Checklist for First Time LandlordsWritten By PropertyLoop February 11, 2021
As a new landlord knowing where to start the search for your tenant and rental success can be challenging. With numerous laws, regulations, and responsibilities to stay on top of we have prepared this checklist for fist time landlords to help your journey get off to the best start.
- Before You Find Your Tenant
- Change to a Buy-to-Let Mortgage
- Do You Need a License to Rent?
- Get an Energy Performance Certificate (EPC)
- Get Gas and Electrical Safety Checks
- Install Smoke & Carbon Monoxide Alarms
- Is Your Furniture Is Fire Safe?
- Check for Legionnaires’ Disease
- Carry Out Referencing Checks
- Take Out Landlord Insurance
- Once You’ve Found Your Tenant
- Conduct Right to Rent Checks
- Register the Security Deposit
- Create A Tenancy Agreement
- Give Tenants Appropriate Documentation
- Carry Out a Property Inventory
Before You Find Your Tenant
Change to a Buy-to-Let Mortgage
Despite a common misconception amongst new landlords, you are prevented from letting out a property without first changing your existing residential mortgage to a buy to let. This will commonly first require the permission of the mortgage provider before the mortgage is changed to a buy to let. Whereas when taking out a residential mortgage the owner must show they have sufficient income and savings to afford the periodic repayments, with a buy to let the lender will not only demand a far higher deposit, but will also evaluate the potential rental income of the property.
Typically, when re-mortgaging the property for a buy to let lenders will demand that the rental income generated by the property is at least 145% of the monthly repayments. It is also important to note that with a buy to let mortgage the landlord will exclusively be repaying the interest on the borrowed amount, with the capital being repaid once the rental is sold.
Do You Need a License to Rent?
Mandatory licensing applies to HMOs and can be applied for via the local authority in which your property sits. Ask your council if your rental property is subject to Additional licensing or Selective licensing measures. If your local authority demands that you first obtain a license before renting, this will typically cost around £500, lasting for around five years.
Get an Energy Performance Certificate (EPC)
Landlords must not only ensure that their rental has a valid energy performance certificate before it is presented to renters, but that the property also meets the minimum energy efficiency standards. In order to meet these minimum standards, the rental property must achieve an EPC rating of an E grade or above. If the rental falls short of this mark the landlord is able to consult the certificate and implement the recommended improvements to make the rental more energy efficient.
The latest energy performance certificate must also be provided to new tenants within 28 days of an agreement being signed. If the landlord neglects to provide the occupants of their property with this documentation, then it is likely that they will encounter difficulty serving a section 21 notice if they try and seek repossession later down the line.
Get Gas and Electrical Safety Checks
Owners must ensure that their rental property undergoes a gas safety check each year. This examination must be carried out by a certified gas safe engineer, seeing the gas appliances, pipes, flues across the rental be inspected. Once the evaluation has taken place the landlord is obligated to provide a copy of the gas safety certificate to their tenants within 28 days.
Further to this, landlords are legally required to have the electrical wiring, appliances and outlets inspected by a qualified electrician every 5 years. Once the inspection has been conducted the owner will be provided with an electrical installation condition report which once again must be given to the residents within 28 days.
If a landlord is found to be in breach of these regulations it is likely that they will be served with a fine of up to £30,000, with numerous offences commonly resulting in the landlord getting a banning order.
Install Smoke & Carbon Monoxide Alarms
A working smoke alarm should be present on every floor in your rental property. A carbon monoxide detector should also be in a room where solid fuel is used for heating.
Is Your Furniture Is Fire Safe?
If the owner is providing a rental opportunity that is partly or fully furnished then any fabric or items of upholstery and even garden furniture must be fully compliant with the Furniture and Furnishings (Fire Safety) Regulations. Any items that are compliant with the regulations will show this through a tag that displays the material’s resistance to ignition.
Check for Legionnaires’ Disease
Owners must take measures to assess the risk of legionnaires disease in their rental. This may not be an issue for properties that have newer water systems installed as the main risk of the disease arises through stagnant water.
Carry Out Referencing Checks
Tenant referencing is an essential part of the letting process, giving landlords a guide on the aspiring renter’s suitability for the property. These assessments will see the tenant have their current income, employment status and credit history evaluated to ensure that they are able to consistently pay their rent throughout the duration of the tenancy. Further to this, the process will also give the new landlord a reference from the previous owner providing them with a first-hand account of the tenant’s previous conduct in a recent tenancy. The referencing process is hailed by many landlords as the best way to avoid a problem tenant that will likely lead to eviction proceedings later into the tenancy.
Take Out Landlord Insurance
Whilst a landlord is under no legal obligation to take out a landlord insurance policy, it is often a condition of their buy to let mortgage that such measures are in place by the owner. Unfortunately letting out a property is not always plain sailing and landlords need to be prepared in the eventuality that their property becomes accidentally damaged, the tenant is unable to pay their rent or they need legal expenses covering. As can be expected not all policies will be essential to all landlords, with contents insurances being largely wasted on owners that provide an unfurnished letting opportunity.
Once You’ve Found Your Tenant
Conduct Right to Rent Checks
All landlords are legally required to check their tenant’s right to rent. The owner must conduct the right to rent checks no later than 28 days before the start of a tenancy. This will see landlords scrutinise any official identification documents such as a UK/EEA passport, Visa, or a document proving that the renter has obtained indefinite leave to remain in the UK. If the owner is found to be illegally letting to a tenant that does not hold a sufficient immigration status, then they could face a fine of up to £3,000.
Register the Security Deposit
At the start of each tenancy, landlords will take multiple deposits from their new tenants. Whilst the holding deposit may initially be given to take the rental opportunity off the market for an offer, it is only the security deposit that will need to be secured by the landlord. Typically, landlords will request a maximum of five weeks’ rent for the security deposit. This amount must then be entered into a government backed deposit protection scheme within 30 days of its payment.
If the owner of the rental property neglects to protect their occupant’s security deposit, then it is likely that they will be made to pay as much as three times the taken amount to each tenant if legal action is pursued.
Create A Tenancy Agreement
Most commonly tenants will receive an assured shorthold tenancy agreement from their landlord. The document will make clear the rights and responsibilities of each party in the agreement, detailing the amount of rent the tenant must pay, the frequency of these payments, when the fixed term will end, if the tenant can keep any pets, and if the rent can be increased amongst other key details. It is essential to note that the owner of the property is prohibited from entering any illegal clauses into the tenancy agreement, and any that make their way in will not be upheld if challenged.
Give Tenants Appropriate Documentation
Landlords must supply their new tenants with a series of documents from the outset of the tenancy. As mentioned, the owner must provide a gas and electrical safety certificate, alongside the appropriate energy performance certificate within 28 days of the tenancy. Further to this, the landlord must also give the tenants details of how their security deposit has been protected. Additionally, the occupants of the property will need to be given the most recent copy of the government’s “How to Rent Guide”. This correspondence allows new renters to stay informed throughout the tenancy’s lifetime, detailing their rights and where they can turn if they need support. If the landlord neglects to provide any of the above documentation to their tenants they will be unable to serve them with a section 21 notice.
Carry Out a Property Inventory
The importance of a clear inventory is all too often overlooked by landlords. By comprehensively documenting the condition of all appliances, furnishings and areas of the rental at the start of the tenancy, any disputes surrounding deductions from the tenancy deposit can be resolved with ease thanks to detailed descriptions and accompanying photographs. Once the inspection of the property has been completed the document should be signed by both parties to ensure complete agreement over the overall condition of the rental.
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