Top tips on becoming a private landlord
Becoming a private landlord? Here are some top tips for both landlords and those making long-planned investments.
Some people become landlords out of circumstance, such as inheriting a property or moving in with a partner and renting out their old place. Others plan from the start to turn their property into an investment. Either way, it’s best to get the lay of the land to make the most of the opportunity.
Here’s how drawing on the experience of letting agents and other landlords in your local area, to factoring in all the costs and responsibilities involved, will help you on your way.
A private landlord definition
The private landlord definition is simply that of an individual who rents out land or a building. For the purposes of this article we will confine the definition of being a landlord to the domestic rental sector, rather than the commercial sector.
What to consider before becoming a private landlord?
Becoming a private landlord involves some solid groundwork before any contracts are signed.
If you’ve not got a place to rent out already, the first and most obvious step is to decide on the type of property you will be renting out. Plus, the ideal tenants you would like to attract to live there. Will you rent to students, families or professionals? Will you accept pets? Will you rent your property furnished or unfurnished? And so on.
If you already have a property you’d like to rent out, then you’ll need to become familiar with the local market and research a realistic rent to charge. If you’re looking for an area to buy in, then remember that properties outside cities like London are generally cheaper and can offer a better return on investment.
Our interactive rent level changes heat map shows the average rent and number of properties in a given area to give you a starting point for your research.
Initial admin for landlords
Once you have a property you want to rent out, then the next step is to ensure you have all the relevant administration in place. Depending upon where you are letting your property, it’s possible you will need to register as a private landlord.
Private landlord registration in England
Private landlord registration England is not essential outside of the London Borough of Newham. This is the first council to impose mandatory registration in England. Laws around private landlord responsibilities in England are nevertheless robust and require landlords to meet particular fire, safety and energy regulations.
Private landlord registration in Scotland
Private landlord registration in Scotland is required of anyone who owns residential property. With a few exceptions, landlords are required to register with the local authority. The local authority also must be satisfied that landlords are ‘fit and proper persons’ to let any properties, and fire, gas and electric safety and energy regulations are met.
Private landlord registration in Wales
Private landlord registration is a requirement in Wales. Landlords are required to register with Rent Smart Wales to be licensed themselves, or they can use a licensed agent. Fire, gas, electricity and energy regulations must also be adhered to.
Private landlord registration in Northern Ireland
In Northern Ireland anyone who lets out property under a private tenancy is required to register as a landlord under law. This means providing accurate and up-to-date information with the landlord registration scheme. Again, landlords must ensure the fire safety of the property and uphold gas, electrical and energy regulations.
10 top tips for being a private landlord
So you’ve done your initial research, decided where your property will be located and considered the type of tenant you are looking for. There are several more issues to consider, which will help your life as a landlord to run smoothly. Here are our top ten private landlord tips to help you get started in property letting.
1. Shop around for buy-to-let mortgages - Shop around for mortgages that offer a rate of interest that you’re happy with, though this will change depending upon the economic climate. It’s often worth getting advice from an independent mortgage broker.
2. Work out your profit margins - There are a number of expenses associated with setting up and managing a property [link to the cost of becoming a landlord article]. So consider these when working out a realistic profit margin.
3. Plan for the worst-case scenario - Unfortunately, a tenant’s circumstances can change. They might lose a job or become seriously ill, or any other number of unfortunate circumstances could happen. Consider what your plans are should the worst happen and they’re unable to pay their rent. How might it impact your bottom line?
4. Consider decor carefully - You’ve found the ideal property and it needs a little redecoration. It’s a good idea to keep your personal stamp for your own home and opt for a neutral decor to appeal to a wider range of people.
5. Furnished or unfurnished - In general you can charge a little more rent for a furnished or part-furnished property. But be aware that you’re responsible for maintaining furnishings, replacing old items and ensuring they meet safety standards.
6. Consider using a lettings agent - If you choose to use a letting agent, then it’s worth going with one that belongs to a professional body, such as the Association of Residential Letting Agents. In exchange for a percentage of the rental fee, an agent can be a helpful buffer when dealing with emergency calls from tenants about broken boilers and similar issues.
7. Be realistic - It’s tempting to want to get the most return on your investment by seeking a good rental profit each month. This is understandable when you consider the initial outlay on possible renovation, redecoration or other costs. And if you want to find tenants easily and keep them, be make sure your charging what is appropriate for the area and nature of the property you’re letting.
8. Health and safety - A landlord gas safety check certificate from a gas safety registered engineer is essential. Gas pipework and the gas meter must be in line with current legislation. There are also a number of health and safety responsibilities you’ll need to comply with before letting out a property to tenants.
9. Energy efficiency - You will need to supply an Energy Performance Certificate (EPC) for every self-contained dwelling. This helps your tenants understand the cost of running the property and will inform their decision about whether to live there.
10. Get the right insurance - Accidents happen, from chip-pan fires to leaky pipes that bring a ceiling down. Make sure you have the right insurance before anything else. Read on for further information.
Mitigate the biggest risks
There are all sorts of risks that can befall your property and it’s important to be aware that domestic insurance is not sufficient to cover a residential letting. Find out more about landlord insurance.