The UK is home to around 4.33 million private landlords, and with the average house price at £180,419 (per March 2017), it’s no surprise that being a landlord can be a lucrative business. As well as rental income, there are other benefits to letting out your property, such as capital growth on your assets.
But what do you need to do in order to become a landlord? Here’s our step-by-step guide…
Step 1 –
Build up savings You’ll need some savings before you buy your first rental property – after all, you won’t have any income from tenants until your building is finished! We recommend setting aside at least £10k for repairs and buying furniture for your new home. This money could be used to buy furnishings such as beds and sofas, though you may prefer to start with the basics.
Step 2 –
Make sure you have researched and have consulted with a team of landlord and tenant solicitors so you understand the legal obligation of being a landlord and get help from them in drafting your contract and any necessary legal advice that you will need to oblige by UK law as a landlord.
Step 3 –
Choose your property You can only become a landlord if you have valid permission from the landlord or council. In practice, this simply means that you won’t lose your home if things go wrong – it’s all very standard stuff! Next, find a suitable property to rent out. To get started, there are loads of sites that tell you about different properties in your area: Rightmove, Zoopla Prime Location, Tupelo Spare Room and so on…
Step 4 –
Buy or lease? Different landlords take different routes when buying their first investment property. Some opt for self-build packages, while others go for different methods when buying properties to rent out. Whichever route you choose, a landlord is going to buy property at the lowest possible price – so see our guide on buying in bulk.
You can also consider purchasing a leasehold property rather than a freehold if it’s your first landlord purchase; this will protect you from any costs or liabilities relating to the structure and building of the property. See our guide on leasehold properties for more info. Once you’ve purchased your property, make sure that it’s all up to scratch and fit for purpose before renting it out; read our landlord checklist article to make sure everything is 100% ready!
Step 5 –
Renting rooms Here are a few options when renting out rooms: On dedicated websites such as Just Landlords or Spare Room, or websites such as Craigslist, Gumtree and move flatmates.co.uk On local noticeboards and through word of mouth Ensure that all of your adverts clearly outline your landlord responsibilities; items to include are what the tenants must pay for (i.e. gas and electricity), any deposit scheme you’re registered with, and any terms concerning pets, smoking or how long the tenant can rent for in advance Once a tenant has applied for one of your rooms, conduct reference checks; ask previous landlord’s or employer’s permission to contact them if necessary, check credit rating using Experian or Equifax, make sure that they have enough funds to cover the first month’s rent plus a deposit (generally equal to no more than three months). This I crucial when vetting tenants for your new home. If
Conclusion
When you start renting out a room in your property or your whole property to a tenant or group of tenants, please take into account that the whole landlord and tenant relationship is about trust but also unafraid to be able to evict them from your home if they don’t follow the terms of their tenancy agreement. Clear communication is crucial throughout the landlord, and tenant relationship as many problems will be solved before they even crop up. If there are any damages or compensation fees, make sure it’s clearly stated in the tenancy agreement what party will take responsibility for these costs. Finally, good landlord-tenant relations are about mutual respect; when you make sure your tenants feel respected, you’ll find that not only do they respect you but also often maintain a high level of cleanliness within the house. Make sure that you check on your tenants regularly, landlord site landlord services landlord insurance and landlord insurance UK to find out if any maintenance work needs carrying out within the house.
