If you are thinking of joining the ranks of the UK’s more than 2.6 million private sector landlords, there is probably quite a lot you will have to learn.
The following tips are designed to help you get started and are followed by a quick checklist of who you will need to notify once you have taken up your role as a landlord. We then conclude by reviewing some of the most frequently asked questions (FAQs) we receive here at Cover4LetProperty on the role of a landlord.
Top ten tips for new landlords
Unfortunately, it’s not likely to be as easy as popping an advert in the local paper and waiting for your first tenants to arrive. You will need to work hard at achieving – at a bare minimum – the following steps as a new landlord:
- identify your target market – who do you envisage letting property to? Tenants come in all shapes and sizes, each bringing their own considerations and requirements;
- find the right property – different types of tenant may be looking for quite different types of property. The type of property that will attract a family with younger children, for example, may not appeal to a childless couple, a group of professionals sharing, or a group of students;
- meet your responsibilities and obligations for the health and safety of your tenants – for instance, all gas appliances such as a central heating boiler, water heater, fire or cooker must be checked and certified safe by a Gas Safe registered engineer at the beginning of any tenancy and at least once a year thereafter. Our Landlord Legislation Guide explains this further;
- there are additional statutory safety requirements – so, remember that if you are intending to let on a furnished basis, then items of furniture and soft furnishings may have to conform to fire regulations and standards. You can read our more in-depth Landlords Guide to Health & Safety for further advice;
- make the right impression – in a competitive market, making a good first impression may be key to letting success. Having a well presented and well maintained property, both inside and out, may be critical to attracting potential tenants and might also be important in helping you achieve your anticipated rental income;
- keep the relevant authorities and people informed – if you have a mortgage on your property then you may obviously need to ensure that your lenders are happy with your plans to let it out. If you have a standard residential mortgage – suitable for an owner-occupier – you may typically need to remortgage, by arranging a specialist buy to let mortgage;
- tenants have rights – as a landlord you may have a number of obligations to keep your property well maintained and to an acceptable standard. Don’t underestimate the ongoing costs this may involve for you;
- carefully consider the levels of landlord insurance that you may need to protect your investment. Your mortgage lender, for one, is likely to insist that you have at least buildings cover as part of your lending agreement. This may protect your bricks and mortar from events such as floods, fires, earthquakes, damage from falling trees and branches and vandalism, and the like. These days policies may not always include subsidence cover as standard (though ours do!) so you will need to consider exactly what cover is offered when choosing your policy;
- if letting on a furnished basis, you may wish to carefully calculate the value of your belongings and then decide whether or not to insure them on a new for old basis; and
- bear in mind that while insurance for your property is another call on your resources, there may be ways you can help influence the level of your premiums. If you agree to take a higher excess on the policy, for example, you may find that premiums might be reduced slightly.
Who to notify when becoming a landlord
In the United Kingdom many businesses are comparatively lightly regulated, and you may not need much in the way of formal permission before commencing activities. There are a limited number of exceptions though and, depending on your interpretation, becoming a landlord may be one such.
Following up on point no. 6 above, therefore, the following are some of the parties you may need to notify before you can start to let out your property.
Your mortgage provider
If you are planning to let property that you have previously occupied as your own home and it still has an owner occupier mortgage on it, the conditions of the loan oblige you to discuss your plans for change of use, in advance, with the mortgage provider. As we have mentioned, you may even need to remortgage the property to reflect its change of use.
Of course, if you have a specific buy to let mortgage on the property that may not be necessary.
If you plan to start letting out property that has not been let previously and it is not solely owned by you, you should seek the written permission of any other co-owners of the property concerned.
Your insurance provider
A property that has previously been occupied by the owner is likely to have owner occupier buildings and contents insurance in place.
Typically, that cover will become invalid once you start to let the property and you will need to switch to purpose-designed landlord’s or buy to let insurance to maintain the protection you continue to need – both for the premises and your new property rental business.
We will gladly provide further assistance or help answer any questions you may have regarding your buy to let insurance.
The freehold owner
This is one that is sometimes overlooked with potentially serious consequences.
If you are the owner of the leasehold, then you may need the freehold owner’s permission in writing before you start letting out the property.
The local council and other authorities
In some circumstances, you may need the permission of the local authority in which the let property is situated and this may involve some form of registration and licensing before you start letting out a property to certain types of tenants.
Examples might include any House in Multiple Occupation (HMO) or those occasions when your tenants are considered vulnerable individuals or the elderly.
Remember that the laws in England, Scotland, Wales, and Northern Ireland may differ in these respects.
Various service providers
Some supply contracts for utilities such as gas and electricity may specifically exclude you assigning them to tenants.
It might be worth discussing this with the companies concerned, in advance.
Although there may be no precise contractual or legal requirement to do so, if you are planning to start letting out a property for the first time, it might be prudent to consult the immediate neighbours in advance.
Although their legal permission may not be required, objections and subsequent legal actions may prove to be expensive and distracting for you – particularly if you lose and are forced to change your business direction as a result.
Being a landlord – your questions answered
After all of that, if you still have some unanswered FAQs, the following may help – but remember that we are not in any way attempting to offer formally qualified legal advice.
Do I need a formal qualification to be a landlord?
No. Unlike professions such as a doctor or lawyer, a landlord does not need to be formally certified before starting to engage in the business of letting property and calling themselves a landlord.
However, there are a range of legal requirements that may apply to the way you conduct your business, and it would be highly advisable to ensure that you are clear what these are before you commence your business operations.
If you plan to let a House in Multiple Occupation (HMO), the licensing conditions require that you are a “fit and proper person” to act as such a landlord.
Can I select the tenants I wish?
Typically, the answer is yes – though it is highly recommended, of course, that you are carefully selective in the sense that you have taken all reasonable steps to check that your tenants are likely to prove trustworthy.
Note that some forms of landlord insurance may exclude certain categories of tenant (students or welfare benefits claimants, for example) and it might be important to be clear that your target tenants are covered by your insurance. None of the landlord insurance policies arranged by us here at Cover4LetProperty contain any such exclusions.
Why do I need special landlord cover insurance?
Insurance is about the management of risk – and the simple fact is that a home occupied by tenants rather than owner-occupiers is exposed to qualitatively different risks.
For the landlord, a let property is essentially a business asset – relying on a stream of income generated by rents – and at the core of any landlord insurance policy is the protection of that physical asset against the possibility of loss or damage.
But there are financial and business risks too. Landlord insurance also needs to incorporate indemnity against potential charges of landlord liability, if a tenant, one of their visitors, a neighbour, or even a member of the public, is injured or suffers damage to their property.
Landlord insurance may also recognise a further business risk – the loss of rental income in the event of an insured incident which leaves the premises temporarily uninhabitable and unlettable. A degree of financial compensation for such loss of rental income is, therefore, typically included in landlord insurance policies.
Can I charge whatever rent I wish?
This is a complex question. In practice, the rent you charge, and any increases you make, may be subject to appeal and testing through legal processes (unless you are a resident landlord letting out rooms in your own property).
Space here does not permit a full discussion but suffice it to say that you should research this area thoroughly before deciding on your rental levels – quite apart from the purely practical consideration that if you charge an unrealistically high rent, you are unlikely to receive any applications from potential tenants.