Letting your property - what you need to know

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There are many things you’ll need to consider when renting out your property. If you are a first-time landlord the process can be quite daunting so we’ve put together some useful guidance on the step’s you’ll need to take.

Choosing your letting agent

The first thing you’ll want to do when you are considering letting your home is to prepare a shortlist of letting agents to talk to. There are many options when it comes to selecting the right agent for you depending on what you need. As part of your research, you’ll want to look at all your options including:

  • High street estate agents that offer a lettings service
  • Independent letting agents
  • Online letting agents

It’s also a good idea to ask family and friends for recommendations and look at review sites such as Trustpilot to see what their existing customers are saying about their service.

Questions to ask your letting agent

What are your fees and what’s included?

Ask the agent for a break down of all fees such as referencing, inventories, photos and floorplans through to ongoing management services. You should also find out if these fees include VAT.

What’s included within the management service?

If you don’t plan to manage the property yourself you should find out what their management service includes. Typically agents charge a percentage of your rental income to manage the property day to day but this may exclude certain things so make sure you are happy with what they cover. You may be able to pick and chose what they include depending on how much you are willing to do yourself. The safest option would be to start with everything, especially if you are a new landlord.

What other useful services do you provide?

You might want to know if they can offer premium listings on the major portals like Rightmove and Zoopla which might help you find a tenant faster.

There are also other considerations you’ll need to think about to comply with the law and your agent may be able to help you manage this or at least give guidance and recommendations. For example, you are legally required to provide an Energy Performance Certificate (EPC) as well as a Gas Safety Certificate, both of which an agent might be able to help you with. You will need to have a new gas safety certificate completed at least every 12 months, as well as having regular boiler maintenance and servicing completed in accordance with the manufacturers instructions so ask if the agent can help you with those.

Home Visit

Before you go ahead and select your agent you should have your shortlisted agents visit your property to tell you what rental income they think you’ll achieve, discuss any work you’ll need to complete in order to let the property but also to see if you get a good feeling about the person who will be responsible for finding your tenants because hopefully, you’ll have a long term business relationship with.

Once you have made a decision and you’ve signed your contract, you’ll need to have photos of the property taken and a floorplan completed. Floorplans might be an extra cost but it may increase your chance of finding a tenant faster. You may require a second visit but that’ll give you time to prepare the property so that it looks it’s best for the photographs.

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Advertising your property

When your property is being advertised on the portals you’ll want to have regular catch up’s with your agent to make sure you are getting enough interest. If you are letting your property for the first time you may have to be prepared to adjust the monthly rental price to find a tenant or be a little patient if the rental market in your area is slow or has a lot of competition. During this time you may also need to cover the cost of any mortgage payments if you have one so, you’ll need to factor that into your budget. You can also help by posting the property on your social media and telling as many people about it as you can.

Viewings

If your agent is doing your viewings for you make sure they are fully prepped on the great features of your property plus anything about the area that your potential tenant might want to know. This could include things like local schools, supermarkets and public transport links. Also, make sure you ask for feedback from the viewers so even if they do not want to rent your property you’ll know about any issues with your property from a tenants point of view.

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Your tenant

Once you have found an interested tenant you’ll need to run some checks on them. These will include a credit check, affordability check, written previous landlord and employers’ references for every tenant. Your letting agent will be able to complete these for you.

In June 2019 the tenant fee ban was introduced meaning that you’ll be responsible for paying for things like tenant referencing. Your agent should have already mentioned these fees when giving you the breakdown of costs to prepare for.

When both you and your agent are happy then you’ll need to have the tenancy agreement signed by the tenant.

You will also need to find an insurance policy that is appropriate for landlords. Normally they need some details about your tenant so make sure you have these to hand when you are getting your quotes. There are various types of cover so do your research thoroughly. Tip: check cashback sites or ask your friends if they have referral codes, there are lots of great offers around that will save you some money.

Deposit collection and registration

The deposit should, by law, be registered with a deposit protection scheme by your agent. You may be given two options which are:

  • For you or the agent to hold the deposit and it is insured through the deposit protection scheme or;

  • The deposit money is paid into a custodial scheme which holds the money for you.

You may or may not be given the choice by the agent, sometimes they will make that choice for you according to their rules and processes. If there are any damages to the property or there are any rental arrears then deposit money can be released to you but if you are happy to return the deposit then the deposit protection scheme will return the money to the tenant within 10 days of them leaving.

Rent Collection

Your agent will arrange for your rental payments to be paid to your chosen bank account. Normally they will insist on a standing order from the tenant on a set date each month. Typically you’ll receive the rent minus any fees that you’ve agreed with the agent. This is the amount you’ll be expected to declare when you file your tax at the end of the year. HMRC have some great resources to help you understand the tax aspect.

Summary

In summary; Make sure you understand every cost, work closely with your letting agent, stay on top of regulations and expectations of landlords and get some insurance.

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