Becoming a landlord can be daunting at first, with a whole host of responsibilities and duties to suddenly do, not only to get the most from it but ensure everything is safe and covered. As you begin to look around for help and advice, it may begin straight forward with just collecting the rent and arranging the odd repair, but things can begin to unfold further down the line.
You can also find yourself in this landlord role via lots of routes. On one side it might be a conscious effort to become a landlord as part and parcel of being a property investor and looking to extend your portfolio of tenanted properties for capital growth and income streams. On the other side, you may need to move out of your own home and rent it out in the meantime, or you dabble in taking some lodgers through sources like AirBnb.
Whatever your reasons, you still have the role of a landlord to suss out, whether that's for a simple residential buy-to-let property, or more complex commercial business property.
So here are 15 different aspects of being a landlord to go through. These of course are not exhaustive and will highly depend upon your own situation and property, but they're a good starting point to begin homing in on the issues involved.
This is where our best-seller book the Property Management Book
can be a great help, as this not only goes through the main 53 principles involved with property management but has a quick overview at the end of each principle as to how this specifically relates to landlords.
In the meantime, here are 15 important ones to consider when becoming a landlord and understanding your new-found responsibilities:
1. Suss Out The Legal Roles
Although being a landlord can appear straightforward, maybe as you own a property that you are now letting out to a tenant, you need to check this basis against the legal titles.
So with freehold properties this may be more straightforward, but with long leasehold ones for, say, residential flats or commercial investments, you can technically be a tenant yourself through a head lease to a superior landlord or management company, and therefore under-letting to a sub tenant.
Also make sure you don't fall into a new legal scenario without realising it, so what may begin as a short-term lodger or licence may end up picking up tenancy rights without you realising it.
2. See What Support You Can Have
You don't technically need any formal accreditation or vetting to be a landlord in the majority of cases, but it's something that you may want to still look into.
There are accreditation and support bodies and groups that you can become a member of for help and guidance, although remember that these are often there to get you in the right direction which you still need to implement as a landlord rather than automatically happening.
Even online there is a host of information available for property landlords, although you have to make sure this all makes sense and you can join the dots of understanding together.
3. The Right Insurance
With having such an important property asset, you will need to make sure it has the correct building insurance cover for any kid of loss or damage. There can also be other add-on covers to look into, for example Director and Officers in your role as a landlord and being a Director in a company.
In the majority of cases you yourself will need to arrange this cover, with separate arrangements to possibly recover the cost of the premium from tenants directly or a service charge.
4. The Property's Condition
The physical condition of the property is of course important, whether needing a straight forward repair, a proactive improvement, or dealing with a root issue like damp or roof issues.
Although this may appear obvious, as a landlord you can be tempted to ignore or assume that the tenant will do it. The lease will need to clearly state who does what, and in some cases like short-term residential lets the landlord by law will still be responsible for things like the main structure and services.
If the tenant is responsible for repairs, then make sure these are personal with them, and things like an inventory are established to clarify the initial condition of the property.
5. The Property's Compliance
This is kind of linked with the above condition of the property but goes a stage further to state what minimum level of repairs and compliance are needed by law. This may involve the actual condition of the property, and basic legal duties to be safe from harm to people and Health & Safety risks addressed.
However, it can also include other behind-the-scenes issues, often linked with services. So maybe having the correct asbestos survey and management plan, and back-up for any building works through building regulation approval and CDM compliance.
Services wise, gas safety checks may be due along with electrical testing on the main supplies and possibly portable appliances.
Water supply may also need risk assessing and action taken in order to ensure that there are no issues from, say, legionella, and of course fire compliance and safety.
6. Understanding the Utilities
This may appear blatantly obvious, but it can cause a whole host of issues and costs afterwards if not correctly understood at the beginning.
The main ones of course are electricity, gas, and water - and in addition to the compliance side of their actual supply as above, make sure it's clear on where meters are and how they are managed. So there may be a communal supply that the landlord still needs to pay and then recharge tenants for, and you may need to look into sub-meters to clarify longer term.
The actual cost with suppliers also needs watching, making sure any contacts are agreed for better rates, and that accounts are correctly transferred to any new tenant and moved back to a landlord when empty on any beneficial vacant-property rates (and turning supplies off if needed).
Also watch out for modern media utilities like internet provision, TV aerials, and telephone lines. These are becoming more important in modern life, and affect the lettability of your space.
7. Sound Out Your Space
Again this may sound obvious at first when you look at what space you have to let out, but it's the finer detail that can cause you problems afterwards.
From a landlord’s perspective the ideal situation is where the whole property is let out to a tenant who is then responsible for everything. Even if this is the case, check this with the legal titles, and that any extra parts like outside yards and gardens are also included.
