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Renting out property is a great way to boost your income. With interest rates low, and demand for homes to rent at a premium, buy-to-let properties are still a good investment. Being a good landlord can be rewarding too; you’re providing a comfortable and secure home for someone, while making additional income into the bargain.

Surveys show, that most people renting out property never set out to become landlords, with many taking on the role part-time while pursuing other careers - as teachers, nurses, IT professionals and accountants.   

While a proportion of new landlords buy their property as an investment or business venture, many have inherited a home, which they decided to let out rather than sell.  Others find themselves with an additional property after moving in with a partner, being unable to sell or relocating abroad.  

Whatever the route, your new role comes with a series of responsibilities. These can sometimes be demanding, especially if you have a day job. The key to becoming a happy and successful landlord is being well-informed and doing the right preparation before you start.

To help you, we’ve pulled together the six steps to take before starting your search for tenants…

   

1. Make sure you have all the approvals in place


Unless you’ve bought the property with the intention of letting it out, and taken out a buy-to-let mortgage, you should get in touch with your lender as soon as possible.  Depending on the type of mortgage you have you may have to switch or alter your current contract.   

You should also let your insurance company know that you’re planning to rent it out. Failing to do so could invalidate your policy.

In addition, it is advisable to take out public liability insurance and landlord insurance to protect you against any incidents that take place in or around your property.   

 

2. Make sure your home is safe, fit and legal for tenants 
 

As a landlord you must fulfil certain legal and health and safety obligations and comply with a range of regulations.  

These include making sure all gas and electrical equipment is safely installed and maintained; that the property has plenty of working smoke alarms and that your tenants have been provided with an energy performance certificate.  

You are also required to protect your tenant’s deposit in a government-approved scheme and to carry out checks to establish that your tenant has the right to rent in the UK.  
 

3. Get your tax right   


HMRC classes all the rent landlords receive as income, which means it must be declared on your end-of-year tax return.   

If you are currently in employment, and are taxed by PAYE, you will need to register for self assessment. If you do not usually send a tax return, you need to register by 5 October following the tax year in which you received rental income.  

The first £1,000 of your income from property rental is tax-free. This is your ‘property allowance’. If your rental income is between £2,500 and £9,999, after allowable expenses, or £10,000 or more before allowable expenses, you must declare it on a self assessment tax return. You should, however, also contact HMRC for advice if your income from property rental is between £1,000 and £2,500 a year.  

As a landlord you will pay tax on the profit you make after allowable expenses have been deducted. Allowable expenses are things you need to spend money on in the day-to-day running of the property and include buildings and contents insurance, repairs and maintenance (not improvements), interest on property loans and utility bills.   

You may also be able to claim tax relief on the replacement of domestic items such as beds, sofas and white goods. Read more about tax, self assessment and allowances for landlords on the gov.uk website.  

 

4. Agreements and inventories


The majority of UK landlords use an Assured Shorthold Tenancy Agreement to let out their properties. This is a legally-binding contract between you and your tenants, which lays out the terms and conditions of the tenancy, such as its duration, the rent due and fees for late payments.   

A tenancy agreement protects a landlord’s interests by allowing you to evict your tenants if they break the terms of the contract, by failing to pay their rent, for example. It also gives tenants peace of mind that they have a legal right to remain in the property.   

The most common type of dispute between landlord and tenant involves claims for damage. Drawing up a full inventory can help you avoid this issue – make sure you take photos or videos of your property itself and any items included. Your tenants should sign the inventory to confirm that everything it lists is both present and in the stated condition.   

 

5. Will you use an agent or go it alone?


You will need to decide how you are going to advertise, find good tenants and manage the property throughout the tenancy. You have three main options:

    You could appoint a letting agent to look after everything for you, including repairs and maintenance.  

    You could appoint a letting agent to advertise and source tenants. They will screen your potential tenants and conduct reference and credit checks, arrange the viewings and negotiate the rent. They may also collect the security deposit and first month’s rent, before stepping away to let you manage the ongoing relationship.  

    Alternatively, you can undertake the whole process yourself.   

The option you choose really depends on how much time you want to devote to your new role of landlord. The third option will mean savings on fees, but will be time consuming, leaving you with sole responsibility for finding the right tenants and making sure you fill an empty property quickly enough to avoid losing money.

If you decide to use an agent, choose wisely – you shouldn’t necessarily go with the cheapest. Look for a member of the Association of Letting Agents ARLA, the National Association of Estate Agents (NAEA) or the Royal Institution of Chartered Surveyors RICS.   

They should also be signed up to the Property Ombudsman Scheme - an independent service, which resolves disputes between tenants and agents or the National Approved Letting Scheme NALS. Membership of these schemes gives reassurance that they are regulated by leading industry bodies.   

Personal recommendation is a good way to find a suitable estate agent. Ask for advice from someone you know who has experience of renting property locally.  

 

6. Make your home tenant-ready


Find a great tenant in record time by sprucing up your property to make it as appealing as possible. Deal with any outstanding DIY jobs and make sure that the property is decorated to a good standard in neutral shades. White and other pale colours reflecting light to make your rooms appear, not just bright and airy but bigger. Replace patterned or dingy carpets with light floor coverings too.  
   

Find out more


If you are a first-time landlord with a property in SE1 we’d be delighted to talk through the steps you need to take and explain how we can help. Contact us today to find out more.