Letting a property out?

[Harry Bloomfield]

She owns a small property and is considering letting it out. What's the process please, what might be involved.

Short term/long term. Furnished/unfurnished. CT included or not, energy bills included or not.

How might letting it affect her mortgage?

What about letting agents? Do they sort out insurance and deposits etc..

 

[motorbiking]

She needs to tell the mortgage company and also and if a lease hold, check she has rights to sub-let. Agents are best if you contract for the minimum. Find, check and set up payment. It should cost 8-10% of 1 years rent. Write your own contracts (agents are rubbish) and allow rolling tenancy after. First thing is the rip off electrical inspection. Depending on the location she may also need a license.

https://www.gov.uk/government/publi...safety-standards-in-the-private-rented-sector.

Insurance you sort yourself and you can also secure deposit yourself.

The other option, depending on location is AirBnB - way easier.

 

[Harry Bloomfield]

The other option, depending on location is AirBnB - way easier.

It would be too far away from here, to keep it regularly maintained.

 

[Diver Fred]

It's worthwhile having a look at the NRLA website.

There is information on there on what you need to do as a Landlord - much more if you join including training courses.

Agents are useful to find tenants and do the necessary checks, set up the AST etc. Expect them to take around 15% + VAT. Make sure you have contract with them that allows you to end the contract with them after a period Without Charge - say 12 months by which time you should have some experience. If the agents won't or don't allow that walk away - there are plenty around.

An Assured Shorterm Tenancy lasts for 6 months minimum unless contracted longer, after which it roll over into a 'Periodic Tenancy'. To end the tenancy after the AST period you have to give 2 months notice, the tenant 1 month.

Your first 'homework' is read the doc's found here.

Your next 'homework' is get the following paperwork together for Energy Performance (EPC) (10 years), EICR (5 Years), LL Gas Certificate (Annual), the how to rent document all to give to the tenant. You need a list of maintenance people to do emergency repairs for you - if you use an agent and you don't have a list of your preferred maintainers then they will use their suppliers at the agents charge - expensive.

Important items in the AST (I recommend you read and use the NRLA model AST as a guide at the very least) is to include a paragraph on Rent increases (5% or RPI which ever is the greater), annually; you don't have to have a rent increase every year but without the clause it's more paperwork to get one, I'd recommend that you always have an annual rent increase - I know - I let the agent not increase the rent, it's now 'costing' me £150 a month! There is no need to have a new AST every year unless you have new tenants (I've had the same tenants for 15 years without a new AST). The AST should say who is responsible for certain repairs e.g glass, waste disposal, garden maintenance.

You have to supply certain items - Cooker, Vacuum Cleaner, Lawn mower all spring to mind.

Before you let the property (either direct or via an agent) Take lots of 'photo's, record serial numbers items supplied. Prepare and have to hand to pass on to tenants simple instruction sheets on how operate door locks, window locks, Alarm (including user code but not how to change it or engineer code), central heating, supplied items.
Prepare a duplicated document with the photo's on, on the day the tenant moves in walk the tenants around the property with that document and get them to initial your copy of the document that they agree with the image and condition of the item.
Edit - see next posting

There is a lot more I could say but for now - the NRLA is your real friend!

 

[Diver Fred]

The document I recommended above which you have the tenant initial that they agree with is needed on checkout for comparison for damage etc - something that could mean withholding part (or all) of deposit.

Council Tax, water and energy supplies are the tenants responsibility. Unfortunately you cannot tell the tenants which energy suppliers to use or that they cannot have smart meters or water meters.

When a tenant moves in or out take meter readings and let the respective authorities and suppliers know.

Once you have decided to let have a maintenance plan for interior and exterior decoration, change of carpets, and the like.

If the property doors have Euro Locks or standard 'Yale' locks be prepared to change such after the tenant has left for security reasons.

 

[motorbiking]

It would be too far away from here, to keep it regularly maintained.

you find a few friendly neighbours to do the cleaning and change overs £30-40 a pop and have a key box, if its a touristy area, its easier and you'll make more money. You can even avoid council tax.

