11 December, 2019
You've put in the hours to find a suitable property, got your finances in place and are about to make your first foray into the world of being a landlord. What are the next steps when it comes to getting set up for your first tenants and what decisions will you need to make from the outset? Being a first-time landlord can be daunting, so we'll try and guide you through the ever-more-complex process and outline your responsibilities.
The first decisions to make
You will have already given consideration into the type of tenants your property is likely to attract, be they young professionals or families, so you’ll need to decide whether your home will be more appealing to your target group, fully/partially furnished or unfurnished. A furnished home might be more desirable to younger tenants but you need to bear in mind, whatever furniture is left in the property will be your responsibility to repair or replace. On the whole, more mature tenants or families are likely to want to bring their own furniture with them.
Will you allow pets? We are a national of animal lovers and with pet ownership on the rise, it can be a great selling point. However, you’ll need to think about whether you could cope with the typical damage wrought by our four-legged friends such as scratching or chewing.
Pros and cons of using a letting agent
One of the biggest decisions to make will be whether to use a lettings agency to manage your property. Although there is of course a cost implication with this (which you can offset against your tax bill), it can be a godsend if you are very busy with a full-time job or don’t live very close by.
Most letting agencies offer a couple of different propositions. A fully managed service, where every aspect of finding tenants, setting up the tenancy and managing the property is taken care of, or a rent collection service that will help you find tenants and manage the rental payments on your behalf.
Some of the pros of using an agency are:
- As experts in their field, and with good knowledge of market conditions they can probably achieve a higher rent than you would able to privately.
- Stringent vetting and referencing procedures mean you’re more likely to attract reliable tenants.
- Letting agents can handle all the paperwork and deal with the day-to-day property management and maintenance issues.
- Rent can be collected and chased up on your behalf.
- Letting agents will ensure you are complying with all the current legislation affecting landlords.
- You have an objective and impartial buffer between you and your tenants.
- If you need to evict a tenant, a letting agent will know the correct legal process to follow.
- Letting agents may be able to offer legal, landlord Insurance and tax advisory services.
The downside to using an agency
These really relate to the costs involved with appointing an agency to manage your property, but as mentioned before you can deduct these costs from your income in order to reduce your annual tax liability. The charges you should expect from an agency will vary according to the service level agreement but can include:
- A fee of between 10-15% of the monthly rental income (+ VAT).
- Additional fees for the administration involved with the setting up of a tenancy such as inventory management, check-in fees, drawing up tenancy agreements and marketing costs.
- If the letting agents arrange repair work on your behalf, you may be charged an arranging fee, on top of the actual repair costs.
- You may also be charged a fee for an agency to conduct a periodic property inspection.
Ultimately, your decision will really come down to cost, what you see as value for money and how much time you want to spend on setting up the tenancy/managing your property.
Choose a reputable agent by ensuring they are a member of ARLA (the Association of Residential Letting Agents).
Here at Michael Hardy, we are proud to long-standing ARLA members and would be delighted to come and give you a free market appraisal or give you more advice about letting your property. Visit our landlords’ information page for more details.
We’ve hinted at the increasing number of legal requirements that landlords must comply with. Regardless of whether you use an agency to assist you, there will be several documents you will have to provide from the outset.
At the start of any new tenancy you must provide each tenant with a copy of a valid Landlord gas safety record. The test must be carried out by a Gas Safe-registered engineer and will show that all gas pipework, flues and appliances you are providing are safe.
You should have a current EPC in place before marketing a property for letting and it must have a rating of ‘E’ or above. Any advertising material or website advertisement must show the EPC asset rating, so you will need this before you can start marketing your property.
You will need to provide a working smoke alarm (tested on the first day of occupation) on each floor of the property and a carbon monoxide alarm.
If furniture is provided, it has to be fire resistant to ensure that it won’t produce fume-filled smoke if there is a fire, and must be clearly marked with a label showing that it meets the necessary standards (the Furniture and Furnishings Fire and Safety Regulations 1988).
There are numerous other regulations involving managing electrical works and other health and safety issues. An agent can provide you with all the guidance you need to give you peace of mind that you are fulfilling all of your obligations as a landlord.
Find out more about all our lettings services or call us on Wokingham 0118 9776776 or Crowthorne 01344 779999 for advice.