Are you thinking of investing in a buy-to-let property? There are lots of positives about renting out a flat or house to tenants. This could be your main source of income. The tax deductions that are available and the long term security that having property can bring you are also excellent reasons to take the leap and becoming a landlord.
However, before you jump in and buy that property, it’s worth making sure you know what’s expected of you. All landlords have certain responsibilities and there are rules and regulations to follow before you can let any tenants move in. Here’s a quick-look guide to some of the key things you need to know about.
Buying your property
So, how will you cover the cost of the buy-to-let property? There are two ways you can do this. If you have the cash to cover the asking price, you can buy the property outright. Or, if you have enough for a deposit, you can take out a buy-to-let mortgage.
If you decide to take out a mortgage, all the risks that are associated with any other mortgage apply here. Should you decide to sell the rental property in the future for less than you bought it for, the price you sell at might not make up for what you still owe on the mortgage, so you’d need to make up the difference.
Another thing the remember is that if your property is empty for any reason or your tenant can’t cover the costs and you don’t have any rent coming in, you’d need to find the funds to cover the mortgage repayments.
As with buying any property, you’ll also need to pay survey and solicitor’s fees and stamp duty.
The landlord’s checklist
Once you’ve bought your property, there are some key documents, insurance and other things that you need to have before you can allow tenants in:
- Make sure the property is fit for purpose
This is a legal requirement. Landlords need to make sure the electrics are safe, there is a working smoke alarm installed, and that there are no hazards. The property must meet safety standards for gas, electricity, and fire.
In addition, tenants must have access to running water and facilities for personal hygiene and sanitation. There can’t be any damp, the property must be structurally sound, and it needs to be legally fit for purpose. This includes running checks and servicing the boiler. Landlords are responsible for ensuring there is a boiler care plan in place.
- Arrange an EPC
All properties must have an energy performance certificate. This shows the energy performance rating.
- Take out insurance
Buildings insurance is required if you’ve got a buy-to-let mortgage, and landlord insurance is optional but good to have as it protects your property if anything gets damaged.
- Arrange a tenancy agreement
You need to supply your tenants with a tenancy agreement. This is the official contract that gives the tenant the right to live in your rental.
- Arrange to protect the tenants’ deposits
There is a lot to think about when you decide to become a landlord. Be sure to go through everything that’s required of you before you start renting your property to anyone.