Many letting agents will require six months notice plus a penalty fee to terminate the contract. They may also charge a one-off fee if the tenant they introduced to you remains in the property. In addition, fees will be issued every time a new Assured Shorthold Tenancy Agreement or Bare Contractual Agreement is drafted.
When renting out a property for the first time, many agents have a tiered charging model on which they base how much to deduct from the monthly rental amount for their services. This may include a Rent Guarantee Scheme charge; again, it is important to understand what this insurance does and does not cover, as you may be able to find cover at a lower rate elsewhere.
Take your time when selecting your tenants
Depending on the location of your rental property, time of year, rental charge, and demand, you may have several candidate tenants to choose from. While it may be tempting to say yes to the first tenants wishing to proceed, it is important to select carefully, in the interests of both parties. For example, if you are looking for a long-term tenant, it is important to ascertain the potential duration of tenancy required by any candidates. Undertaking a credit check specifically designed for residential tenants will also provide you with the assurance there are no undisclosed credit concerns which may later pose a risk to the payment of rent, and will help verify the information they have provided in their application is correct.
Inform your mortgage lender of your intention to rent out your home
If you are renting out a property which has a standard residential mortgage, perhaps if it was your own home, it will be necessary to gain permission to rent out the property. By renting out without informing and agreeing with your lender, your actions may constitute a breach of your mortgage agreement. Many lenders will, on the application, and maybe for a fee, permit temporary tenancy occupation (i.e. perhaps for two years), but will likely later require you to switch to a buy-to-let mortgage. Regardless, you must gain permission to rent out a property under a residential mortgage; without doing so, you may risk the property being repossessed, or incur additional charges.
Look at the range of insurance cover available
Landlords have a range of insurance options available which while adding to ongoing costs, can significantly mitigate financial risks. Beyond the more obvious insurance requirements, including building, contents (if the property is rented with furnishings), you may wish to consider:
- Rent protection – covers you if the property cannot be rented due to an insurance matter such as fire or flood.
- Rent guarantee – covers you if the tenant is not paying rent and you need time to legally remove them (typically for a maximum number of months).
- Public liability – not all landlords need this, but it can protect in the event of an injury or damage claim related to your rental property.
- Unoccupied rental insurance – will provide cover if there are gaps between tenancy occupation.
Consider maintenance cover
Your landlord experience may be made considerably more challenging if you suddenly face a large bill for work required to the heating, plumbing, electrics, drains, or appliances. Even a single call-out by an emergency plumber to replace parts in a boiler could run to several hundreds of pounds. To this end, it is worth looking at the wide range of home maintenance cover options on the market. For a relatively small fixed monthly fee, you can be covered for most eventualities, providing peace of mind that you will not need to self-fund a large repair bill.
It is also best practice to save part of the monthly rental income for other repairs, general maintenance, and redecoration. While this may reduce your regular return, it will ensure you can keep the property to a standard which will attract reliable and valued tenants on an ongoing basis.
Renting Out A Property For The First Time
Being a successful landlord is about making sound choices which protect your interests and that of your rental property. This means that making decisions based purely on saving money to maximise income may not always be sensible. By anticipating the risks you face as a landlord, and then implementing mitigations, you will boost your chances of making a sound financial return without unnecessary stress and anxiety along the way. We wish you every success with your landlord endeavours and hope you found these tips for renting out a property for the first time useful.
Guillaumes LLP is a full-service Weybridge law firm, with specialist property solicitors. If you're looking to rent out your property for the first time, you may wish to speak to a residential property lawyer. Contact us today to discuss your property with us in confidence.