You own a property, but for whatever reason, you are not using it. One option is to sell it. However, according to UK HPI, as of February 2019, an average property in the UK sold for £226,234, which is a 0.6% increase in prices from last year (2019). Given the constant increasing house prices in the UK, selling the property may not be the best idea in case of future needs and return on investment. However, one solution is to rent that property out. If you haven’t had experience with renting a property out before, here are some questions you may have – answered.
What is the first step when it comes to renting a property?
Research, research, research. You must first understand the demand for rental accommodation. According to the English Housing Survey 2017-18, “the private rented sector accounted for 4.5 million or 19% of households” (2019). This renting trend has increased over the years, meaning that people are becoming more interested in renting, than purchasing a house. This offers a great opportunity for you as a homeowner, to become a landlord.
However, you need to research in order to understand the rental value, demand for your type of property, and whether there is any value in upgrading the standard of the flat to achieve a higher rent. You will then be able to weigh up the opportunities and costs, that allow you to determine if renting your property is beneficial. A good letting or management agency will be able to help you on this and provide guidance, usually free of charge.
In London, the average rent was over £2,000pm according to an Independent survey done in late 2018. This has risen over 2.1 percent in the last year and is predicted to increase a further 4% in 2019. This means that a number of landlords will be adjusting their rent to match market trends so it’s important to keep on top of where the market is moving to ensure you aren’t missing out on additional income. Managing a property isn’t cheap when you try to do it yourself, especially when you have more than 1 under your ownership.
Where do you list your property for rent?
If you have determined that you want to rent your property, the next step is knowing where to list it. There are platforms that allow you to list your house for rent yourself, such as Gumtree, Spare Room and The House Shop.
However, it is recommended you should approach a letting and property management company for assistance. They will have local area knowledge, an established database of applicants who may be suitable for the property, experience in negotiating terms of a tenancy and have exclusive access to the biggest property portals.
What is a landlord’s responsibility when it comes to renting?
As a landlord, you have to take care of the conditions offered to your tenants. You must make sure that the space you rent out is in good condition by primarily ensuring the safety of your property as required by the Government in terms of:
- Fire safety – ensure that there are smoke detectors and alarms on each floor of the property and that there are carbon monoxide detectors in each room that requires it. All furniture and furnishingsmust comply with the Furniture and Furnishings (Fire Safety) Regulations
- Gas safety – safety checks done every 12 months by a Gas Safe certified registered engineer.
- Electrical safety – ensuring electrical equipment meets the right standard.
- Plumbing and water supply is in working order.
- The risk of Legionella is minimal.
- The structure of the property is safe.
You must ensure you meet all these basic requirements to carry out your job as a landlord, legally.
What administration is involved in letting your property?
If you rent your property on an Assured Shorthold Tenancy:
- You must check original ID documents of all prospective tenants and certify their identity.
- You should obtain full references on all prospective tenants and guarantors.
- You have to ensure that all tenants have the Right to Rent, as required by the UK Government.
- You have to provide your tenant with your full name and address, or if you are hiring a property management company, provide their details.
- You must give a copy of the EPC for the property to your tenants.
- You must give a copy of the latest government How to Rent Guide to your tenants.
- You must give a valid gas safety certificate to your tenants unless there is no gas at the property.
- You must protect the tenancy deposit with a UK government approved deposit protection scheme.
- You must serve the tenants the prescribed Information.
- You will need a drawn up legal contract between the tenants and you, signed and executed prior the tenants move in to the property.
- Have an inventory created to check the tenants in and out of the property.
- Prepare instructions on how to use the household appliances for tenants use.
- Ensure you serve the correct notice within the specified timeframes if you seek end the tenancy.
Should I hire a property management company?
- Collect rent on a monthly, quarterly or six-monthly basis
- Pay invoices from the rent and account with statements
- Make arrangements for repairs and maintenance with trusted contractors
- Visit the property periodically during the term of the tenancy
- Record renewal dates for safety checks (Gas Safety, Electrical etc.) and arrange re-testing
- Communicate with tenants directly
- Assist with tenancy issues promptly
- Co-ordinate the inventory make, check-in and check-out
- Assess any dilapidations from the check-out report
Property management companies usually base their fee on a small percentage of the rent while moving the responsibility of managing off your shoulders. It is always a good idea to speak to several companies before choosing someone to ensure you can communicate effectively and put your trust in them.