How to Let a Property Without an AgentWritten By PropertyLoop April 19, 2021
For new and accidental landlords that want to know how to let a property without an agent, the benefits are often revered as massive savings, cutting the high upfront costs associated with becoming a landlord. However, the rental landscape can be unforgiving, with vacant properties, swathes of documentation and endless regulation; using a letting agent can help landlords to find their ideal tenant, curate a fair tenancy agreement for both parties, all whilst allowing landlords to maintain a return on their investment. But, can you rent out your property without an agent and how do you let a property privately?
Buy to Let Mortgage
If you are weighing up renting out your property to tenants, it is essential that you either obtain permission from your residential mortgage provider to do so, or obtain a buy to let mortgage before accepting any occupants. This is simply because the typical residential mortgage isn’t intended to be used by landlords, there for if a home owner decided to let their property to tenants it would be considered a breach of their mortgage; making contacting your mortgage provider to declare your intentions essential. Usually if the property owner is only seeking to rent out their property for a short period of time then the mortgage provider will allow them to do so whilst remaining on a residential mortgage. With this being said, this will of course, vary between mortgage providers and your individual financial circumstance. Furthermore, this convenience will come at a cost in the form of a one off fee, or an increase in the interest being paid on the residential mortgage. It is worth noting that whilst some mortgage providers will offer the landlord with the opportunity to extend this residential rental period, however, if the landlord is intending to let their property for an extended period of time their only option is to obtain a buy to let mortgage plan.
Thanks to the increased risk commonly associated with buy to let mortgages, the criteria that a prospective landlord will have to meet in order to be eligible is traditionally far stricter than a residential mortgage. The mortgage provider will assess the applicant’s credit rating, the rental charge for the property, and the security of their income when deciding if their application for a buy to let mortgage has been successful. Buy to let property owners will also find their to be a sizable upfront cost to becoming landlord, with a buy to let mortgage demanding a deposit of over 25% of the rental properties value. If a buy to let mortgage is secured the landlord will of course pay this off in instalments, however, unlike a residential mortgage these payments exclusively cover the interest, with the remaining amount being settled at the close of the term.
How Much Should You Charge For Rent?
It is natural that a landlord would want to see some return of their buy to let investment, particularly after paying the associated costs of getting the property ready to rent. As expected the landlord can recuperate these costs and generate an income through the monthly rental payments they receive. However, it is important to remember that without tenants, no rental payments are received, and setting the rental charge too high can deter a lot of potential renters from your door.
Setting an appropriate figure for tenants to pay in rent means considering a few factors, with perhaps the most important being where the rental can be found. Great value can be derived from assessing what similar rental opportunities are available for tenants in the local area. If properties that are able to offer similar amenities are charging far below what you believe your property can demand, adjusting accordingly could make all the difference. However, these prices could be an indication of rental demand in the area, if opportunities can be found at under the average rate and yet are often found vacant it is telling that tenants are of short supply. If however, there is a surplus of potential renters to be found in your location there is more room to find a greater return on your rental yield.
Typically landlords choose to charge at least 25% more than the costs they incur from their monthly buy to let mortgage payments, allowing them to maintain an income whilst covering any unforeseen payments, such as missing rent, or replacing or repairing the contents of the property.
Whilst it is possible for a landlord to increase the amount of rent that they charge mid-way through the tenancy period, this must be agreed upon by both parties, with the property owner and tenant signing a new tenancy agreement. However, if there was a rent review clause contained in the original tenancy agreement then it will typically explain not only when the landlord is able to increase the amount of rent paid by the tenants, but how much notice they should expect to receive before an increase, and how much the property owner is able to increase the rental charge by. With this being said, if the tenancy period has come to an end and the tenant is on a rolling, or periodic tenancy, the landlord is unable to increase the rent more than once each year without the occupants first agreeing.
Finding the Ideal Tenant
If you choose to let privately then the sometimes daunting task of finding a new tenant rests solely on your shoulders. This burden alongside the pressure of missing income and drawn out void periods could be enough to push anyone to accept the first tenant that comes through the door.
Perhaps the area where using a letting agent comes into its own, marketing your rental property effectively as a DIY landlord can sometime yield results that fall short of the mark. Of course, cost effective solutions can be found with platforms such as PropertyLoop. Not only is your property then hosted on the major rental platforms such as Rightmove and Zoopla, but also benefits from the exposure granted by PropertyLoop’s community of tenants and landlords.
We also understand that exposure is meaningless unless your rental opportunity is presented well, with its unique character being highlighted to the right demographic. To this end, when advertising your rental with PropertyLoop, landlords benefit from the latest rental media technology. Our 3D virtual tours allow potential tenants to explore their future home in a new, captivating medium. Allowing renters to interact with a dimensionally accurate, meticulously recreation of your rental, giving a convenient and ground-breaking viewing experience.
