Practical Tips for Accidental LandlordsWritten By PropertyLoop February 17, 2021
First up, you may be wondering what we mean by the term ‘accidental landlord.’
Well, quite simply, it’s a landlord who had no intention of ending up with a rental property.
He or she has become a landlord because circumstances – rather than desire – forced their hand ie they moved to a different job in another location and haven’t sold their original home yet. Or, it could be that they’ve moved in with a partner to get married, or their parents to save money. Regardless of the reason, the fact remains – they’re now landlords.
So, if that’s you then get up to speed with some of the important stuff that you need to know fast, such as:
Can I Rent if I Have a Mortgage?
You need to swap your residential mortgage for a buy to let mortgage. It’s slightly costlier in terms of interest rates but, at least you only pay back the interest, meaning you’ll get a good chunk of the rent to keep every month.
Online Letting Agents
You’ll reduce your costs considerably by using an online – as opposed to a High Street – letting agent. In fact, you could save up to £1000 by using the former. You’ll also be able to access your file whenever you like online, rather than waiting until the physical shop opens (and which feels so old-school now!). You can even get ongoing management services from online letting agents, so they’re definitely worth considering.
How Do I Know What Rent to Charge?
Check out Rightmove and Zoopla to find out what other landlords are asking for rent in your location. How much are other two-beds in the same street, for instance? Are they in as good condition as your property? It wouldn’t hurt to actually go along and view these properties (if possible).
You really need to know what you’re doing here because get it wrong and you could have to pay back your tenant three times what they’ve given you as a deposit. That’s if you don’t tell them where you’ve put it within 30 days. All deposits must go into one of three government accredited schemes. The maximum deposit landlords can take for an average tenancy is five weeks rent.
This is essential if you don’t want to find yourself having to seek another tenant in three- or four-months’ time because the current one hasn’t paid rent for the past two months. For a small sum, a tenant referencing agency will check your prospective tenant’s employment credentials, references from previous landlords and their credit file.
When you let out your property both you, the landlord and your tenant have to sign a Tenancy Agreement. This outlines what is expected is either of you as well as states what the rent is and how long the fixed period of the lease is for (usually six to 12 months).
If your tenant is a student then you’d be advised to get a guarantor to agree to cover the rent if the tenant can’t. This isn’t unusual these days and is usually a parent or other family member who agrees to be the guarantor.
You’ll have to pay tax on your rental income. There is landlord relief – of 20% – across the board. You can also offset your tax by claiming for expenses such as marketing costs, management costs, replacement items of furniture etc. The tax is paid in the form of a self-assessment which must be sent annually. Rental income is added to any salary you receive for tax purposes so you are unlikely to be beneath the government’s Personal Allowance threshold.
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.