Starting out in the Buy to Let business can be an attractive prospect, and a daunting one too. Here’s our rundown of the basics you need to know before taking the plunge.
- Don’t fall foul of the law
There are a great many laws governing what you can and can’t do as a landlord. You need to be fully aware of all the rules and guidelines set by the government. This is not just a simple exercise in jumping through hoops, the regulations are there to help yourself and the tenant.
Landlords have specific responsibilities and a duty of care to the people living under their roof. You should be fully aware of what your legal responsibilities are. Don’t risk losing out on a profit, or worse, simply because you didn’t do your research properly.
- Put money aside for unforeseen expenses
As a landlord, it’s your job to make sure your house is in a good state of repair and maintenance. If you don’t keep on top of it the cost can quickly mount up. Tenants need to have access to all the facilities you would expect, hot and cold water, heating, electricity. If you let the property fall into disrepair, any of these services might fail and if several go at the same time then you could be looking at a hefty bill to get it all fixed up.
- Don’t rent to anyone and everyone
It’s your house, you get to choose who lives there. Let’s be clear about this, you can’t discriminate based on things like race, gender, disabilities, or age, for instance – that’s illegal. But you’d be a fool not to evaluate who you are entering into a legal agreement with.
Make sure you check references, do credit checks, and rental history checks. Just remember, it’s far more difficult to evict a problem tenant than it is to refuse them in the first place.
- Understand eviction
Evicting a person from their place of residence is a big deal for everyone involved. It’s a complicated process governed by multiple laws and guidelines, and with good reason. When you’re a landlord, people are actually depending on you for a degree of stability in their lives.
You can’t just kick someone out and change the locks on a whim. There are specific circumstances when you are allowed to evict a tenant. It’s things like; not paying rent, breach of contract, if and when extensive repairs need to be made, antisocial behaviour, and conducting illegal business.
- Prepare your lease properly
When you agree to rent out a property, or part of a property, you will be entering into a business relationship. Whether you use a tenancy agreement or a lease paper, the document is a legally binding agreement – make sure it works for both parties.
When drawing up the agreement, make sure the terms reflect your needs and requirements as a landlord. If you don’t want people having friends over and making noise late at night, make sure that’s specified in the agreement. Similarly, with smokers, if your house is a no smoking house that needs to be written into the document.
It’s better to be specific at this stage so as to prevent stress further down the line.
- Don’t jump in at the deep end
It’s far easier to start modestly and grow your business organically than it is to jump straight into a large-scale operation. You don’t have to rent an entire house; you could begin with just a spare room. All you need is a room, a tenant, an agreement, and the confidence you aren’t doing anything wrong.
For more advice about getting into the buy to let business don’t hesitate to call or visit any of the Petty Real offices and we’ll be able to advise you further.