How do you make a success of being a landlord, once you’ve got your first rental property? Whether you’re an accidental landlord, or you’ve bought it as a buy to let, this guide for new landlords will show you how.
There are lots of letting agents that promise to take away the “burden” of being a landlord by taking over the management of the property, so you can enjoy “passive income”.
However, I’m a firm believer that it’s possible to become a successful landlord doing it yourself, without spending a fortune on professional management or expensive property courses.
This practical guide will help you on your journey as a first-time landlord, by highlighting 3 key decisions and lots of helpful tips. All the things you need to know before becoming a landlord.
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A Guide for Success as a New Landlord: Overview
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Decision 1: Furnished or unfurnished?
One of your first decisions will be whether or not to let the property unfurnished.
According to research carried out by the NRLA in 2021, only 15% of rental properties are fully furnished, and 31% offer partially furnished or are flexible.
Which is best?
If your property is in a city centre, you’re likely to have high demand from younger renters and students, who tend to prefer fully-furnished properties. Corporate lets are usually fully furnished with kitchen appliances, including kettles and toasters, and soft furnishings included. Family lets tend to be unfurnished.
My first rental property was a flat in Cambridge that was already furnished as I’d been living in it myself during the week for work purposes, before letting it on Airbnb. I was surprised when I came to let the property (after getting fed up with Airbnb) that no-one was interested in it being furnished. I let it to a couple in their thirties who asked me to remove all the furniture, as they already had their own.
If you’re not sure what’s the norm for your area and target renters, it’s a good idea to speak to letting agents. You can also take a look on Rightmove to see what’s usual in your area.
Practicalities
In terms of practicalities, it’s definitely easier not to furnish a rental property. Usually any additional rent is low, and you have the ongoing cost of replacing items as they wear out. You might also go to the expense of furnishing it, only to be asked to remove some or all of it.
Furnished properties are more high maintenance when it comes to management, as there’s more to go wrong. You’ll also need to organise portable appliance testing (PAT) each year of any electrical items. Additionally, any furniture and furnishings need to comply with the Furniture and Furnishings (Fire Safety) Regulations 1988. Finally, you’ll have the added cost of contents insurance, on top of the usual landlord buildings insurance.
If you decide to let the property unfurnished, some landlords do provide a few extras such as curtain rails. You’ll also need to provide “adequate cooking facilities”. Click here for a guide on what else to provide in unfurnished properties, and here for a list of Landlord Essentials.
Decision 2: How to find renters
The next big decision you’ll need to make is how to go about finding renters.
Appointing letting agents
The easiest route is to appoint a good local letting agent. If you do, you can either chose a ‘let only’ service or a fully managed service. They’ll no doubt also try to persuade you that it’s best to pay them for a fully managed service (See Decision 3 below). The headline cost is not much more than a let only service, but a let only fee is a one off payment. On the other hand, the management fee is paid every month, usually for so long as the tenants are there.
For a let only service, the agent advertises the property on the portals, conducts viewings and prepares a shortlist for you to choose from. They’ll also put in place the tenancy agreement, administer and register the deposit, take up references and arrange guarantors (if needed). They will also check that the safety certificates are in order.
Prices vary, but when I last used a letting agent in 2021 on a let only basis, it was a one off up front payment of £2,100. For context, the monthly rent was £1,300. This compares with the fully managed cost of almost £2,500 per annum.
At a first glance, the difference of £400 doesn’t seem much. However, the average renter stays 4 years in a property, which means the management charge is £10,000 for the four years. If the rent goes up, the management fee payable will go up too
Self-letting: Finding renters yourself
Given the high cost of letting agents, the high demand from renters, and the fact it’s not rocket science, I began to wonder if I could do it myself and save all this money.
I decided to find tenants myself for the first time earlier this year, and it worked really well. I used the Rent Now full tenancy creation service of Openrent, for £49. This included advertising on the portals, a portal for arranging viewings, sending both parties the tenancy agreement for electronic signature, and the deposit administration.
OpenRent offer a comprehensive referencing service at the competitive price of £20 per applicant with a 3-5 day turnaround. If you’re in a hurry, they also offer a less comprehensive speedy referencing service for the same price (click here for details).
OpenRent were great. Although it was more work myself, I didn’t find it difficult. And certainly, saving myself well over £2,000 made this minor inconvenience worthwhile.
If you’re interested in finding your own tenants, click here for my in-depth self-letting guide.
Setting the rent
As well as asking local letting agents for guidance, it’s worth checking Rightmove to see the going rate for similar properties.
Do trust your judgement though as agents use the post code average to recommend a guide rent to landlords, and your property might not be average. Agents covering a large area don’t always appreciate the nuances of difference roads. For instance, a quiet no-through road is likely to be more attractive to renters than a busy A road. Having my properties in the same area means I have a good feel for how rents are developing. My hunch for what I’d achieve has always been about right.
