5 top tips to portfolio perfection for landlords
Private rental properties have almost doubled in the past few years which means that for landlords, it’s important to hold a well-established position in the lettings industry. To do this, you need to be fully prepared to meet the demands of a changing market – and knowledge is key. But what should you be expected to know as a professional landlord? We’ve put together our top tips to being ahead of the curve and perfecting your portfolio…
1. Be aware of legislative changes
Did you know that according to the findings of the English Private Landlord Survey, one in twelve landlords are unaware of a suite of legislative changes that have occurred across the lettings industry in recent years? The survey notes that legislative changes are considered the main concern for current landlords, and although a lot of these changes can be confusing, there are some things that every landlord should know.
With so many legal updates happening in recent years, specifically the ban on tenant fees, it’s easy to feel overwhelmed. However, if you’ve done your research and know your rights and responsibilities as a professional landlord, it should be plain sailing from there. Key legislative changes to keep an eye on for 2019 include:
- Tenant Fees Ban
- Section 21 potential abolishment
- Landlord income tax changes
- Minimum tenancies
Organisations such as the National Landlords Association are on hand to offer learning and development to landlords at all stages, with handy guides and checklists to help you in your training.
2. Recruit the best letting agent
Your rental property is more than likely to be one of the single most valuable assets you own. It’s therefore important that you completely trust your letting agent and the service they provide, especially when it comes to referencing your tenants.
Everything starts with a tenant reference, and to ensure you have the best tenant possible in your property it’s important that you check with your letting agent that they’re using a high-quality tenant referencing provider. In the lettings industry, we’re seeing more and more cheap referencing providers adopting a DIY service to letting agents which can easily result in untrustworthy tenants being placed in your property, and inevitably more headache for you in the long run. Cheap, low quality referencing means that vital information on the tenant’s background and financial history could be missed without a thorough search. Same Day Referencing and Open Banking are taking the lettings industry by storm with the introduction of complete credit checks on tenants, meaning not only can references be provided much quicker, but you know the tenant being placed in your property has a reliable background and financial history.
Above all, make sure you’re fully in the know about the fees you’ll be charged by your letting agent, and establish a good line of communication from the beginning to ensure they keep you up to date with anything related to your tenant or your property.
3. Know your responsibilities and obligations
Whether you’re an experienced landlord, or just starting to build your property portfolio, it’s vital that you know your responsibilities. Your duties and obligations will vary depending on the type of tenancy, but the basic rules tend to remain the same:
- Provide start of tenancy information: Energy performance certificate (EPC), gas safety certificates, How to Rent Guide, Prescribed Information, Deposit Certificate, etc.
- Check your tenant has the right to rent: Ensure you’ve carried out right to rent immigration checks to comply with current laws and regulations
- Protect your tenancy deposit: You must have the deposit registered with a UK government-approved deposit protection scheme, information can be found here
- Repairs and maintenance: You are responsible for ensuring that the equipment for supplying water, gas and electricity is functioning safely and that the repairs to the exterior and structure of the property is safe. See the official guidance here.
- Keeping you and your tenant safe: A gas safety check must be done every 12 months and electrical equipment you provide must meet health and safety standards. Also, should you be providing any furniture with the property, it must meet safety standards.
- Location: Depending on where your property is situated throughout England, Wales and Scotland, be sure to note that property law is different in each country. Being a member of a professional body such as the NLA will keep you abreast of changes both legislative and best practice.
The complete list of basic landlord responsibilities can be found on the gov.uk website.
4. Protect yourself, your home, and your tenant
Landlord Insurance - Start with a great landlord insurance policy which will cover you should the worst happen. The market is saturated with companies offering landlord insurance, so it’s important to know the quality of cover you’ll get for your money. Providers offering comprehensive cover options such as nil excess, accidental damage, legal liability cover, trace and access, malicious damage, un-occupancy cover and contents cover will ensure complete protection and peace of mind for you. It also helps to state in the initial stages of renting the property that you would prefer tenants to have valid liability insurance upon moving into the property. Although legally this cannot be mandatory, accepting a tenant with liability insurance in place prior to moving in means extra protection for your property, and your tenant.
