Are you thinking of becoming a landlord, and wondering the extent of what’s involved?
You’re not alone. Many people are now turning to property as a way of making their money work more effectively for them, and buy-to-let is one of the most popular strategies there is.
With buy-to-let, you become the owner of a tenanted property, and once you have paid your mortgage and maintenance costs, can enjoy passive income from the rental paid by your tenant.
It’s a simple but effective strategy which has endured despite the covid pandemic and now the cost of living crisis. Property remains at a premium and good housing is scarce, reinforcing the law of supply and demand.
So, without further ado, let’s see what’s involved in becoming a landlord.
Choose your location wisely
Understanding the best area for your buy-to-let means doing your research and asking important questions.
- What are the average rents in this area?
- Are the yields consistent?
- Are the properties within your budget?
- What are the most sought-after properties?
- Is this a popular area where people want to live?
If you’re short on time, a good property sourcer will have detailed local knowledge and access to a wide range of available properties. They will also have their ear to the ground about up and coming local developments and properties not yet on the market.
Add a letting agent to your power team.
Once you’ve done your homework and found your property and lender, the next important step is to find a reliable and reputable letting agent. Take the time to talk to them and make sure that they understand what’s important to you.
It’s easy to market a property and find tenants, but marketing a property in the right way and finding the kind of tenants you want takes skill and experience. Think of your letting agent as a valuable link in the chain and a gateway to a successful tenancy.
While you are in the process of getting your property ready, the letting agent should be searching for the kind of tenants you want and checking their references. By the time your buy-to-let is in walk-in condition, the tenant is then ready to move in.
Unless you are self-managing the property, a letting agent will be the tenant’s first point of contact once they sign the tenancy agreement, so it’s important to ensure they have the tenant’s best interests in mind as well as yours.
Register as a landlord
Operating as an unregistered landlord is a criminal offence with fines payable up to £50,000 so as part of your compliance (more on that later) you will have to register as a landlord.
This can be done while you are getting the property ready for letting. It is a straightforward process but requires some preparation so make sure you have all the information and documentation to hand.
The Scottish Government has recently introduced online application for the Scottish Landlord Register, which also gives a detailed list of what you will need to apply
Alternatively you can apply via your local council’s housing department.
Compliance
Compliance is a vital part of your legal, moral and contractual obligations as a landlord.
Legal, because the law demands that you meet your compliance obligations, moral, because it is your duty to keep your tenant safe and secure, and contractual as per what has been agreed between you and your tenant in the tenancy agreement.
These are some of the documents and duties you will be required to undertake to keep up-to-date with your compliance obligations:
- EICR (Electrical Installation Condition Report)
- Annual Landlord Gas Safety Record Check
- EPC (Energy Performance Certificate)
- Legionella Risk Assessment
- Carbon monoxide detector and smoke alarms
- A tenancy agreement signed by both parties
You’ll also need to lodge the deposit paid by your tenant (usually the equivalent of two months rent) with one of the approved tenancy deposit scheme providers. You can find more information on this here
A good letting agent will be able to provide you with guidance regarding these certificates and checks, and explain in simple terms what is required from you.
IMPORTANT: Letting agents may be able to carry out some of these duties, but legally you remain ultimately responsible for all compliance.
Advice from a property professional
I never tire of emphasising the importance of due diligence. If you’re thinking about becoming a landlord, due diligence is the glue that bonds the whole investment process together.
Let’s think about that for a moment. Imagine if, at every stage of becoming a landlord, you left nothing to chance.
If you take the time to find trusted professionals from the sourcing agent to the solicitor, you’ll not only feel that you’re in good hands but you’ll ideally be ensuring a smooth process from start to finish.
As you can see, there’s quite a few steps involved in becoming a landlord, but don’t let that put you off. The right property investment company can take care of the whole process from sourcing the property to handing over the keys to the tenant.
Conclusion
Thanks for reading and I hope I’ve clarified at least some of the process of what’s involved when becoming a landlord. I understand it can seem like quite a lot to take in, but remember there is always help and advice out there should you need it.
I’m always happy to chat some more about what’s been mentioned in this blog as I understand the importance of being fully informed, and doing your due diligence.
If you have any questions, or just need some advice, please don’t hesitate to get in touch – there’s no obligation or fee for an initial chat.
Written by John Nicol
Founder, Ascension Property Investments
Get in touch on 01383 603091 or email me via [email protected]