On the inside you might have hidden areas like communal electricity meters, lofts, basements, and store cupboards under the stairs which you may or may not want to demise to a tenant, or you may need to use the loft to store your own items.
Also remember any other rights as well, so for example your neighbour may have a right over your drive to their property which will need noting with a tenant in terms of how they manage their parking and access.
8. The Rewarding Rent
Now we come to the important part, what rent you will be receiving from your tenants, the ultimate reward from being a landlord.
As well as the obvious amounts of rent, check the basis of this continuing at the same level, as with commercial properties you tend to agree future rent reviews and any initial rent-free periods.
Then look at the practicalities - so it being paid, often in advance every month or quarter, and making sure this is in the right form, ideally a direct bank payment.
9. The Awkward Arrears
When things don't go to plan and a tenant doesn’t pay up, you can start seeing arrears mount up from them that may require action. In addition to the main rent, watch out for other costs such as service charges, insurance premiums, and ad-hoc recharges.
On one side you may need to take clear action, and procure the right way through notices and then instructing others like solicitors. There is a tonne of information on these options available, but make sure it's the right course of action for your situation, and it's done correctly.
You may also need to look at more 'softer' chasing, reminder calls and correspondence, and even simple things like making sure they have a correct invoice and summary of what they owe.
10. Leases and Legislation
This is the bedrock of your landlord-tenant relationship; the lease tenancy that you have with them.
Not only make sure this is the correct one that is completed with the right details, but watch out for what happens at the end of the lease as tenants will tend to have rights to continue and request a new lease from a landlord.
Also watch out for general legislation that offers protection for both a landlord and tenant, and which can infer rights where the lease is silent on matters, particularly important with residential properties where there is greater protection of properties as people's homes.
11. Tenant Changes
The actual change in tenants is an issue in itself, whether that's first selecting one, managing their vacation from the property, dealing with any lease renewals, or being involved with other interests like co-tenants and guarantors.
These will need first correctly vetting, with certain legal responsibilities to correctly check their authenticity as tenants. There may also be costs involved in this that either yourself or the tenant will need to cover.
12. Tenant Deposits
This is particularly important with residential short term lets, but it can also be an important aspect with other letting in order to provide reassurance as a landlord that you have monies ready to use in case the tenant does not pay the rent or leaves the property in a terrible state at the end.
These may need to be kept and managed in a certain way, for example with short-term residential ones needing third-party protection, but also make sure the amounts are agreed, that the basis of them is documented, and that the tenant will quickly repay back any deposit you do have to draw on.
13. The Hidden Service Charges
As a landlord you may experience service charges from both sides of the fence.
On one side, you may need to action them and charge your tenant for any shared costs and services you incur, often with multi-let properties. This gets technical, and you really need some accounting help to understand how these need to be correctly managed.
On the other side, you may receive a service charge payment from a superior landlord, for example if you have purchased a flat in a block. In some cases you might be able to include these costs back into any separate mini-service-charge that you then operate for tenants within your own property.
14. The Fundamental Finances
The finances of a landlord are key, and of course really require separate financial advice based upon the actual situation of the landlord personally as well as with their property.
This includes looking at any mortgage and finance payments, and knowing when these lenders need to be informed about any key changes like new tenants at the property.
You may also need to look at the way in which you first hold the property to benefit financially, for example in a company or pension provider.
Also watch out for taxes, in all shapes and sizes. This includes business rates and council tax that you may incur directly when the property is vacant, additional stamp duty due, and good old VAT.
15. Clear Communication
Landlords can typically have a distant and stand-off approach when it comes to communication, where as in actual fact effective communication is key on all levels, particularly with the property world being personality driven and you are dealing with people's actual use and enjoyment of a property.
You need to balance both extremes of formal and informal communication with tenants and other advisors in order to make your landlord life easier. There will be times when you need to be clear in writing, whether that's formal notices or written notes being taken, but there will also be those times when you need to pick up the phone or meet someone on site and simply talk through common-sense solutions.
The Great Landlord Adventure
So as you embark on your landlord path, whether you're a newbie or you're looking to sharpen your understanding as you head into new property territories, these 15 pointers will help paint a clearer picture for you. It's important to remember that it will involve lots of different aspects that not only need to be remembered but balanced together nicely.
So on one hand you might have issues with a tenant and lease, and on the other more practical property-condition concerns. But marrying these together is important to make sure that how you deal with a tenant relates to how to treat the actual property.
After you go through these initial pointers, begin looking into each one accordingly, with all kinds of information available for landlords nowadays through methods like the internet, local support groups and organisations, and specialised training material.