Advice for Landlords – What you need to know

It’s no secret that first and even second-time buyers face significant hurdles to getting onto or climbing up the property ladder. With average deposit levels in 2015 breaking the £25,000 barrier across the UK, and the £75,000 level in London, home ownership for younger households has increasingly looked more like a pipe-dream. Add in the effective requirement for a couple to both be in the top 25% of earners to afford a London borough property at a standard 3½x loan to value mortgage multiple, and you can begin to see the reason behind the continued growth in the rental sector.

The long-term effect of legislative attempts to “take the heat out” of the buy-to-let sector remain as yet uncertain. None of the measures targeting buy-to-let appear to significantly assist first-time buyers, and the predominant issues of deposit level and income-multiple viability remain for the bulk of younger households. The short-term reality is that the number of households requiring rented property will continue to grow, and the prospects for the buy-to-let sector remain optimistic.

Whilst the sector outlook should provide comfort for portfolio-holders and investors, in these times of shrinking margins and greater legislative responsibility, whether you are a multi-property professional investor or a part-time “accidental” landlord, understanding  how to protect your investment is more important than ever.

It shouldn’t cost the earth to keep a well maintained property with happy tenants. The failure to do so however can see projected yields quickly turn into financial loss. With 28 years of experience of managing investment portfolios from executive lets right through to social housing, Orchard & Shipman have some clear advice for first-time or experienced landlords. Get these basics right and in place every time to protect you, your investment and also your tenants.

1. Written Tenancy Agreements

An absolute must, regardless of whether you are letting your property to a friend, colleague or a complete stranger. An AST (Assured tenancy Agreement) is the most widely used type of tenancy in the rental sector, and will assist you in the return of your property at the end of the term. Your Lettings agent should be able to provide you with copies of this agreement, and talk you through how the AST will protect you as a landlord.

2. Deposit Protection Scheme

Landlords are now legally obliged to register a deposit with an approved deposit protection scheme. We register deposits with schemes such as DPS or My Deposits Scotland for the protection of both tenants and landlords.

3. Insurance

Landlords will need to discuss use of their property for private letting, as failing to declare that your home is now being used in a rental capacity will often invalidate many policies. If the worst happens and your house burns down during the tenancy, the financial consequences could be devastating. Also, Landlords should consider Public Liability insurance to cover for accident or injury that may arise to anyone being hurt whilst in or around your property.

4. Regular Visits

Regular visits to the property can assist in ensuring your property remains in good order, but this doesn’t mean you need to be popping around once a week for coffee. At O&S we recommend a visit in Month 3 of a tenancy to check the condition of the property and discuss any issues with tenants, then followed up by visits every 3-6 months as appropriate. Remember you will need to give at least 24 hours’ notice of the visit in writing, and it is good practice to have a written record of any defects, repairs, or comments from the visit.

5. Safety requirements

Regardless of the size, condition, location or rental value of a property there are some basic safety requirements which you as a landlord must ensure are met. These include compliance with the respective Gas and Electrical Safety Regulations, ensuring your property has an Energy Performance Certificate and that all furniture complies with the relevant Fire Safety Regulations. With the added complication of the additional regulation and best practice around smoke and carbon monoxide alarms for rented properties, this can seem like a minefield for landlords. These responsibilities cannot be ignored or avoided – for advice on what is applicable to your property, your Letting Agent should be able to assist.

At Orchard & Shipman we are more than happy to provide advice, support and guidance on any of the challenges facing landlords today. All of the above and more are covered by our Full Property Management Solution, details of which are available at www.os-residential.com or by calling 0203 301 5993 (England) 0131 516 9799 (Edinburgh) & 0141 428 3263 (Glasgow).

Lee Richards,

Managing Director