How to become a landlord
Not everyone sets out to start buying properties with the aim of renting them out. Lots of people inherit a property on the death of a parent, or move out of their main family home to take a new job, and find themselves in the position of landlord by accident. Being a landlord is not a responsibility to be taken lightly. Fail to conform to your legal obligations and you could face hefty fines or in the worst case scenario, prison. It’s not all scary though and there are a few pointers which make becoming a landlord easy.
Delegate it – the easy option
The very easiest option for becoming a landlord is to delegate the responsibilities entirely to someone else. Letting agents take the hassle of being a landlord away from you. They’ll advise on what rent to charge, look for tenants, manage payments and make sure you have all of the right safety certificates which you need to operate legally. Management fees are typically around 10% to 15% of the monthly rent. If you can cover the mortgage costs of the property easily, it might be far easier in the long run to let a professional letting company manage your property.
Set your criteria and make it legal
If you’re doing things yourself, then take some time to understand your obligations before leaping in and advertising your property. First, you’ll have to register with HMRC as a business owner, and agree to submit an annual tax return. Think about how much you are hoping to get each month in rent, and decide what sort of tenants you are looking for. Speak to several insurance companies about specialist landlord insurance and decide what level of cover you need. If your property is a larger home, look into whether it is legally defined as a HMO, or house in multiple occupation. There are lots of landlord forums and advice pages around online, where you can get information and share experiences with others who are in the same boat.
Consider costs
It’s easy to assume that the rent you are receiving each month, less the cost of any mortgage on your property is “profit”. That’s only the case until something goes wrong. Landlords are responsible for big maintenance jobs like roof repairs or a new boiler, and the little repairs too. Keep funds set aside and ring-fenced should you need them. In some cases, repairs might be tax deductible, so keep receipts and ask your accountant for advice. There will also be costs associated with getting your property ready for rental in the first place, by installing smoke alarms, getting gas safety checks done and any appliances PAT tested.
Know the local differences
Each of the four countries which make up the UK have different rules and regulations about rental properties. For example, in Scotland, all landlords have to join a central register and obtain a “fit and proper person” licence. Research both national and local requirements to ensure you’re always on the right side of the law.
