While the strength of the UK rental sector has seen a slew of new landlords looking to reap the impressive yields currently available, the continued struggles of the wider property market has ensured not everyone is doing so by choice.
The return of accidental landlords to the fore – those having to rent their homes after an inability to sell them following a move – has seen the rental market dominated by a growing demographic of those with little-to-no previous experience of managing a home for tenants. With figures released earlier this year by Rightmove suggesting that around 30% of all landlords are now ‘accidental’, nearly one in three renters are likely to be paying their rent to someone letting their home out via circumstance rather than design.
But although the strength of the rental sector has ensured that many accidental landlords are in no rush to sell their rented property, it’s vital that they understand exactly what’s required of them to adequately perform their duties and protect both themselves and their recently rented home.
The cost of keeping your tenants happy and your house well maintained doesn’t have to be an expensive task, but a failure to do so can turn potential yields into a costly financial loss. Here are our top five tips for accidental landlords’ first foray into the market:
1. Tenancy agreement
Devising a clear, coherent and authentic written tenancy agreement is essential to ensuring a trouble-free tenancy. Regardless as to whether you’re planning on letting your property to a complete stranger or a close family friend, letting a property on a verbal agreement has the capacity to cause some serious trouble further down the line.
An Assured Shorthold Tenancy Agreement is the most frequent form of tenancy on the private rental sector and will ensure you get the property back at the end of the arrangement – for a spell of at least six months or more. Make sure the agreement is signed, witnessed and kept safe.
2. Deposit protection
For those unfamiliar with the rental market, deposit protection schemes can seem like an uncertain prospect. But far from being an optional extra, landlords have been legally obliged to protect their tenants’ deposits since April 2007.
Tenancy deposit protection (TDP) is in its most basic guise, a free dispute resolution service that offers landlords and tenants the fairest possible method of settling any disputes that arise at the end of a tenancy. It is important however to take out a thorough and extensive inventory at the start of the tenancy, to safeguard your property against any potential dispute that may arise.
3. Talk to your insurer
Assumptions are dangerous things to make in any walk of life, but when it comes to insurance policies, they can be potentially devastating.
Although many property insurers offer flexibility to homeowners, a failure to declare that your home is now being used in a rental capacity will often invalidate many policies – ensuring that if your house burns down during the tenancy, you’ll be left facing devastating financial consequences.
As well as declaring a change in circumstance to your insurer, be sure to consider taking out Public Liability Insurance to cover you in the case of an injury or incident that might arise through someone being hurt in or around your home.
4. Make sure your visits aren’t getting shorter
Irrespective of the behaviour of your tenants, try and keep a regular and cordial relationship with those occupying your newly founded rented home. While this doesn’t necessarily mean harassing them with bi-weekly phone calls, look to visit the property every two to three months.
You’ll have to give at least 24 hours notice in writing to the tenant or occupier, but an active presence can help to build trust and ensure that problems that might arise during the course of the tenancy are more easily manageable.
5. Be serious about Safety
For new landlords, the precise requirements about tenant safety can seem hazy at first. But while worrying dodgy carpets and suspect leaks is extremely important, it’s vitally important you don’t forget about safety requirements you’re legally obliged to fulfill.
By law, landlords must have a valid annual gas safety certificate. Additionally, all furnishings must show a fire safety label – if they don’t then they’re not legal.
Electrical certificates and smoke alarms do not carry the same legal weight as gas certificates, but ensuring both are present is extremely good practice, for both your property’s sake and most importantly your tenants, too.
Even though the benefits of the rental market are there to be reaped by landlords of all varying experiences, it’s vital that accidental landlords are aware of exactly what’s expected of them before making a temporary move into the property market permanent. Give your property, tenants and landlord responsibilities the time they deserve and there’s no reason why your accidental foray into rental can’t be a successful one.
This post was contributed by Total Landlord Insurance (Hamilton Fraser) who have been specialising in providing comprehensive landlord insurance since 1996 – they also provide helpful advice for both landlords and tenants on their blog.