Weigh up pros and cons
Consider the costs versus returns before letting out your property. The process needs to be financially viable and worth the time and effort it will take in order to fully commit to the idea.
As of 2020, rental income is taxed at 20% (basic rate) or 40% (higher rate). Also take into account costs for letting agent fees and any potential tax deductions that may be applicable.
Once everything has been calculated, the net amount will have to at least be enough to pay for your mortgage payments. It also makes sense to have a buffer to cover potential maintenance and repair costs, and enough to pay for the mortgage during periods when the property is not producing any rent.
Whether you are renting out an existing property, or thinking of investing in a buy-to-let mortgage, always be sure it makes financial sense in the long run.
You can then take a closer look at your local market to get an idea of how much rent you could charge for a similar property. At Hotblack Desiato, we offer a free rental valuation using the most up-to-date market insights. This is a great starting point for those looking to let property in the North London area and can provide reliable and accurate information on rental yields.
Preparing the property
The property will not only need to be in good condition for tenants to live in, but also prepared for marketing to attract the sort of people you want to live there. Consider if the tenancy will be furnished, part furnished or unfurnished and what items you want to leave there (bed/sofas etc.). Make sure the following are taken care of:
- Any clutter and unneeded items are removed
- Fix and repair fixtures and fittings
- Ensure doors/windows have secure and modern locks
- Make sure appliances in the property are working – replace if needed
- Redecorate to make the property look and feel new
Find a letting agent
As the landlord you can choose to manage the tenancy yourself, although using a letting agent can make the process even easier and add a lot of knowledge and experience. Before choosing a letting agent, make sure they are an ARLA Propertymark protected agent and they also have Professional Indemnity insurance before agreeing to work together.
At Hotblack Desiato, we are able to market the property, advise on appropriate rental costs, organise property viewings, deal with referencing and deal with the tenant directly for as long as needed. We are also members of a variety of professional bodies such as ARLA, Tenancy Deposit Scheme and The Property Ombudsman, meaning that our lettings team work to the highest standards in the property industry.
For information on our Landlord Charges click here.
Reviewing prospective tenants
It is always a good idea to meet any prospective tenant before making a decision about letting your property. In most cases they will want to view the property, which allows you to find out more about them and what they are looking for.
Alternatively, you could ask us to manage property viewings. We can also carry out thorough reference and credit checks to ensure the tenant can be vouched for by employers/previous landlords and that they will be able to afford the rent. This is part of our Letting Service Only.
Before and during the tenancy the landlord has a number of legal responsibilities that must be met. This includes:
- Safety standards: Ensure smoke (every floor) and carbon monoxide alarms are installed. A gas safety check has recently been conducted and a certificate available for the tenant. All furniture and soft furnishings must meet current safety standards for being fire retardant and have appropriate labels. Installation Survey or Portable Appliance Testing (PAT) has been carried out for all electrical devices. Water supply must be in proper working order.
- Energy Performance Certificate (EPC): By law property must have a minimum EPC rating of ‘E’ and cannot be let unless it meets this standard.
- Right to Rent check: Ensure the tenant has a legal right to live in the UK by asking for proof of ID (passport/driver’s licence) and taking a photocopy for your records.
- Landlord information: You must provide the tenant with details of either your name and address, or that of the letting agents, along with a copy of the How to Rent guide.
- Deposit protection: Assured shorthold tenancies (AST) must offer regulated protection of the tenant’s deposit. The tenant must also be provided with full details of the scheme within 30 days of the money being deposited. Unless there is a dispute regarding damage and repair cover, the deposit must be repaid in full at the end of the tenancy.
- Repairs: You will be responsible for most repairs needed during the tenancy. This could be anything from a faulty roof, to a broken window or boiler.
- Property access: If any repairs or inspections need to be carried out, you must give the tenant good notice (outlined in the tenancy agreement) and arrange a convenient time that suits both parties.
- Licensing: If your property is a house of multiple occupancy (HMO), you must have an HMO license. The licencing can vary depending on the local authority the property is in. If you’re unsure whether your property is classed as a HMO, we advise you to speak to one of our lettings teams who will be able to inform you whether a license is required and what needs to be done to obtain one.
As you can see there are a number of responsibilities that landlords must take care of when letting out property. This is why many landlords prefer to use a letting agent to manage their rental property. We offer property management services for landlords, helping them with routine and non-routine property visits, repairs, deposits, safety checks, maintenance and more. This can help you stay on top of your landlord responsibilities and ensure that the tenancy runs smoothly.