Right now there are a lot of new buy to let landlords in the UK. If you are a new landlord then there are 4 things that you must be aware of and understand to ensure that things go as smoothly as possible for you.
There are often changes in the buy to let sector. The government and local councils make these changes because they want landlords to be more professional and offer a good standard of accommodation to their tenants.
Landlords need to do all that they can to take care of their tenants. This starts with the standard of accommodation that they provide and extends to safety and having the right documentation in place. A recent survey by Direct Line showed that new landlords had significant knowledge gaps in 5 areas:
1. The Tenancy Agreement
In the survey by Direct Line, nearly 60% of new landlords said that the most difficult aspect of successfully renting out their buy to let property was the creation of a good tenancy agreement.
The tenancy agreement is very important as it is a binding contract between you as the landlord and the tenant. While it is possible to have a verbal tenancy agreement this is uncommon and not recommended. A good tenancy agreement needs to be in a document.
Your tenancy agreement needs to specify the term of the let. This could be a fixed term of 6 months or a year or a periodic tenancy which runs on month to month or even week to week. You have a few choices when it comes to creating a tenancy agreement:
- Pay a solicitor to create one for you
- Pay your letting agent to create one for you
- Download a tenancy agreement template and modify it to suit your requirements
It is very important that you have a good tenancy agreement in place so choose the method that works best for you.
Deposits are another area where new landlords admitted a lack of knowledge in the survey – almost 50% of the participants admitted that they needed to improve their knowledge in this area. There are several things that a tenancy security deposit has an impact on and this includes evictions.
The first thing you need to know is that you have to use an approved scheme for tenancy deposits. Approved TDP schemes include:
Tenants are entitled to get their deposits back if they have honoured the terms of the tenancy agreement. As a landlord you can reasonably make some deductions such as property damage and unpaid rent.
3. Evicting Tenants
More than 50% of the new landlords in the survey said that their knowledge of evictions was weak. With the Covid-19 pandemic this is a hot subject as the government has acted to provide protection to tenants so prevent evictions. You need to be fully aware of where you stand with evictions and the law.
4. Damage to Property
There were around 23% of new landlords in the survey that admitted their knowledge about property damage was lacking. The biggest area of concern for these new landlords was the difference between damage that is unreasonable and what constitutes fair wear and tear.
On the Shelter website there is a good article on this. They believe that the day to day use of a rental property can lead to “damage” which landlord’s should not penalise the tenants for. This could be paint peeling due to bad weather or a new carpet which has clear signs of use.