Selecting tenants
Whether or not you use a traditional letting agent, in this strong market, you’re likely to have several tenants to choose from. It’s a big decision, as you’re deciding who’s going to live in your valuable asset. You need renters who’ll be reliable, pay the rent, look after the property and be good neighbours.
Affordability is a key factor, especially in these periods of high inflation. I look for a combined salary of at least 2.5 x the rent, and prefer renters with a steady job. If there’s any doubt in their ability to be able to pay the rate, it’s worthwhile asking for a guarantor.
One of the downsides of using agents, is that you don’t usually meet the candidates yourself. This means you’re reliant on your agent’s memory of the viewings, and their ability to brief you well enough for you to be able to make an informed decision. When I used agents, I always met the preferred candidates to form my own impression of them, before making my final decision.
Decision 3: Who will manage the property?
This is another big decision for new landlords, and one that will have long lasting financial and practical implications. You have three choices when it comes to managing the property:
Appoint letting agents to manage the property
If you listen to letting agents, it’s best left to the professionals. I disagree, and you can find out how easy it is to self-manage in my blog post here.
Sometimes when portfolios become very large or when they are spread out geographically, managing can be a hassle. Some landlords find self-management a distraction, and would rather focus on the next project.
If you’re determined to use letting agents, it’ll cost around 15% of your gross rent. The fees do vary, and you might be able to negotiate a discount if you have a portfolio. But do discuss service levels with them.
Here are some of examples of what to agree with letting agents before you engage them:
- How many inspections will they carry out each year? Most only offer one, but a lot can happen in 12 months.
- Will they visit the property if there is a maintenance issue to see what the problem is?
- Will they supervise work while it is done, and check it in person before paying it? This used to happen before Covid, but increasingly agents accept photos and don’t check what has been done.
- What type of issues do you want to be informed about?
- How much notice do you need to give if you want to self-manage after all, or change agents?
For tips on how to choose managing agents, and get the best out of them, take a look at this practical blog post on managing agents.
Self-manage your rental property
Here are 8 practical tips to help you manage your properties yourself. If you’d like to explore how to do it in more detail, take a look at my blog post on how to self-manage rental properties.
I personally don’t think it’s that difficult managing, say, up to 5 properties yourself, if you have the time and inclination. The key is to have a list of trusted trades people you can call in an emergency and being organised.
Use Contract Property Managers as back up
One of the big worries about being a self-managing landlord is wondering what will happen if something goes wrong at one of your properties when you’re away. Or perhaps if your properties are not local to where you live. Although it’s easy to arrange a plumber to go round by telephone, what if there’s a more serious problem and you need someone there you can trust?
I came across Viewber when one of my rental properties was unoccupied prior to selling, and I needed the meters reading. Viewber provide a service for landlords to book a DBS-checked property professional to visit the property and carry out a task for a very reasonable fee. For instance, they can carry out routine or one-off property condition checks, unoccupied property checks and key management with builders. They can even host viewings.
You can register all of your properties on the service, free of charge, with no obligation. Then, if you need them, it’s simple to book a ‘Viewber’ online. If you’d like to find out more about Viewber, you can click this affiliate link here to register with Viewber, and also help support this free blog at the same time.
Landlord responsibilities
There are over 170 separate pieces of legislation that affect private landlords in England. Each year, more legislation is added, without pruning what is already there.
In order to guide you through the landlord maze, I’ll go through them in three main categories: safety checks, documentation and repairing obligations.
Safety checks
Quite rightly, landlords must carry out regular safety checks. Here’s a handy checklist, so you know what you’ll need to do before your renters move in.
These checks must have been done before you let your property. Make a note in your calendar for when they are due to expire, so you won’t forget to renew them.
In order to show compliance with gas safety rules, landlords must obtain an annual gas safety certificate. It’s also best practice to have the boiler serviced at the same time. Not only will it extend the life of the boiler, but it also shows you take your renters’ safety seriously.
OpenRent offer really good rates for Gas Safety Certificates with £45 as standard, and £15 for additional appliances (prices as of 28 April 2023). You can also add a boiler service for £55 . Click here for more details on their Gas Safety services.
Landlords must test the smoke and carbon monoxide alarms once every year. Smoke alarms need to be on every floor, and carbon monoxide alarms where there is a boiler and/or working fireplace/wood-burning stove.
Electrical installations needed to be tested every 5 years to produce an Electrical Installation Condition Report. OpenRent offer competitive rates for EICRs and PAT testing. Click here for details on OpenRent’s electrical safety services.
The energy efficiency of the property needs testing every 10 years. Rental properties must have an Energy Performance Certificate (EPC) rating of E or better.
