London is one of the most expensive cities in the world, and it can be a great place to become a landlord. However, getting started can be tricky and mistakes will be costly. Luckily, there are plenty of resources at your disposal to help avoid falling victim to common mistakes; start by reading this series of tips and considerations for new landlords in London.
Carry Out Research
No matter what type of business you’re starting, research is an essential part of the start-up process, and becoming a landlord is no different. You need to take a look at your property and figure out if it’s close to any public transport spots, schools, colleges, or universities. In London, the majority of residents rely on public transport to get around, so having a tube station located a short walk away will be incredibly appealing. Knowing all of this information will give you a better indication of what type of tenants you’ll be speaking to, such as professionals, students, or families.
As well as researching the local layout, you need to have an idea of the surrounding market. Take a look online and see what type of price similar-sized properties are selling at. You can use these figures as a baseline and set your price competitively within the bracket.
The Ongoing Costs
Your source of revenue as a landlord comes from tenants, but you need to be prepared for the ongoing costs of property management. For example, you need to keep the property maintained and cover mortgage fees for any void periods. If your property is registered with a letting agent, you’ll have fees to pay them.
While you’re exploring the unexpected costs of being a landlord, you need to work out a strategy for reducing your outgoings. This could be anything from saving tax, reducing upkeep, and keeping the energy bills lower. You can also get help with your budget if you plan to renovate, just look up double glazing window grants and see if you are eligible for a grant.
Contact Local Agents
We already mentioned the need to research properties online to find out what sort of rental price you can get. However, the most accurate method of receiving this information is to contact a local agent, as their price estimate will be much more accurate. Additionally, an agent can provide you insights on how to make your property more appealing – they can even take care of this for a fee.
Prepare Your Property
Your property needs to be to the highest standards before having tenants move in. Therefore, you should examine every corner of the house and carry out maintenance tasks that will attract tenants. For example, a fresh coat of paint will make the home look tidier. Additionally, if your property comes with any furnishings, ensure the decor is neutral and everything is in excellent condition.
Think Health and Safety
As the landlord, it’s your responsibility to ensure tenants are safe for the duration of their contract, which means focusing on health and safety. For example, you need to ensure that the property has enough smoke and carbon monoxide detectors – and that they work. Additionally, you will need to check your property for any broken or uneven fixtures including uneven stairs and broken windows.
You will need to have a gas safety certificate as well as an electrical installation condition report (EICR) – renewed every five years. You can easily have your first EICR carried out by a qualified electrician, but this can be difficult to source without the correct contacts. Therefore, we recommend making general EICR queries about EICR certificates in London, which can be done by following the link. As well as Domestic EICR, you will find a range of Commercial EICR/Fixed Wire Testing services.
Have Appropriate Cover
Having landlord insurance isn’t mandatory, but it’s highly recommended because it covers your back against any damage caused by natural disasters as well as accidental damage caused by tenants. On top of landlord insurance, we recommend having rent guarantee cover to protect your bottom line if a tenant fails to pay their rent. Additionally, this type of insurance will cover legal costs relating to tenant evictions.
Find Reliable Tenants
You should start sourcing tenants by talking to your immediate network, including friends, family, and work colleagues. If you manage to find a tenant this way, you may find life easier because you’re already mutually acquainted.
If word-of-mouth fails, your next step is finding a letting agent. The agency’s involvement can usually be scaled to your needs. For example, you may want them to manage the tenant vetting and legal documents, while you take care of the property maintenance.
When putting your property on the market, you will need to include all of the information and local amenities. Additionally, high-quality photographs will go a long way when it comes to attracting the right tenant.
Before allowing your chosen tenant to sign the agreement, make sure you check their financial history. After all, you don’t want to have a tenant renowned for not paying rent or forfeiting credit repayments. There are many referencing businesses in the country, but one of the best is HomeLet.
Create Thorough Tenancy Agreements
After finding the perfect tenants, it’s time to draw up a tenancy agreement that details your expectations of the tenant and your promises to the tenant. Having a tenancy agreement in place before the move-in date is essential, as it will help protect your property.
If you’ve decided to let your property through an agency, you won’t need to worry about the tenancy agreement. However, if you’re going it alone, you can easily find the government’s tenancy agreement template online. All you will need to do is read through everything in detail and delete/add clauses as you feel fit. Before handing over the agreement for a signature, have a lawyer look over everything first – wrong wording can cost a lot of money when it comes to settling disputes.
Audit Energy Efficiency
The cost of living is at the highest it’s been for a long time, and it’s only going to continue rising. To attract high-quality tenants, you need to improve the energy performance of your property, which you will find on your Energy Performance Certificate (EPC). The lowest rating for a rented property is E – you can increase your score with these methods:
- Invest in a smart meter
- Upgrade the boiler
- Have double-glazed windows
- Seal all cracks
- Have appropriate insulation
- Use LED bulbs
According to legislation released on 1st April 2016, all tenants have the right to ask a landlord to improve the rating of their home.
Build a Good Rapport with Tenants
If you manage the property, it’s important to build a good rapport with the tenants. If you can communicate effectively and deal with any requests promptly, you will find life is much easier. Having good tenants who take care of your property is essential, so don’t lose them by being unprofessional. If your property is let through an agency, they will take care of all the maintenance and speak on your behalf. However, it’s still your property, which means you need to ensure that the agency is fulfilling its promises.
Becoming a landlord is exciting, but there are many considerations to make including the running costs. However, if you communicate well, offer the best facilities, and maintain your property, you will find your journey runs smoother.
