Category: Being A Great Landlord

Tenant referencing is very important, even if you’re renting to people you know. It protects both parties and helps you be sure you’re making a wise decision. Why? Because it flags potential problems, such as historic missed rental payments or poor credit, before you’ve signed a tenancy agreement.

Until recently, the cost of referencing potential tenants was passed to the tenants themselves. Not any more.

Since the tenancy fee ban came into force 1 June 2019, landlords and estate agents now need to cover the cost of doing background checks on prospective tenants.

Because the ban is new, some landlords may inadvertently – or deliberately – skip this step. But frankly, this is asking for trouble!

‘Nightmare’ tenant stories

The internet offers up plenty of landlord horror stories, such as the landlady in Hull who was forced to pay £300 for her tenant to leave, despite them leaving the property in an awful state, with holes in the walls and floors and rotting food strewn all over.

The tenant said she had housing benefit that would pay the landlady, but it turns out she wasn’t entitled to it and the landlady wasn’t paid a penny throughout the entire tenancy.

Then there’s the chap who caused £12,000 worth of damage to the property after a dispute about an electric meter.

Not even celebrity landlords are exempt from terrible tenants. Two years ago, English footballer Frank Lampard rented his £2 million London property to a woman who openly began using his basement for unlawful activities.

What should you be checking?

Financial Reliability

This will check whether your property falls into the affordability bracket for the prospective tenant, and whether their outgoings each month are consistently more than their income.

Scanning credit reports and credit history for CCJs or payment defaults

If a prospective tenant hasn’t been able to keep up with credit, loan or bill repayments this would raise a red flag.

Employment status

Confirmation of your new tenant’s employment status with confirmation of their contract type and/or length.

Tenancy track record

If your tenant is moving from another rented property it is important to ask for landlord references. Landlords tend to look out for each other, so if a tenant is to be avoided, a previous landlord is likely to let you know!

All these checks and reports will help you make an informed decision about the suitability of your new tenant.

If your prospective tenant raises a red flag in any of these checks it may be an immediate ‘no thanks’. You could also consider a guarantor if your worries are on a strictly financial basis.

It’s also important to remember that if you are taking out Rent Guarantee Insurance the policy will include that a tenant has passed affordability, proof of earnings, credit score and CCJ checks.

Regular property inspections

As well as all the credit and referencing checks that you should do at the start of the tenancy you should make sure you do regular property inspections.

This will make sure everything is being kept clean and in good working order, and that the property is not being used for something outside the terms of the tenancy agreement such as running a business.

The Howsy tenant referencing service

The good news is, such stress (and money drains) can easily be avoided. Unlike some traditional letting agents that charge an additional fee to vet prospective tenants, it’s included in both Howsy’s Standard, and Protect Plans.

From just £35 a month (or £65 in London) we do industry-standard credit checks and references on your tenants.

Usually all of this is done fast  – in under 72 hours. And our smart technology and experienced reference team will flag up fraudulent tenancy applications and misleading information within that time, too.

Always check the facts – or at least let us help you check them – and enjoy the benefits of having good tenants.

Putting solid safety measures in place is good for everyone. Both landlords and tenants can sleep well at night knowing there are working safety alarms in their property that will warn of any danger.

There’s no doubt about it; working alarms save lives. If there was a fire in your home, it’s said you’re at least four times more likely to die if there’s no working smoke alarm.

Since the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 came into force on 1 October 2015, it’s a legal requirement for private landlords in England to fit smoke and carbon monoxide alarms. This means privately rented properties are now in line with building regulations that require newly-built homes to have hard-wired smoke alarms fitted.

Are smoke and carbon monoxide alarms the landlord’s responsibility?

Yes, and no. Yes, the landlord has to make sure the alarms are working on the first day of the tenancy (even if the tenant decides to move in after that date). After that, it’s the responsibility of the tenants to check – ideally every month – they’re working properly.

Is it illegal not to have a smoke and carbon monoxide alarms?

Yes, it is.

Are there penalties?

Fail to install smoke alarms and carbon monoxide detectors and landlords in England could face up to a £5,000 civil penalty, imposed by the local housing authority. If they disagree with the penalty charge notice, they can ask the relevant local authority to review it.

At worst, landlords may go to prison for breaking the law. A landmark British case in 2018 saw a landlord jailed for a year following the death of two young brothers from a fire in a Huddersfield home that his property company managed.

The West Yorkshire Police Detective Superintendent dealing with the tragedy said: “We hope that this case is a stark reminder to landlords and letting agents to treat their responsibilities seriously and they have an obligation to ensure that all properties are fully equipped with all adequate safety measures to ensure the safety of their tenants.”

Where should the alarms be placed?

The regulations don’t state where the alarms should be go, just that at least one smoke alarm should be on every storey, and a carbon monoxide alarm in every room with a solid fuel-burning appliance in it, such as an open fire. A purely decorative fireplace doesn’t count.

However, as gas appliances can emit carbon monoxide, we encourage landlords to ensure that working carbon monoxide alarms are installed in any room with a gas appliance in it.

In general, smoke alarms are best fixed to the ceiling in a hallway or a landing, and carbon monoxide alarms at head height, either on a wall or shelf, about one to three metres from a potential source of carbon monoxide.

