There are a number of reasons people consider becoming a residential landlord.
Often, it’s because someone wants to do more with their savings and sees property as a sound investment with a regular income. It might also be that a person becomes an accidental landlord after inheriting a property or moving into a house with a partner.
However, while the allure of consistent rental income is certainly appealing, there are several things you need to consider before you begin your property portfolio.
Here are seven things to think about when becoming a landlord in Tower Hamlets.
How to Become a Landlord of a Rental Property in Tower Hamlets
1. Consider set-up costs
Finances matter, the numbers have to stack up. If you’re going to obtain a buy-to-let mortgage, the mortgage lender needs to know about your income and what rent you hope to achieve.
They have to ensure that you can cover the costs. You’ll probably have to pay for surveys, too, so they can be sure the property you have in mind is worth what you think it is.
Then there are the legal fees and the search costs. Many law firms who specialise in conveyancing will be able to give you an early indication of what your final bill will be.
2. DIY or use a letting agent?
You could manage the property yourself – and many landlords consider this as it can help reduce costs. However, you must make sure you have the time to dedicate to the management of the property.
Do you want to choose a letting agency to find you a tenant and arrange the initial agreements? You can then keep on top of things for yourself. Or would you rather hand over all the property management to the agency? This will certainly reduce the pressure on you but there will be costs involved due to letting agent fees. You can view our fees here.
Read our step by step lettings guide here
3. Landlord insurance
When you are renting out a property in Tower Hamlets, you must obtain landlord insurance. This is because a home insurance policy will not cover you for what you need, and also because the right insurance will protect you, your property and your tenant.
Read ‘what insurance should I have as a landlord’ here.
If you’re taking out a mortgage to buy the property, your lender will insist that you have insurance. The costs of insurance will vary depending on the level of cover, such as personal liability, contents cover and buildings cover, and loss of rent cover, in the unfortunate event of unpaid rent. Speak with an insurer or a broker and be absolutely clear about what you need.
4. Furnished or unfurnished?
Whether you rent out a fully furnished property or one that is unfurnished is a decision you need to make early on.
If you’ve inherited a furnished property, then it might well be an easy decision. If this is the case, you might find this suits a potential tenant, and you will be able to get a higher monthly rent.
Obviously, if you rent out an unfurnished property, it means you don’t need to buy furnishings for it. Many potential tenants prefer this as they can add their own furniture and make it their home. Don’t forget; it’s best practice to get an inventory carried out as this will affect your insurance policy and could minimise any disputes at the end of an agreement with prospective tenants.
5. Paperwork
One of our top tips for being a landlord is to be well organised and up to date with paperwork from the start. It may seem daunting having a lot of documents, but organisation is key.
Not only will this ensure you don’t fall foul of any legal responsibilities, but it will also mean that if any disputes arise, you know immediately where important documents are. (It’s also particularly useful when you’re doing your accounts or checking information).
6. Legals & responsibility
There are certain legal obligations and responsibilities that need to be understood. These are in addition to the tenancy agreement that you and your tenant should be signing. For example, before a property is let, you’ll need an up-to-date Energy Performance Certificate (EPC) for it.
A gas safety certificate is required for each gas appliance in the property, each home has to have smoke alarms and a carbon monoxide detector, and any appliances or furniture must meet the required safety standards. There are also rules about a tenant’s deposit and how it is kept in a Government-approved scheme. If you need help with any of these, we can advise you. Simply call us on 0207 790 7702 or read our compliance guide.
7. Right to rent checks
A relatively new aspect of renting out a property in Tower Hamlets is the need to carry out a Right to Rent check. A landlord must, by law, check whether a potential tenant has the legal right to rent a property in the UK.
Failure to carry out the required checks could result in hefty fines so if you need advice on this, then contact us and we will be delighted to help.
For expert property advice and becoming a landlord in Tower Hamlets, contact our team of professionals on 0207 790 7702 or email admin@cityrealtor.co.uk.
Need Help With Your Rental Properties?
As property management experts in Tower Hamlets, we’re on hand to make your life as a landlord easier and more profitable!
If you’re a landlord thinking about working with a letting agent to help manage your property, our friendly team at City Realtor would love to hear from you.
Require a valuation, or searching for property management services in Tower Hamlets? Contact us on 0207 790 7702 or email us at admin@cityrealtor.co.uk, and we will be delighted to help you.
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In the meantime, here are the answers to the most frequently asked questions on this topic.
Frequently Asked Questions About Becoming a Landlord and Setting Up Rental Properties
Do I need a license to become a landlord in the UK?
In England, landlords may need to obtain a license for certain types of properties, such as houses in multiple occupations (HMOs), while Scotland and Wales have their own licensing systems; it’s crucial to check local regulations.
What responsibilities do landlords have regarding tenant safety?
Landlords are legally obligated to ensure the safety of their tenants by conducting regular gas safety checks, providing smoke and carbon monoxide alarms, and adhering to electrical safety standards.
How can I set a fair rental price for my property?
Speak with a local letting agent, research the local rental market, consider property features and amenities and evaluate comparable rentals to determine a competitive and fair rental price for your specific location and property type.
What steps should I take if my tenant fails to pay rent?
Follow the legal eviction process outlined in the relevant UK legislation, which typically involves issuing a notice to the tenant and seeking possession through the court if rent arrears persist.