 

[johnny2007]

Get pre-payment meters installed.
Then if the tenants want to go on a contract they can do so in their names.
My wife found herself with a £600 bill because the tenants never changed the name on electricity.
Fortunately she found out before the deposit was released by the dps.

 

[motorbiking]

I wouldn't do that it can put tenants off, but it depends on the type of property you are renting. Its not difficult to change the names over and its really the landlords responsibility (or his/her agent).

 

[blup]

Use an agent for initial letting and managing, much less hassle especially if the property is some way away. The location and condition of the property will determine the kind of tenant. Avoid students and those on benefits. However looks can be deceiving, and there are con artists out there. I would say one in every 5/6 tenants is a bad un. If they don't pay the rent get them out asap, it will just get worse. If you are lucky and get a good long term tenant who pays on time, do what you can to keep them, a lot of income is lost in the period between lets.

Lastly choose the agent carefully, they will carry out checks but ultimately are in it for the money like you. They charge more for non managed tenants.

Blup

 

[HawkEye244]

Some great advice here from the other guys.

To give you a little background : I was a landlord for seven years but packed it in last year as the risk reward ratio became too balanced in favour of risk over reward. I own the property out right - so no mortgage - and despite that, the money I was making was equivalent to a few days extra work a month.

I would advise considering air b&b or a lodger arrangement over AST. Local and regional government has seen fit to strip landlords of their legal protections, and it will continue to get worse because the legislation in place does the exact opposite of what it is supposed to achieve. There is very little money to be made now; even less so if you have a mortgage to pay on the property.

Your friend needs to sit down and itemise all of the costs associated with renting her property. Leave no stone unturned because the unforseen costs will be the ones to catch you out. I would suspect that if she does this properly the AST would be the least preferred option.

 

[Mottie]

My uncle let his house out and the tenant stopped paying. He got no rent for 18 months and cost him £24k to get it back and put in order so that he could sell it.

If the OP's partner died and there was a mortgage on it, didn't he have life insurance to cover the remaining mortgage?

 

[motorbiking]

Letting agents will charge around 5% extra fees and 15% on top of service/repair fees for managing + VAT and take no real responsibility for quality.

If you are over seas it can be worth it. Other than that... not so much.

 

[The Samaritan]

Anyone reading this thread my tip is, do your research properly, consider non rental periods, repairs, problem tenants, your circumstances over the next year or so as best as possible. We rent out a place as do our children and my siblings, we always, always use a letting agent. My sibling has rented one of his properties out to the same family for over 7 years and from year three her dropped the letting agent and that is ok imo but you need the time to deal with leaks, non working w/c etc and have builders in mind as some charge hundreds to change a toilet flsuh item.

Ask the letting agents what they do and any extra charges, ensure they have been around for years, look for online reviews, see how they deal with you call and ask them if they have builders etc they use regularly - dont go the cheapest go for the long-established privateers imo.

We've met a few that treat us like fools for "wasting money on letting agents" but when it goes wrong it goes wrong big style

BTW - letting agents we use we have insurance cover for bad tenants and eviction costs - one of our children had to have evicted a nasty T - the letting agents took care of everything as our child had taken out legal cover - saves a lot of stress and distress and money and usually all done over 3/4 months as opposed to the 12/24 months.

Me, family and friends never let out to those with ccj's or unemployed as the properties are near stations and for working people and slightly above avergae general rents.

Be aware of the 'nice couple' prpred to give you cash 6 months up front, often ends in tears as with those that can move in next day.

The above is our experience and you may have different experiences.

Btw none of us rent out to smokers and those with pets.

 

[blup]

Agree on non smokers and no pets.

Blup

 

[The Samaritan]

Letting agents will charge around 5% extra fees and 15% on top of service/repair fees for managing + VAT and take no real responsibility for quality.

We got caught out with the small print re repairs over 200 pound incurred charges as you said. We changed letting agents, smaller firms been around for 30 years they don't charge these fees and there is always room for negotiations.