London Fire Brigade strongly recommend an additional heat detector in the kitchen.Your local fire and rescue authority may be able to offer extra advice, or you can download fire safety information from www.gov.uk/firekills.

Do rental properties need hard-wired smoke alarms?

The regulations don’t specify what type of alarm should be fitted. That said, Howsy believes the best option would be a hard-wired type. If opting for stand-alone ones, we recommended getting the models with a 10-year battery life.

If the occupier shares the accommodation with the landlord or landlord’s family, the 2015 regulations don’t apply.

Like the idea of being a landlord? Owning a buy-to-let property can still be a great investment – if do your research. With new landlords facing more risks than ever, it’s vital to get clear on what’s going to work best for you.

Buy-to-let means buying a property for tenants, not you, to live in. As the landlord, you make money from the rent – as long as it’s higher than the monthly buy-to-let mortgage repayments, of course – and/or when you come to sell the place.

Here are the key questions we recommend you ask yourself when planning a successful rental property investment.

1, Where do I buy?

Location is every bit as important in a buy-to-let property search as it is when buying your own home. “Invest locally” is our advice to first-time buy-to-letters. You know the market well, and it will be easy to meet prospective tenants and keep an eye on your investment. All of which means more peace of mind.

Location is every bit as important in a buy-to-let property search as it is when buying your own home. “Invest locally” is our advice to first-time buy-to-letters. You know the market well, and it will be easy to meet prospective tenants and keep an eye on your investment. All of which means more peace of mind.

That said, certain areas, especially in England, are dependably strong renters markets. University cities, for example, with thousands of students, like Edinburgh, Liverpool, Leeds, Swansea, and Manchester, promise some of the UK’s highest rental yields (see question no.7). The consistent influx of new students every year are a big draw for landlords.

When you’ve chosen an area to focus on, get on the phone to local letting agents. They’ll know what kind of properties are most in demand, the average house prices, and what they rent for.

2, New build or an older property?

Modernised homes typically rent out quicker than older ones. All new builds in the UK are covered by a 10-year home warranty and insurance guarantee that protects the owner against all sorts of issues, including construction problems.

In the first two years, any faults that don’t meet the warranty provider’s technical requirements have to be corrected by the builder. You won’t pay a penny. After that, the warranty covers you against certain structural defects and smaller issues, such as the double-glazing, internal plastering, and the staircase.

While older properties are likely to be cheaper, they may need money spent on them to get them into a rentable state. On the plus side, places that need improvement present you with an opportunity to renovate them cheaply and quickly boost the value of your investment.

3, Flat or house?

It depends on the level of stress you can handle. A house will probably have more potential maintenance and repair demands because it has external walls and a roof. But a flat will have ongoing service charges. Make sure you know what they are, and whether they’re likely to go up, and when. The most popular type of property in rental areas is a two-bed flat.

4, Who do I want as tenants?

Who you have in your property not only directly impacts how easy – or not – being a landlord is, but all of your plans. Many lenders, for example, put restrictions on mortgages for student properties.

Who do you see as your ideal tenants? What are their needs? If it’s students, they’ll want a good value, non-plush place close to their university, while young professionals tend to prefer somewhere modern, airy and stylish.

A family will typically need to be near a good school and have space and plenty of storage for their belongings, as well as the freedom to put their mark on the property and make it their home. The more at home they feel, the longer they’re likely to stay, which is good news for you.

It’s very important to do reference checks on all prospective tenants to avoid trouble down the line. Skip this step at your peril.

5, What are the transport links like?

If you’re planning to buy in or around London, or any city for that matter, research the local transport links. Easy access to public transport, especially the Tube in London, will be a big selling point. Like buyers, renters are willing to pay more to live near a public transport station.

Are there new transport infrastructure projects being discussed? They’re likely to spark a sharp upward trend in (sales and) rental prices for you. Get in as early as you can.

6, How low can I go?

As a buy-to-let investor know that you’re in a strong position to negotiate a discount on the property price. Just like a first-time buyer, you’re not in a chain, and that’s very attractive to a seller. So haggle hard on sale prices and don’t feel you need to love a property. You aren’t going to live there – it’s an investment.

7, What’s the rental yield and affordability?

Do the maths thoroughly before you start your search in earnest. Figure out what your monthly rental yield will be – that’s the income you’d make on a property expressed as a percentage on the building’s value. As a benchmark, 5% a year is considered a good rental yield.

Your mortgage application will also consider affordability. In other words, whether you can keep up with mortgage payments while the property is empty. As a rule of thumb, it’s smart to budget for a place being empty for at least two months in any 12. Consider all costs, such as agent fees, stamp duty, repairs, etc., when working out the affordability.

8, What capital gains might I get?

Although you’re initially looking at rental income as your key return on investment, long term capital gains and property price increases can be very nice too. So invest in up and coming areas.

Word of warning: buy-to-let properties are not exempt from capital gains tax (CGT), due on any increase in value when you come to sell. CGT is paid at 18% or 28%, depending on your tax bracket. Other profit-eating costs you’ll face include insurance premium tax, and an extra 3% on stamp duty.

Property investing still makes people money. Sometimes a lot.Talk to those who’ve done well and ask them for tips, and which pitfalls to avoid.

Going in with your eyes wide open like this will boost your chances of securing a successful buy-to-let investment. Good luck!