Thinking of letting your property?
Letting out a property can be a daunting prospect, but by getting the groundwork right you can maximize your changes of a successful tenancy. Below are some hints and tips that will help you to plan your next steps into the letting market. If you’ve any questions, please don’t hesitate to call us. We’ll be more than happy to help.
Do your homework
It sounds obvious but you’d be surprised how many people get into letting without doing even the most basic checks. Getting the right letting agent is crucial. Get busy on the web and see who’s out there – a quick look at the main portals like Zoopla and Rightmove are a good place to start. Then, once you know who’s on your patch, put together a shortlist based on things like their trading history, recommendations, testimonials and professional membership. Don’t be afraid of popping in to see, or phoning, the lettings manager. Your relationship with them is going to be crucial so it’s always best to get a feel for who you might be dealing with.
Finding 'the one'
There’s no right and wrong way to pick an agent. It’s a bit like finding a partner – you need to ask the right questions to find out what’s important to you and than see if you’re impressed with the answers you get. It can help to think about three main areas:
• What’s the company like: How does your lettings team work? What’s your track record? Who will I be dealing with?
• What service can I expect: How are you going to market the property? What do you expect to get? How long will it take to find a tenant? Should I be doing anything to the property?
• How much is it going to cost me: How much do you expect to get? How much commission do you charge? Is marketing included? Are there any hidden extras?
There’s nothing to stop you taking on multiple agents if you want to but be careful, properties can become overexposed and sometimes a 'sole agent' can help you get a better rental price than a group of agents. Don’t make the common mistake of going with the agent who says they’ll get you the top price – it can backfire if you ask too much and your property ends up sitting empty. Discuss comparable prices in the area with your agent. Find out how long properties are taking to rent out. Importantly, think about how far in advance you need to start marketing your property so that you’ve got a tenant lined up for when it becomes vacant. We recommend you consider at least four to five weeks.
Ask your agent to tell you exactly what they’re doing to market your property, get them to do the viewings on your behalf and insist on detailed feedback from people they’ve shown round so that you know if any issues crop up repeatedly.
Which service should you choose?
Most lettings agents offer three types of services:
• Let only
• Let with rent collection
• Full management
They're all slightly different and will have different costs associated with them. You need to find the one that’s right for you, so think about:
• How far away from the property you live
• How much involvement you want to have in the running of the tenancy
• Whether you want a professional relationship with your tenant
• Your ability to carry out any maintenance
As a general rule of thumb, the less day to day involvement you want to have, the more you are moving towards a full management arrangement. Many landlords prefer to let their agent handle everything for them as they’ve got the skills and the infrastructure to do it properly.
Have you got the wow factor?
It goes without saying that the better presented your property is, the more chance you have of finding a tenant and getting the best price. But in our experience presentation can mean more than just clean and tidy - though that’s clearly important. Try and put yourself in a prospective tenant’s shoes – would you walk in and think 'wow, I want to live here!'. If the answer's no, chances are that anyone looking around would feel the same. It's common sense, but check to make sure that any electrical items and white goods work properly and that any carpets etc are clean.
Think about whether you want to rent your property furnished or unfurnished – it can help to keep an open mind about it until you've found a tenant because some might have very specific requirements. One top tip is that if you are letting your property furnished, it's best to ensure that you don't overdo it – we've known it result in tenants asking for items to be removed and landlords ending up with a storage headache.
Make a record
Whatever you leave in your property, and however you leave it, make sure it’s properly documented in a schedule of condition and an inventory – you won't regret it. We use a specialist third party company to oversee the whole check-in and check-out process. We find it provides clients with piece of mind of knowing that, in the event of a dispute over damage to your property or missing items, there’s always a professional independent report to back up your case.
The paper trail
When the offers start to come in, your agent should run them all past you, however unrealistic, and work with you to decide what’s the best all-round deal. You'll want to take a number of factors into account, including the rent being offered, the type of tenants wanting to move in, how long they want to stay for and other conditions such as employment status or pet ownership. The agent's role doesn’t stop once you’ve accepted an offer – quite the opposite in fact.
Once you’ve decided on a rental deal, it needs to be properly documented and shared with both you and the tenant. This will include full details of the monthly rent, deposit, the type of tenancy, moving in date, special conditions etc. The next crucial stage is contracts and referencing.
You and the tenant will typically be asked to sign a contract document known as either an assured short hold tenancy, a company let of a common law tenancy. While the contracts are being drawn up your agent will be doing background checks on the tenant to ensure they are who they say they are. They will look at areas such as credit history, employment, previous addresses and previous landlords references. Your agent should go through these references with you and together you can decide if the person is a satisfactory tenant or whether you might need to consider some sort of additional insurance policy or rent guarantee scheme.
Your security deposit
The standard deposit is usually the equivalent of four to six weeks rent – though this can be varied with the agreement of both landlord and tenant. Rules introduced to protect both parties in the event of a dispute mean the deposit is usually held by the agent in one of three Government approved schemes. All three schemes strongly recommend that you have detailed inventory at the start of the tenancy and that the check-in and check out process is carried out by an independent third party. If there are any disputes at the end of the tenancy, it will be the deposit scheme which makes the final decision on any deductions.
Moving in day
Once all payments have been made and all parties have signed the contracts, it’s time for the final check-in. As recommended by the deposit protection schemes, it is sensible to get an independent party to check the tenants into a property. The check-in process involves going round the property and documenting the condition of everything. Both landlord and tenant then get a copy of this check-in report and it is used at the end of the tenancy to compare condition and cleanliness.
Once the tenants have moved into the property and everything is up and running, either the landlord or the agent – depending on the level of management support chosen – will be responsible for rent collection and maintenance.
Time to renew
Approximately three months before the tenancy comes to an end, your agent should contact you and the tenant to ask about your future plans. If you are both happy to agree a new tenancy you might want to discuss any changes to the terms of your original agreement, for example an increase in the rent. If you or the tenant does not wish to renew the tenancy, discuss it with your agent. They should ensure that the right amount of notice is served and agree a plan for re-marketing the property. If the property is fully managed, your agent will handle the check-out, the release of the deposit and the return of the keys.
Last but not least… Don't forget the tax man
There are tax implications involved in renting your property and it’s vital you are fully aware of these from the start.
All rent from letting out a property is potentially taxable and Her Majesty’s Revenue and Customs (HMRC) must be made aware if you decide to let your property. There are a number of costs, which can be offset against rental income but everything you receive needs to be declared. It is important to keep all paperwork, including any contracts, statements and bills.
We strongly recommend that you seek advice from your accountant before agreeing to let your property.
The rules are slightly different if you are going to be overseas while renting out your property, but it is still worth asking your accountants’ advice. If you’re having your property fully managed, always remember to provide HMRC with contact details for your agent so they can be fully aware of any relevant correspondence. Finally, the UK tax wheels do not move quickly. Expect to allow 8-10 weeks for any tax application to be processed.