A new law is under discussion which would require rental properties to have an EPC of Band C or better from the end of 2025, although it’s now likely to be 2028. Click here for my tips on what you need to know if your property currently has an EPC rating of Band D or Band E.
Documentation to hand to tenants
As well as signing an assured shorthold tenancy agreement with the renters, landlords need to hand over a lot of documentation before move in day.
Your letting agent should take care of it all, but do check, as it’s ultimately the landlord’s responsibility. If you find your own tenants via OpenRent, you’ll need to upload the safety documents onto the portal for the renters. OpenRent automatically send the How to Rent Checklist to the renters.
It seems a lot, but after you’ve done it once, it becomes second nature, especially with this new landlord guide! Here are the documents you’ll need to give your renters – click on the hyperlinks for more information:
- EPC
- EICR
- Gas safety certificate
- How to Rent checklist
- Deposit Protection Certificate within 30 days of the renters moving in
- Inventory – not compulsory, but it is fair to both parties if there is an independent inventory. It’s useful evidence in the event of a dispute.
Repairing obligations
Landlords’ legal responsibilities for repairs and maintenance have developed over the years in a piecemeal way. Consequently, they’re in different pieces of overlapping legislation, making it difficult to navigate. With the proposed introduction of a Decent Homes Standard for the private rented sector, the obligations on landlords will increase further.
In essence, landlords must look after their properties and keep them in good repair so they’re fit for people to live in. They also mustn’t contain serious hazards that may harm the people living there. And when a tenant reports an issue, it’s important to respond promptly. Despite the complexities of the law, If you keep this general rule in mind, you’re unlikely to go wrong.
Keeping up with repairs and maintenance is not just the law, it’s also good business sense. A neglected building will soon lose its value if problems, such as leaking guttering, are not dealt with. They can also lead onto more serious problems like damp. Clearly it’s also important to look after the property for the benefit of the renters who live there.
If you’d like to read more on landlords’ repairing obligations, click here for my in depth guide to the key obligations.
Get your property ship-shape
Whether or not it’s a buy to let, or your own property, it’s bound to need some work before it’s of a good standard for renters to move in. Even if it’s just a case of a thorough deep clean.
Ensuring your property’s ship shape before letting will help you get a higher rent and generate more interest from prospective tenants. Now is the time to repair all of the things that don’t work properly.
Check the gutters and downpipes, treat any mould in the bathroom, bleed the radiators, clean the extractor fan filters etc. It may also be worth giving the property a lick of paint, or new flooring.
Doing this will save you aggravation in the future, and it’s easier doing work when it’s empty. It also means your new tenants can settle into their home without disruption from trades people.
Register with the ICO
The ICO is the Information Commissioner’s Office. It’s the independent body responsible for making sure that organisations comply with UK data privacy law.
All but the most “hands off” landlords, who don’t even receive copies of the tenancy agreements, need to register with the ICO. It only costs £40 a year and is simple to do.
To find out more, take a look at my blog post on how landlords can register with the ICO.
Money tips
Think long term
Being a landlord is a long-term project. It’s not a get rich quick scheme. Property requires regular maintenance to ensure that it will continue to give you returns into the future.
Thinking long term, and investing for the future, will stand you in good stead as a landlord. And in inflationary times, prices will only go up, so it makes sense not to delay investments (cash flow permitting).
You also need to give yourself enough margin to be able to withstand economic headwinds and the unexpected. Being over-geared can leave you vulnerable in difficult times. It’s always better to have a bit left up your sleeve than to run out of money. My motto has always been “Plan for the worst, hope for the best”.
When making choices, such as what carpet to get, think quality, not low cost, as you want things to last. Look for products, from taps to boilers, that come with long guarantees and will stand up to heavy use. Having good quality fixtures and fittings will mean less hassle for you going forward as they’ll be less likely to break.
Create a sinking fund
It’s only a matter of time before something goes wrong. For instance losing roof tiles, a fence blowing over, a water leak, or even general wear and tear.
As a guide, landlords should put aside a sinking fund of at least 10% of the gross rent for the inevitable rainy day. If you do this from the start, you’ll have enough in the kitty to pay for a new boiler, or replace the carpets, when the time comes.
If you have leasehold property, your sinking fund can probably be less. Your service charge will cover repairs to the communal parts and the structure of the building, so you’ll only need to maintain the interior. The management company should have its own sinking fund. Do look at the accounts to see how much has been put aside. It’s not uncommon for service charges suddenly to go up when the development is 15-20 years old. (I speak from experience).
Record-keeping for tax
If you’re a sole trader, you’ll need to keep copies of invoices and receipts so that you’ll be able to report your income and allowable expenses on your tax return. If your properties are held by limited companies, you will also need to keep invoices and receipts for your company accounts and corporation tax assessments. Click here for my blog post on the pros and cons of owning your properties through a limited company
Do also keep records of business mileage. You can claim an allowance at a rate of 45 pence per mile for the first 10,000 miles. It soon adds up.
