Our top 10 tips for accidental landlords
Not all landlords have a large property portfolio and are well-to-do businesspeople; some might become an accidental landlord. Many have become “accidental landlords,” maybe as a result of inheriting a home, needing to relocate but being unable to sell it, or having a temporary job overseas.
A property’s rental process can be difficult and time-consuming, which is why effective property management is crucial. With almost 170 laws pertaining to home rentals, how does an unintentional landlord make their way through this legal maze?
In order to assist landlords who did not anticipate holding that position, we have put together some advice.
What Is the Definition of an Accidental Landlord?
Anyone who has never intended to become a landlord but finds themselves in need of renting out a home they own is considered an accidental landlord.
If so, take a look at our advice on how to successfully rent out your property.
#1. Notify Your Mortgage Lender
You must notify your lender of your intention to rent out your property if it has a mortgage. If your lender gives you consent to let, you can continue to pay your mortgage even though you can rent out your house for a maximum of 12 months. Should you choose not to, you will have to convert your residential mortgage into a buy-to-let mortgage. The mortgage rate in this case can be different from your existing rate, and you will also be responsible for an arrangement charge.
#2. Verify your Lease
Verify if you are able to sublease for leasehold properties by consulting your lease, and consider seeking tips for accidental landlords if you’re new to renting. It could be necessary to ask your leaseholder for approval. Certain leases completely prohibit subletting.
#3. Make Sure You have Landlord Insurance
Although building insurance is required by mortgage companies, landlord buildings and contents insurance is not legally required, but it is advisable to have it in place.
When you rent out your property, regular home insurance won’t cover it, so landlord insurance is necessary.
#4. Be Realistic on your Pricing
To learn more about your neighbourhood’s tenant population and the monthly rental amount you may expect, speak with local leasing agencies in the area and look up comparable properties on Rightmove and Zoopla.
Don’t overprice your property; accepting a monthly fee that is a little less than the asking price may solve your problems of keeping tenants away and possibly prolonging their stay. Tenants will also take utility costs into account so if you are able to provide an energy performance certificate showing savings through efficiency then you may be able to attract a higher rent.
Take a look at the rent you want to get and subtract all of your expenses to determine what your reasonably desired return is, considering gas safety certificate costs as well. Add the cost of your mortgage, as well as ongoing expenses like insurance, upkeep, and letting agent fees, along with landlord insurance for extra protection. It’s important to account for any possible downtime.
#5. Pick Whether To Rent Something Furnished or Unfurnished
It is up to you as the landlord to decide whether to rent out a furnished or unfurnished property. It will rely on your goals and requirements, the demand from local tenants, and the kind of tenant you want to draw in.
A washing machine, refrigerator-freezer, stove and oven are the bare minimum that you must provide because most tenants demand white goods to be included.
Keep in mind that, as the landlord, you are in charge of all upkeep and repairs, including any furniture you provide.
#6. Provide Safety Checks Certificates on your Rental Properties
Ultimately, while dealing with tenants, you must abide by the law. This means that a number of safety certificates and tests will be required from you:
Gas Safety Inspection
Every year, all gas appliances and chimneys/flues need to have a safety inspection performed by a certified Gas Safe licenced engineer.
Electrical Safety Inspection
Every five years, at the very least, landlords are required to have a skilled and competent individual assess and test the electrical systems in their rental buildings.
Fire Safety Inspection
A carbon monoxide (CO) detector must be installed in every room that is used as a living space, whether fully or partially, and contains any fuel-burning appliance, such as gas boilers, wood stoves, open fires, etc. Private sector landlords are required to install smoke alarms on each floor of their buildings.
Landlords are also required, as of October 2022, to make sure that smoke and carbon monoxide alarms are properly replaced or fixed when they are found to be malfunctioning.
The landlord’s furnished rooms must comply with fire safety regulations; all couches, cushions, chairs, and beds must have a fire-resistant mark on them.
In the event of a fire, tenants need to be able to get away fast. In order to prevent a fire from spreading quickly across the property, landlords are required to perform necessary repairs and make sure that fire-resistant materials are being used wherever possible in the building’s structure.
#7. Checks on Tenants
Tenants must be checked by landlords to make sure they are eligible to rent the property, as part of efficient property management. By doing this, you can be confident that all of your tenancies will continue to be lawful and above board, adhering to all legal requirements.
Get References and Credit Checks
Make sure you always get references for your tenants, even from past landlords, as this is a standard practice in property management. In general, only rent to tenants whose monthly income is around three times the rent; ask for copies of bank statements and evidence of income. Spending on credit checks is also important if you want to know their payment history. This can be done for a fee by credit referencing companies like Experian.
Right to Rent Check
It is legally required of you to verify if the renters can afford to rent your residential property. Regardless of their name on the leasing agreement, this applies to all tenants who are at least eighteen years old, ensuring compliance with the legal requirements. Merely verifying the identity of individuals you believe to be non-British nationals is illegal.
It is your responsibility to request the original documentation from your tenants proving their residency in the UK.
#8. Confirm If You Need An HMO Permit or A Local Licence
An HMO (House Multiple Occupation) licence is required for any landlord who rents out property to five or more individuals from several households, making it a legal requirement. In England, certain councils run “selective” or “additional” landlord licencing programmes.
Before renting out your property, you need to check with your local council.
For properties in and around Glasgow, further information and registration can be accessed at Landlord Register Scotland
#9. Get a Security Deposit
Tenants should always provide a security deposit to their landlords. This is legally capped at five weeks’ rent for properties with yearly rents under £50,000 and six weeks’ rent for properties with annual rents over that amount.
Within 30 days of receiving your tenants’ deposit, you must deposit it in a government-backed tenancy deposit protection (TDP) programme.
#10. Pay your Income Tax
Any profit you make from renting out your property is subject to income tax. This is your monthly rental income less any permitted expenses.
As soon as you begin renting out your property, you should notify HMRC since, more often than not, you will have to file a tax return—even if you are only slightly profitable. Keep track of the amount of rental income you get and the permitted expenses you spend for each tax year. Mortgage interest is no longer deductible as a business expense as of 2020.
Western Lettings Glasgow is here to help!
Are you an accidental landlord handling the complications of property letting? Western Lettings Glasgow can assist!
Contact us today at 0141 357 0436 to receive our expert assistance and transform your property into a success story!
