Running a buy-to-let portfolio can involve a lot of work before tenants start paying you rent. Here’s how to make a landlord’s life easier…
Government attempts to take a greater share of landlords’ profits, including a 3% stamp duty surcharge on buy-to-let properties from 1 April, is forcing many providers of private sector rental homes to think harder about maximising their income.
But London-based letting agent Plaza Estates, which manages properties in and around Knightsbridge and Marble Arch, warns landlords that any move they make must be cost-effective.
The property business points out that it could be unwise for landlords with other interests to sideline letting agents.
Here, we ask a small selection of London-based estate and letting agents to identify four hurdles landlords must overcome before they hand over the keys to an investment property to a tenant.
Obtaining consent to let a leasehold property
The majority of flats in London that are bought as buy-to-let investments are leasehold properties, advises Brixton & Battersea estate agent Eden Harper. Landlords with a leasehold property must obtain the permission of the building owner (freeholder) in order to let it out.
They must also ensure that permission is received from their property insurance company and their mortgage lender.
Carrying out an EPC inspection
It is a legal requirement for landlords to provide an Energy Performance Certificate free of charge to prospective tenants.
EPCs are not just a powerful marketing tool for homes that are already energy-efficient. From 1 April, tenants will have the right to request landlord consent to carry out energy-efficiency improvements. Under the Energy Efficiency (Private Rented Property) (England and Wales) Regulations 2015, this consent cannot be unreasonably withheld unless the landlord proposes implementing alternative energy efficient measures.
And from April 2018, it will be unlawful to grant new residential or commercial leases unless the property has a minimum EPC rating of E.
Keeping abreast of gas and electrical safety legislation
There is a raft of legislation covering gas and electrical safety, while recent legislation also covers the installation of smoke alarms and carbon monoxide monitors.
Landlords are required by law to ensure that the electrical installation in a rented property is safe when tenants move in and maintained in a safe condition throughout its duration.
The Gas Safety (Installation and Use) Regulations also state that landlords must only use a Gas Safe-registered engineer for maintenance and annual safety checks on gas equipment they provide for tenants’ use in domestic premises.
Rent guarantee specialist Assetgrove also advises that the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 require private rented sector landlords to have at least one smoke alarm installed on every floor of their properties and a carbon monoxide alarm in any room where solid fuel is used.
Preparing an inventory for the rental property
While it is not a legal requirement to provide an inventory with an assured shorthold tenancy agreement, a full inventory can be invaluable when disputes over the return of tenancy deposits arise.
“By providing an inventory that lists every last item included in the property, including teaspoons, any claims a landlord makes in respect to loss or damage will be fully support,” a spokesman says.
Carrying out pre-tenancy checks
New Right To Rent rules mean landlords must ensure that any tenant living in their property has the right to remain in the UK. Failure to carry out these checks could land a buy-to-let investor with fines of up to £3000 per tenant, warns Belgravia-based estate and letting agent Best Gapp.
This comes on top of requesting references for each tenant and ensuring that their income will at least cover the rent they have to pay for the duration of the tenancy.
All of these requirements will eat up large chunks of a landlord’s time, says a spokesman for Plaza Estates. Not only that, and buy to let investor unfamiliar with the raft of legislation affecting the private rented sector risks falling foul of the law and facing fines running into many thousands of pounds or, in the case of breaching gas safety regulations, imprisonment.