Purchasing a buy-to-let property is still seen as one of the best investment methods in the UK. It typically offers more security than other types of investing, such as stocks and bonds. Over the years, however, it has become increasingly more challenging to operate as a landlord, with the phasing out of tax relief on mortgage interest rates, increased stamp duty and more legislation. But owning a buy-to-let is still an ambition for many. In this guide we’re looking at how to be a good landlord and get the best out of your rental property.
What qualities should a landlord have?
Adhering to legislation is a major part of being a landlord, and you could find yourself in hot water if you fail to comply. Penalties range from a few hundred pounds to, at worst, a possible jail sentence. Overall, there are more than 160 different pieces of legislation, including:
- Checking smoke alarms and carbon monoxide detectors are installed and working
- Gas safety check
- Electrical safety test of all electrical installations
- Legionnaires’ test
- All furnishings pass The Furniture and Furnishings (Fire) (Safety) Regulations 1988
- Providing an acceptable EPC (energy performance certificate)
- Registering the deposit with a tenancy deposit scheme.
Keeping on top of legislation will make life easier as a landlord and give your tenant a better living experience while they’re in the property. Plus, it allows you to avoid pitfalls associated with being a landlord and stay on top of important matters.
Communication between landlord and tenant is needed for a smooth tenancy. Whether you’re managing the property yourself or using a property management company. The tenant needs to know the point of contact for any issues, such as maintenance and repairs. You can make it clear who they need to liaise with when drawing out the terms of the tenancy agreement. As a result, the tenant is clear about the primary contact and will have fewer questions, as there is clarity over the setup.
Understand the costs involved
From buy-to-let mortgages to letting agent fees, several costs are involved with being a landlord. It’s good to grasp these costs to understand how much of your rental income is profit and what needs to go on expenditure. Rental outgoings include:
- Buy-to-let mortgage payments
- Service charges and ground rent if you own a flat
- Letting agent fees
- Property checks (legislation)
- Insurance, buildings and contents (if the property is furnished)
- Wear and tear upgrades
Prepare the property
A fresh lick of paint
If you had a previous renter in the property, you’ll want to ensure it’s ready for new tenants. Tenancy agreements typically state that outgoing renters should have the home professionally cleaned (although it’s not a legal requirement, and you can’t force them to do it), but there’s bound to be some wear and tear if the tenancy lasted for a few years. A new coat of paint might be required, as well as light touch-ups around the home.
Fix minor issues
Once you’ve assessed the property’s condition, you’ll need to fix minor issues. If you’ve just bought a brand new place as a buy-to-let investment, there will be very little for you to do. But if the previous renters have moved out, you might need to make some minor improvements here and there, such as painting skirting boards and attending to outside space.
Replace old furniture (if necessary)
Furnished homes require a bit more work as you may need to replace items that fall under the “fear wear & tear” bracket. Whether it’s a squeaky bed, a worn-out sofa or an old wardrobe, there may be furniture items ready for an upgrade. Fortunately, you can offset the expenses against your tax bill as long as the replacement items cost the same as the original furnishings.
Is it worth becoming a landlord?
Since the phasing out of tax relief on mortgage interest and the stamp duty surcharge, many would-be investors have asked if it’s still worth becoming a landlord. There is no definitive answer, and it largely comes down to each person’s individual desires. Yes, there is more legislation, but these are ultimately good moves designed to professionalise the process of renting. For anyone thinking of becoming a landlord, there are opportunities out there and good deals to be had.
Is it still profitable to be a landlord?
Owning a rental property can still prove to be a profitable experience. If you find an area with growth potential, you can invest in a property at the lower end of the price scale. And see its value rise over the long term (capital appreciation). On top of that, up-and-coming areas often provide higher yields. Meaning landlords can enjoy good rental income while seeing their assets increase in value.
The good landlord
Landlords have a responsibility to ensure their tenants are safe and receive a good living experience while in the property. By keeping on top of legislation, understanding the costs involved so you can plan accordingly and keeping on top of the property during void periods. You can be a good landlord who is on top of everything regarding their rental property.
Last Updated: June 8th, 2022