Tenant deposits - Protecting your tenant’s deposit is also a must by law, and landlords are responsible for ensuring this. Within 30 days of receiving the deposit, you must ensure that it is protected safely in a government-accredited scheme in order to legitimately issue the deposit protection certificate. https://www.gov.uk/tenancy-deposit-protection. Don’t forget, deposits are now capped at 5 weeks rent, but you can add an additional amount to the monthly rent for pets, as long as you have stated in in the advertising of the property.
Tenancy agreements - When it comes to potential rent arrears, it’s crucial that you have drawn up a tenancy agreement which is signed by both you and your prospective tenants. Your tenancy agreement is your way of keeping everything in one place and agreeing to all terms with your tenant. Be sure to keep this safe and ensure it’s signed by both parties with additional copies filed.
Inventory – you can prepare an inventory yourself, however if you use a letting agent, they will have someone experienced in doing these and it helps keep the process impartial. Better still, you can instruct or make sure your letting agent instructs and independent inventory clerk. You can search the register on the Association of Independent Inventory Clerks. There is a cost for this service, however, remember they are both insured and qualified to conduct thorough inventories, inspections and check outs.
Inspections – It will benefit you in the long run if you regularly visit your property to check the state it is in and ensure it is compliant with health and safety law. Legally, the tenant will need to give you permission to enter so ensure that you make clear in your tenancy agreement the agreed notice you will need to give when you will be inspecting the property, and the frequency of the visits.
Guaranteed rent – Thousands of landlords across the UK have now seen the benefits of taking out a Rent Guarantee insurance policy for extra peace of mind. This will cover the rent if the tenant doesn’t pay and would be handled via your letting agent to ensure complete cover should the tenant fall into arrears. Tenancy administration services such as NLA Rent on Time from Let Alliance can give you total peace of mind that rent will be paid on time, as well as securing your cashflow. This can be purchased directly through most UK letting agents or if you are managing the property yourself, via the NLA, and is comprehensive of complete tenancy agreements, legal notices, legal cover, expert rent collection and rent paid on time and in full regardless of the tenant defaulting.
5. Research your rent charges
It goes without saying that you’ll want to ensure reasonable income from your property, but to do so you’ll need to have thoroughly researched your rent charges to maintain transparency with your tenants. Charging rent that’s too low could mean your income will suffer but charging too high could deter tenants meaning more chance of longer void periods. So, researching your rent charges regularly is a great way to ensure you’re charging what’s appropriate for your property.
Also with the Tenant Fee Ban and cap on deposits being a maximum of 5 weeks, should you accept pets at your property, you can increase the rent nominally to allow for pets, but you must explicitly state this in the marketing materials that pets are accepted at an additional £xx per month on top of the advertised rent.
You must be clear to your tenants how and when your rent should be paid, and this must be clarified in the tenancy agreement. It’s important to keep yourself informed around best practice and procedures when conducting a rent review to ensure that the increase is fair to the tenant and that you have mutually agreed to any changes other than what is set out in the tenancy agreement.
Any rent increases must be thoroughly researched and must follow particular rules, especially for assured shorthold tenancies. The more research you can do around rent charges in your area, as well as factors considered such as amenities, size, location, furnishings, etc, the better your head start will be in deciding what a reasonable amount is to charge tenants. As a starting point, ask your letting agent for advice on what similar properties are on the market for in the area – they will know the market in terms of what tenants are willing to pay so should be able to give you a good idea. It’s also a good idea to research the competition in terms of rental properties in your area to get a good idea of the value of your property and what to aim for when charging rent.
Blog post by NLA Rent on Time by Let Alliance.