Hailed as the most important aspect of finding an ideal tenant, the insight that can be provided through the referencing process is invaluable. Naturally, landlords will want to make an informed decision about those that they choose to let into their property, after all, how do you know if they have consistently accumulated rental arrears, or left properties in horrifying condition at the end of the rental period? Of course these sort of assessments would be incredibly time consuming and arduous to carry out, meaning private landlord often turn to tenant referencing companies. Whilst at PropertyLoop we understand that a landlord will take comfort in the expertise of these organisations, we see no justification for property owners to be charged up to and around £70 per reference. For many this turns the search for an ideal occupant into a money saving exercise, and another high cost they must incur before they see a return on their investment.
However, when trying to find the ideal tenant with PropertyLoop a more comprehensive service is provided to the landlord at no additional cost. In contrast to most tenant referencing services offered by high street and online letting agents we don’t just offer landlords a single reference for a tenant from their most recent occupation; we gain a reference from each of the potential occupants previous landlords giving a complete rental history. To ensure that the landlord isn’t surprised by any missing rent further into the tenancy period, we assess the prospective tenant’s financial eligibility for the rental opportunity, evaluating their credit score, current employment status and income. To provide the landlord with complete transparency and peace of mind we also authenticate the identification of any potential tenants, scrutinising any provided documentation.
As mentioned, this absolute evaluation of those seeking to rent out your property is provided by PropertyLoop at no extra cost; we ensure that landlords are paid before us! To this end landlords are alleviated from the financial burden that can come with referencing and can enjoy complete freedom in the search for their perfect tenant.
What Documents Does a Landlord Need to Provide?
Once a landlord has found their ideal tenant and is all set to hand over the keys, there are a number of additional documents they must provide to the tenants before the tenancy period commences.
To this end, all occupants of a rental property must be issued with a copy of the “How to Rent Guide”. This document is produced by the government in an effort to provide new tenants with a greater understanding of the current rental landscape, explain their rights as a tenant, their obligations as a resident of a rental property and where they can turn if they are in need of support. If a landlord wishes to issue a tenant with a section 21 notice, the move will not be upheld if the property owner has neglected to provide their tenants with a copy of this guide.
Alongside this landlords must also provide tenants with a valid Energy Performance Certificate, or EPC. This document allows for a transparent evaluation of the rental properties energy efficiency, rating this on a scale from A to G, with the latter being the least energy efficient. If the property fails to score a rating of D or lower the property will be deemed unfit to rent.
After taking a tenancy deposit from the tenant, the landlord is required to provide details of the scheme under which it is protected. When taking a tenancy deposit landlords are legally obligated to enter the sum into a government backed deposit protection scheme and issue the tenant with details of the protected amount, and the provider within 30 days.
If the rental property contains gas appliances the landlord will also be required to present new tenants with a copy of the Gas Safety Certificate. Inspections of the properties gas appliances are required to take place each year, being conducted by a registered Gas Safe engineer. After the inspection has taken place, tenants must be given a copy of the new certificate within 28 days. In the event that a property owner fails to comply with the gas safety regulations, they are at risk of being detected by the Health and Safety Executive, with the repercussions encompassing fines, banning orders and perhaps even imprisonment.
Do I Need to Use a Letting Agent ?
Of course, it is possible to let out a rental opportunity without the assistance of a letting agent. However, when faced with this assessment many think in terms of cost effectiveness, but should you still use a letting agent? Whilst this is the primary argument for those seeking the DIY landlord experience, the time spent dedicated to hosting several in person house viewings, arranging repairs, curating a contract and marketing a property (just to name a few), far exceeds the efficiency and historical expertise of those like PropertyLoop. Similarly landlords can find themselves facing serious repercussions if they fail to abide by the current legislation set out by the government. Fines, banning orders, and imprisonment are all possible outcomes that can be easily alleviated with having a reputable letting agent on your side.
PropertyLoop is the world’s first commission free lettings platform. Our platform allows landlords to advertise their rental, reference tenants, curate an agreement, register the deposit and collect rent completely for free! There are no hidden charges, upfront fees or any catches.
Built by experienced property investors and landlords, PropertyLoop connects renters with the owners directly. Your property is featured on all major search and comparison portals as well as advertised by PropertyLoop everywhere else on the Internet. You don’t have to worry about finding the good renters, that’s the job for the platform. Receive offers straight to your mailbox and select the renters that are right for your property. Need access to busy London property market? No problem at all! PropertyLoop is the London market specialist with years of experience and unique knowledge. Whatever your needs are, you can always speak to friendly support staff. Renting property is made as simple as one, two, three.