Be professional
Landlords should always remain professional, even when others are not.
Here are some tips to guide you on what it means to be professional as a landlord:
- Be reliable. Do what you say you are going to do when you said you were going to do it.
- Do the paperwork. Don’t let the renters move in without signing the tenancy agreement. Also, if affordability is an issue, ask for a guarantor.
- Pay bills promptly. It’s a professional courtesy and is likely to help you build positive relationships with the trades.
- Treat your renters with courtesy and respect their privacy and their right to quiet enjoyment. However, you still need to fulfil your landlord responsibilities. Equally, don’t be over familiar as they are customers and not friends.
- Be clear about the frequency of inspections. I let my renters know at the start of the tenancy how often the property inspections will be. I also list in the house manual when the safety inspections are next due. It’s polite and practical to give tenants lots of notice before inspections or arranging checks and repairs. Technically you must give more than 24 hours written notice. However, I usually contact them a week beforehand with a choice of time slots.
- Behave in professional manner at all times. This includes the tone of messages and emails, as well as your speed of replying. If there are any issues, it is usually best to try to resolve them amicably.
- Arrears. If renters fall into arrears, process is your friend. Send professional reminders by email before starting a formal debt recovery process. The NRLA has excellent templates for managing rental arrears
Practicalities for New Landlords
The final section of this guide for new landlords covers the little practicalities that you need to remember before your renters move in.
Change the locks
It’s the first thing I do when I buy a new rental property. It’s also important to do it when tenants change.
Your renters need to feel safe in their own home, and know that there aren’t any spare keys circulating. It’s a small cost, but it’s the right thing to do for your renters and also to protect your property.
Do keep a master set of keys as tenants often lock themselves out. I also sometimes use them to let in trades people, with the tenant’s agreement of course.
You shouldn’t be tempted to pop in, using your own keys, as renters are entitled to “quiet enjoyment”. Except in an emergency, you should always arrange visits with at least 24 hours’ notice. When you arrive for the visit, ring the door bell. It’s polite and it shows you respect their space.
Inventory
It’s crucial to arrange a detailed inventory of the condition of the property before the tenants move in. It’s one of the rare things I outsource to independent professionals. They draw up the inventory and describe and take photos of the condition of each element of the property.
Having a professional inventory means there’s an independent record of how the property was when the tenants moved in. In the event of a dispute when they move out, you can rely on this independent inventory as evidence.
The inventory should be carried out the day before the tenants move in. The meter readings can be used as an independent record of what they were when the tenancy started.
Specialist landlord insurance
Your normal residential buildings insurance is unlikely to cover you if you let out the property. There are many companies that offer specialist landlord insurance. Click here for a guide and the different types of landlord insurance.
It’s worth shopping around for landlord insurance. Take a look at my blog post on 5 tips to get competitive landlord insurance quotes, and an easy way to get the quotes.
Utilities and Council Tax
There’s usually a short void in between tenants, or after buying a property, when the landlord takes over the utilities and liability for council tax. Water companies don’t normally charge when the property is unoccupied, but you need to let them know. Some councils do not charge council tax while an unfurnished house is empty, but my local one does.
In order to avoid hassle later, I contact the utility companies and provide the meter readings taken during the inventory. I also inform the local council of the move in date. That way, I won’t need to pay a council tax bill for the period after the tenants move in.
Click here for my post with more tips on minimising costs during voids and refurbs.
Leasehold tips
If your property is leasehold, you’re likely to need to obtain formal consent to let from the freeholder. Check the terms of your lease. If it’s a development, there’s likely to be an online form on the management portal.
Note that the landlord continues to pay the ground rent and the service charge to the freeholder. This will reduce your net return.
Final thoughts
As you’ve seen from this guide for new landlords, there’s more to being a successful landlord than meets the eye. It involves a full range of skills, from the practical to the technical, creative to the legal.
There’s always more to learn, and more to take on board. If you’d like to understand how to be a good landlord, take a look at the 5 hallmarks of a good landlord. When your renters are due to leave, take a look at this blog post to see how to achieve a smooth end of tenancy checkout.
In short, it’s important to treat it like a business, keep the property in good repair, plan for maintenance, and remain professional.
Good luck!
Other posts you may find useful
Landlord Essentials: Tips on what to get for your buy to let
How to shop around for competitive Landlord Insurance
How to achieve Social Media Success for your Property Business
My 5 biggest mistakes as a newbie landlord
How to succeed in property investing in 2023
What landlords need to know about Energy Efficiency and EPC Ratings
What should landlords provide in unfurnished rental properties?
How to spot 10 problems when viewing buy to lets
How to avoid 5 classic landlord refurb mistakes
Which repairs must landlords carry out?
How to be a pet-friendly landlord
