone for all/much of each working day, then again it has greater scope for problems, than more of a day-to-day mostly attended 'companion pet'.
On a TA that allows a pet, I've heard of people taking a reference from a prior landlord on the pet (!). That's because one challenge can be that the default for tenants seems to be to swear blind that their pet is as good as gold. That's when taking additional depo comes in, which IME is something such a tenant seems to understand/accept.

[JayHoe]

Well I have been in discussion with a broker, and they said that things like fitted ovens, fridges etc would come under buildings, wooden/laminate floors as well although carpets if only held down by grippers would be contents! I will insure a small amount for incidental contents.

I will keep an open mind on pets and take it on a case by case basis.

I do have one question though regarding insurance, is it claimable against tax?

TIA

John

[Mike88]

I had a no decorating, no wall hangings and no smoking as well as no sub-letting clauses in my rental property and had no problem renting it out. The longest void I had in 7 years as a landlord was 2 weeks. Specifying what might seem strict conditions did not put off potential renters in my experience. Insurance is claimable against tax but see little point in taking out contents insurance for the items mentioned as carpets and incidentals are consumables and will probably require replacement after 3-4 years anyway the cost of which will be covered by the wear and tear allowance against tax if that still exists.

[DiamondEcho]

Well I have been in discussion with a broker, and they said that things like fitted ovens, fridges etc would come under buildings, wooden/laminate floors as well although carpets if only held down by grippers would be contents! I will insure a small amount for incidental contents.
I will keep an open mind on pets and take it on a case by case basis.
I do have one question though regarding insurance, is it claimable against tax? TIA John

In your shoes I'd want to see their policy and see precisely how they phrase it. For example I've had laminate flooring in several B2Ls and they have always been 'floating', over insulation on top of the original floorboards, with beading around the skirting boards to cover the small expansion gap. Maybe they are talking about wooden/laminate that is screwed into the joists below? It looks like it might hinge on whether the items are categorised by them as fixtures or fittings?

I've never bothered with contents insurance. The tenant is on the hook for damage beyond 'fair wear and tear'. Having good quality inventories done pre/post is IME very worthwhile. It gives you something very useful if you were ever to have to rely on independent evidence. If you have an agent in mind see how they handle that, sometimes the tenant pays for the check-in and LL for the check-out. Any LLs cost is deductible.

I'd have thought insurance is a claimable expense; but buying insurance for contents that's declared to be used by a 3rd party might be expensive. I'd wonder whether it's ever going to get called on beyond the depo.