Becoming A Landlord In 2022Written By PropertyLoop March 03, 2021
With the number of homes comprising the private rental sector soaring from 2.8 million in 2008 to 4.5 million in 2017, and the latest predictions claiming the UK will need another 230,000 to keep ahead of growing demand for rental properties, it’s safe to say this year will welcome many new landlords into the PRS. So, for those that are starting their journey on becoming a landlord, we offer our take on the things every landlord must know.
- How to Find Good Tenants?
- What Are the Right to Rent Checks?
- Don’t Forget About Tenancy Deposit Protection?
- What Insurance Must a Landlord Have?
- Should You Allow Pets Into Your Rental?
- How Do You Prepare a Rental Property?
- Furnished or Unfurnished?
- Energy Performance Certificate
- Gas and Electrical Safety Checks
How to Find Good Tenants?
Although many letting agents will provide rental property owners with what has become known as a let only service, helping landlords to find the ideal occupants for their property. Whilst this may be a huge relief to owners, knowing that the services of an experienced professional will help them source a tenant and get them on their way to generating a rental income as soon as possible, how can owners be certain that their new tenant is an ideal fit for their rental and won’t cause issues further down the line.
This is where the referencing process comes into its own, allowing landlords and agents to assess any applicant for the rental opportunity, giving them a rich insight into the renter’s background allowing them to determine if they wish to proceed into a tenancy. These assessments see the landlord put the tenant through a series of affordability checks to determine if the prospective tenant will be able to consistently pay their rent on time. To verify this renter will need to provide the owner with confirmation of their employment status, current income and credit history. However, the referencing process doesn’t simply identify is tenants can afford their rent but also sees them obtain a reference from a pasty landlord, giving the owner of their new home an unaltered account as to how the tenant conducted themselves over the course of the tenancy.
What Are the Right to Rent Checks?
Perhaps one of the more easily overlooked steps in becoming a landlord is carrying out right to rent checks. These checks see landlords determine if their tenants over the age of q18 are legally empowered to reside within the UK. Landlords must carry out reasonable checks to determine the identity of the renter is correct alongside their right to remain within the UK. This will see the prospective renter provide the landlord with photographic identification such as a passport or a biometric residency permit. Rental property owners that fail to carry out right to rent checks could not only face prosecution but a fine that varies on the severity of their negligence.
Don’t Forget About Tenancy Deposit Protection?
Upon moving into a rental property tenants will be expected to provide their landlord with a security deposit, equal to around five weeks rent. Similarly, to the holding deposit, paid to reserve the rental opportunity, allowing interested parties to make an offer to rent, the amounts provided for the security deposit can be returned to the tenants, although this will come once the tenancy has come to a close and the fixed term has ended. Renters may recognise that this will perhaps be one of the more significant upfront costs to renting, but this is because landlords are able to make deductions from the amounts their occupants have provided for the security deposit if come the end of the tenancy any damage has been caused to the rental property, or the tenants have failed to pay rent. With this being said the landlord must be able to justify any deductions, with the tenants having the opportunity to appeal if they believe funds are being withheld unjustly.
It is essential to remember that whilst a landlord is under no legal obligation to request a tenancy deposit from their occupants, if they do the sums must be entered into a government-backed security deposit scheme. Once the deposit has been provided to the landlord, they will have 28 days in which to protect the amounts and offer the tenant details of the scheme protecting the deposit, confirmation of the amount entered into the scheme, the address of the rental property and any reasons deductions can be made from the amount being returned, alongside how the tenant can appeal these deductions, or what to do if the landlord doesn’t take steps to refund the deposit once the tenancy has come to an end.
What Insurance Must a Landlord Have?
When becoming a landlord, it can be easy to get lost in the mountains of regulations, upfront costs and industry nuances that some may rush when choosing landlord insurance. Similarly to the security deposit, whilst landlords are not legally obligated to take out landlords insurance, the overwhelming majority of rental property owners will have numerous policies to safeguard their portfolio. This is because those that obtain their rental properties through taking out a buy to let mortgage will find that as a stipulation of the loan, they must have a valid buildings insurance policy for the duration of the tenancy. Landlord building insurance will cover the landlord in the event that their rental property is damaged in a storm, fire or maliciously, protecting them from the significant rebuilding and repair costs.
Whilst those that are on their way to becoming a landlord may have already considered if they wish to let out a property that is furnished or unfurnished, they may not have evaluated their need for landlord contents insurance. Contents insurance for landlords will typically protect them in the instances their belongings within the rental property are stolen, damaged accidentally or through natural disasters and accidents such as fires. However, it is essential to note that such a policy will only protect the belongings of the landlord and not the possessions introduced to the rental property by the occupants, meaning that they will need to take out their own contents insurance policies.
Should You Allow Pets Into Your Rental?
With a mere 7% of landlords offering pet-friendly rental opportunities in 2020 the government has stepped in, with the new model tenancy agreement being introduced in January landlords are now prevented from adopting a blanket ban on pets across their rental properties. This does not mean that landlords must accept pets into their property as if they have sufficient reasoning can object in writing.
How Do You Prepare a Rental Property?
Furnished or Unfurnished?
Whether or not to let your property in a furnished or unfurnished state is a key consideration for anyone that is on their way to becoming a landlord. As can be expected those that choose to let out a furnished will also need to consider taking out content’s insurance for landlords, alongside taking a security deposit from their tenants to cover the costs of any repairs or purchasing replacements. Generally speaking, landlords will offer fully furnished rental opportunities to tenants at an increased price, although unfurnished lets could attract those seeking longer tenancies; securing the landlord a rental income for longer.
Energy Performance Certificate
Put simply an energy performance certificate provides interested parties with an overview of how energy efficient the rental opportunity is, showing them a breakdown of its consumption, predicted running costs and any improvements the landlord is able to make. Whilst landlords are only required to obtain a new EPC every ten years, they are prohibited from advertising any rental property to new tenants that does not currently hold a valid EPC. Once new tenants move into the property, they must be provided with a current energy performance certificate or the landlord may face difficulty reclaiming possession of the rental through a section 21 notice.
Landlords will now have until 2026 to increase the energy efficiency of their homes to a grade C, with an increasing number of lenders now offering “green mortgages”, giving owners with more efficient properties more favourable rates.
Gas and Electrical Safety Checks
Rental property owners are legally obligated to have their rental property undergo a gas safety check every twelve months. The inspection must be completed by a certified gas safe engineer, seeing them evaluate the functionality and safety of all gas appliances, flues and pipes throughout the property. Alongside this, owners are further required to have the electrical installations found across each of their properties inspected every five years by a certified engineer. Providing that all outlets, wiring and appliances are deemed safe to be used the landlord will need to provide the tenants with a copy of both the gas and electrical safety certificates within 28 days of their receipt.
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