10 Things You Need To Consider When Looking To Buy Your First Investment Property
Date Published 14 February 2018
Make sure the property's safe
Safety's paramount. Landlords have a duty to keep their tenants safe, failure to do so could lead to hefty fines or even prison. After recent legislation, landlords are now required to install a smoke alarm on every floor where there's a room being used for living space while a carbon monoxide detector must be installed in every room where there's a solid fuel-burning appliance.
In addition, it is also a legal requirement that tenants are provided with a valid Gas Safety certificate at the start of their tenancy.
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Arrange an EPC
All landlords are required to be able to provide tenants with an Energy Performance Certificate, better known simply as an EPC, on the day they move in. From 2008 it became law that all advertisements must contain the property's EPC rating. With this in mind, it's essential that if they don't already have one, landlords order an EPC before marketing their property to let.
An EPC must be provided every time you subsequently let your home to a new tenant. It's used to show tenants how energy efficient the property is.
The law on EPC's is also due to change in 2018 which means every property that is rented needs to comply with the new minimum requirements where applicable.
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Give your property the right exposure
Whether you choose to rent out your property through an agent or off your own back, a good advertising strategy will be crucial. Even if you're not planning on using a letting agent to manage your property, it's still worth considering an agent's tenant-find service.
These days, most people start their property search online, almost always through one of the major property portals. In fact, according to our recent survey of almost 15,000 tenants, 55% of respondents first found their rental property through Rightmove.
To get tenants in place quickly, you'll need to ensure your ad is web-friendly – sharp, snappy and to the point – and that the photographs you use are of the highest quality.
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Carry out an immigration Right to Rent check
As of February 1 2016, the pre-tenancy process will also incorporate the Right to Rent scheme, which requires landlords to check whether prospective tenants have the legal right to rent in the UK.
Immigration status can be identified by checking and taking copies of tenants' identity documents. The Government has identified which documents will be considered legitimate. These include UK passports, European Economic Area passport or identity cards, permanent residence cards or travel documents showing indefinite leave to remain.
Also accepted as proof of a right to rent are a Home Office immigration status document or a certificate of registration or naturalisation as a British citizen.
Landlords will be able to carry out the checks themselves or request a letting agent to do the additional work on their behalf. Those that are found not to be carrying out the checks could be fined up to £3,000 per tenant.
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Reference your tenants
Tenant referencing has become an integral part of minimising the risk of letting a property.
A tenant reference usually includes all of the tenant's basic information as well as previous or current employment details, addresses, bank statements and references from their current landlord.
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Arrange a tenancy agreement
When a tenant agrees to rent your property you must supply them with a tenancy agreement – this is the official contract that gives the tenant the right to live in your property, and you the right to receive rent from them.
The most common tenancy type is an Assured Shorthold Tenancy (AST), which includes the basic information of the tenant, landlord and property. It will also contain the proposed dates and duration of the tenancy, a breakdown of payments and required notice periods should the tenancy be terminated by either party.
To make any changes to the terms of a tenancy agreement, you must first get the approval of the tenant. If you don't have your own tenancy agreement, many letting agents or rental sector firms provide templates for sample agreements.
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Check your landlord insurance
When it comes to renting property, things will sometimes go wrong, costly repairs may need to be made, or matters outside of a landlord's control could occur (i.e. flooding) and that's why it's important to always consider the insurance you have in place.
If you modify your rental property, remember to check with your current insurer to make sure your policy won't be affected. What's more, if you have insurance that protects your rental payments, it may be a requirement of your cover that you notify your insurer of any changes in tenants.
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Protect your tenants' deposits
Every landlord must put the deposit they receive from a tenant into a Government-backed tenancy deposit scheme within 30 days. The three Government-approved schemes are the Deposit Protection Service, MyDeposits and the Tenancy Deposit Scheme.
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Ensure the property's clean
This might sound obvious, but it's something that could get overlooked in a mad rush to get tenants in situ. A clean, attractive home will be much more appealing to tenants, so it's vitally important that your rental property's been given a thorough clean and tidy.
Similarly, you must decide whether your rental property will be furnished, unfurnished or part-furnished. You should also remove any items of personal value or things that will be of no use to tenants.
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Conduct an inventory
One of the most important steps when it comes to letting property, carrying out an inventory before and after a tenancy means you can make sure everything's accounted for. It also lessens the chances of a deposit dispute further down the line.
You can conduct inventories yourself, but it might be better to call on the expert assistance of a letting agent or an independent inventory clerk to make sure it's done right.
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