In the 12 months leading up to March 2022, private rental prices rose by 2.4% in the UK, giving the 2.56 million landlords in the country an opportunity to increase their income or expand their portfolios.
Becoming a landlord can be a consistent and rewarding source of income, but there is more to consider than simply handing over the keys to your new tenants.
To help those considering a buy-to-let or those accidental landlords, Estate Agents Douglas & Gordon have put together some tips to help with understanding the responsibilities and challenges that come with the territory, setting you up for success.
What are my responsibilities as a landlord?
- Fees and hidden costs – In addition to the upfront fees required for certificates, there are some other potential costs that landlords should be aware of, like landlord tax, property maintenance and repair costs.
- Problem tenants, or no tenants at all – can be the bane of a landlord’s existence. There is the risk that tenants may skip payments or mistreat your property. Having no tenants means that you risk financial loss while your property remains unoccupied
- Landlord insurance – It’s wise to take out landlord insurance; it will be a requirement if you have a mortgage. There are different levels of landlord insurance, and the costs for insurance will vary depending on your property type, where the property is located and how comprehensive your cover is.
- Tenant deposits – It’s a landlord’s responsibility to follow all the procedures regarding the tenant’s deposit. Landlords must protect the deposit. Failure to do this could result in fines or even legal action.
Does my property meet all the legal requirements?
While it’s always good to keep your property well-maintained to get the best possible rental sum, certain standards must be met from a legal standpoint.
- Energy Performance Certification (EPC) – This certification highlights the property’s energy use and costs. An accredited assessor will need to inspect the property before it goes on the market.
- Gas Safety Certificate (CP12) – A registered Gas Safe engineer must also perform an annual safety check to certify that all gas equipment is safely installed and maintained. Tenants should be given a copy of this certificate before they move in.
- Electrical, Health and Safety – A property must pass several electrical, health and safety checks to ensure it is good and safe.
Choosing a location for your rental property
The location of your property is essential, as it is easier to run and manage a property if you live or work nearby. Many different factors can impact your earning potential, but an excellent place to start is looking at the average cost of rent in your area or speaking to a specialist estate agent to find out more about market conditions in your chosen location.
How to make a profit
As a landlord, you can potentially earn a profit in two ways:
- Rental yield: what your tenant pays in rent, minus running costs like maintenance, repairs, and agent’s fees.
- Capital growth: the profit you earn if you sell your property for more than you initially paid.
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