Many homeowners think about renting out their house.
They may want the benefits of extra income, want to save money to pay off debts, or for any other reason, or they may see it as an alternative to selling off during a bad economy.
There are so many reasons people consider renting out their houses to tenants, or even investing in a buy-to-let, but it is possible that this plan will cause more trouble than it is worth if care is not taken.
If you are thinking of getting tenants into your house, here are five steps to point you in the right direction:
Get to Know the Market
Investigate the rental property market in your neighbourhood so that you can choose a rental amount that matches local prices and helps you make a profit.
While doing so, take into consideration the number of square meters and the number of bathrooms and bedrooms. Also, take into account the age of your property and any home improvement you have invested in.
You should also consider future maintenance that the property will need, as you the landlord will be the one responsible for these repairs.
However, remember that your rental price should be within the same range as similar properties in your neighbourhood or you may find it difficult to get tenants.
Take out Insurance
As a landlord, you need insurance against a lot of things that could go wrong. From fire accident to water damage by flood and so on. If you don’t know what type of insurance product you need for your rental property, it is best you speak to an expert, as a time will come when you will need the coverage an insurance policy will provide.
In fact, the type of insurance suitable for rental properties is one of the main questions asked by first-time landlords, however, whether an event occurs or not, it is better you have it and not need it than need it and not have it.
For example, as a landlord, you risk being held liable for tenants’ injuries if the tenant can show you neglected maintenance or failed to fix a problem.
Finding a Good Tenant
It is one thing to want to rent your house to tenants, but a totally different kettle of fish finding good tenants. Stories abound about experiences landlords have had with tenants from hell and vice versa, so it is important you are careful about the type of people you allow into your property.
Ask potential tenants to fill out the application form and provide basic information such as name, employer, salary, previous landlords and ask them to provide references.
You can also use an agency to carry out the tenant verification process, as this will make the process efficient and detailed.
Right to Rent
As a landlord, it is your responsibility not to rent your property to illegal immigrants, therefore you must check whether the tenant has the right to rent in the UK.
If you rent the property to a tenant who has no right to rent, the penalty is an unlimited fine and imprisonment of up to 5 years.
Because this is a rather tricky situation, you may want to get an expert opinion from property managers so that you don’t make a mistake.
Once you have confirmed that the prospective tenant has the right to rent, and you have concluded all negotiations, you should write out a rental agreement or contract.
By writing a contract, you and your assets are protected.
This contract should contain the rental cost, rental period, payment deadline, deposit information, and how quickly you can deal with complaints or rent problems, as well as the names of the tenants.
Plan for Emergencies
Renting out of properties carries with it a number of unexpected emergencies, from tenants who suddenly leave the property to unexpected repairs.
This can be a difficult task and as a landlord, you need to provide funds for such situations.
You may want to, therefore, set aside a contingency fund for repairs and emergencies so that your tenants do no accuse you of shirking your responsibility as a landlord.