What does being a property/portfolio landlord entail?
It’s important to be aware of all that a landlord has to do – it should rightly be considered as a job itself rather than seeing yourself purely as a property investor.
Finding the right property
Consider carefully what you are looking for and choose wisely. A newer property will, in theory, give fewer maintenance issues, yet an older property has much potential for adding value through investment in the right places.
It is also worth considering desired occupancy levels – if you are housing more than three separate, unrelated tenants, it will be classed as a ‘House in Multiple Occupancy’ (HMO), which can incur higher fees and solicitor costs. Additionally, you may find that tenant changes are more frequent.
If you intend to house over five tenants in one property, then this will need to be registered and be subject to the following conditions:
The house is suitable and offers comfortable living standards for the number of tenants living there.
Either yourself, as the private landlord, or the letting agents you’ve chosen, needs to be ‘fit and proper’. This means a clear criminal record and no history of having previously breached any landlord laws or code of practice.
You need to send your annual gas safety certificate to the council.
When requested, you can provide safety certificates for any electrical appliances.
You install and maintain smoke alarms in the property
Strategy: Viewing & selecting properties
When looking at potential buy-to-let investment locations, try to be as objective as you can, ignore emotions and find a property that can meet a set of defined criteria, to allow you to meet your business goals.
Here are some of the topics you may wish to consider:
Who do you want to rent to?
How long might it take to secure tenants around this area?
What is the rental market in the area like? Is it growing or declining?
Is there the potential to build in capital growth?
Will the rent you receive cover your costs?
Can you make improvements to the property in order to increase rental income or capital growth?
Have you looked at any forecasts for property growth in the area?
Should you rent privately or use a letting agent?
Finding the right tenants
One of the more important tasks when renting out a property is finding the right kind of tenants – it could be counterproductive attracting tenants that require lots of your time and cause nothing but problems. Property location can dictate certain types of tenants, such as families seeking places close to schools and leisure facilities, or students close to a university.
Letting agents can assist in finding and vetting prospective tenants, securing references and performing credit checks for example – their resource comes at a cost, but it can be money well spent if they avoid costly problems in the long run.
Dealing with tenants
Think whether you are up for the challenge of dealing with all types of tenants, even the most difficult ones. Ask yourself if you’re willing to have difficult conversations when needed, for example missed rent, communicating payment rises or issuing eviction notices to your tenants when the time comes. If you think this sounds a daunting concept, then a letting agent will be able to handle this for you.
Property maintenance
As a landlord, the property is your sole responsibility, and anything that needs repairing or maintaining falls to you to fix. You need to be easily contactable by phone or email, and it will help to have a network of affordable trade contacts who can resolve a variety of challenges at short notice. Be mindful that your responsibility extends to the outside of the property too, including gardens – it pays to consider low-maintenance setups such as patio instead of grass to reduce gardening costs, for example.
No rent coming in
Be prepared, and budget for the eventuality that there are periods of time when you are not collecting any rent. The housing market can be unpredictable, so it is wise to contingency plan for a period without income, and how long you can last paying any mortgage & rates for before having to sell. This is a question asked by all lenders at the moment, is how do you and will you deal with rental voids?
Gas safety check
Checks must be carried out annually, making sure any gas equipment is safely installed and maintained. You must have a copy of the gas safety record before, or within 28 days or a tenant moving into your property.
Legionella risk assessment
Landlords must carry out risk assessments for Legionnaires Disease, a lung infection caused by inhaling contaminated water droplets. It is advisable to familiarise yourself with the periodic checks required and responsibilities in this area.
Furnished or unfurnished
Fully furnished properties may be more attractive to prospective tenants, however if they are unfurnished then it can save money on replacing items due to wear and tear.
Provision of white goods
Generally provided across both furnished and unfurnished properties, landlords provide white goods, it’s prudent to consider the cost of replacements and repairs, and budget this in from the outset.