In the words of the Property Investment Project’s blog, don’t let anyone claim they can teach you everything there is to know about being a landlord. The specifics depend on the type of property or properties you let, the kind of tenants you have and even our own personality.
A few basic lessons, however, might be in order so that the whole business of becoming and being a landlord is less overwhelming than it might otherwise be.
With that objective in mind, here are some key FAQs:
How does it work?
The principle is a simple one – you invest your hard-earned cash, or money you have borrowed, in the purchase of a property you then let to tenants in return for the regular payment of rent.
As the landlord and owner of the property, you are responsible for maintaining your property, but you also have a long list of responsibilities and obligations, some of which are legal obligations, and which are outlined on the government website.
Do I need to be qualified?
One of the reasons for the widespread popularity of buying to let is the fact that you need no formal qualifications – but commitment, hard work and every lesson gained from experience are still going to be required.
If the property you let is a House in Multiple Occupation (HMO), however, you need to meet certain criteria that are less concerned about your competence as a landlord, but rather that you are a “fit and proper” person, without a criminal record and with no convictions for breaching landlord laws, regulations or codes or practice.
Do I need landlords insurance?
Although there is no legal obligation to have landlords’ insurance, the answer to the question is almost certainly going to be ‘yes’.
Having made what is likely to have been a considerable investment in buying the property and coming to rely on the generation of sufficient rental income to repay any mortgage and keep it properly maintained and repaired, the biggest nightmare is losing it all from incidents such as fire, flooding, subsidence – and many other risks to the building and its contents.
The landlords insurance we arrange here at Cover4LetProperty is specially designed to offer the protection which the structure and fabric of your property needs, but also to safeguard your business interests as a landlord – providing you indemnity against claims of liability (if a tenant, one of their visitors or a member of the public is injured or has their own property damaged on or within your premises) and loss of rental income following a major incident which leaves your property temporarily untenantable.
If you are buying the property with the help of a mortgage, the lender is almost certain to require a certain level of insurance to protect their interest in the structure and fabric of the building – beware, though, that the cover required by your lender is sufficient only to safeguard the outstanding mortgage balance on the property and may not cover the full cost of rebuilding in the event of a major disaster.
What rent can I charge and how much is it going to cost me to do so?
Although your buy to let business naturally looks forward to maximising rental income, you also need to be realistic – to attract and retain responsible tenants and reduce the number of expensive voids.
Careful research of your area and the rents being charged for similar properties, maintained to the same standards, may give you a good clue to what is reasonable. You might also want to consult a letting agent about a realistic rent for the property you are offering.
The principal costs of running your buy to let business are likely to include the mortgage repayments (typically, in the case of buy to let mortgages, these are likely to be interest-only mortgages), the cost of repairs and maintenance, any letting agent’s fees, and landlords insurance.
What do I do with the deposit I asked my tenants for?
You asked for a deposit as security for any damage or breakages your tenant might cause during the tenancy, the payment of rent and other bills when they fall due, and the possible cost of cleaning the premises when the tenancy comes to an end.
As with any security deposit, it needs to be returned – less any deductions that are agreed – to the tenant at the end of the tenancy. That means there needs to be sufficient money available to you to make that payment.
To safeguard the deposit – in the interests of both you and the tenant – the Tenancy Deposit Protection scheme requires that any deposit is held for safe keeping by an officially approved third party, who releases the money, in proportions agreed by you and your tenant, at the end of the tenancy.
For further more in depth information, please have a look at one of our many guides on the right hand side of our home page.