Landlord's information & guidance

The role of a landlord can at times be difficult, it can be time consuming and at times stressful.

Things for existing and potential landlords to consider before you buy a property to let include;

  • Find the best buy-to-let mortgage
  • Ensure you have enough to cover the deposit for the purchase (usually a minimum of 10%)
  • Appropriate landlord's insurance
  • Decide on the right tenant for you
  • Up keep and maintenance of the property

Buy to Let Mortgages

If you are thinking of buying a house to let, then you'll probably need to apply for a buy-to-let mortgage, which allows you to buy a second property.

These are three main characteristics that make a buy-to-let mortgage different from other types of mortgages. These are:

  • Rent Potential - a mortgage lender will take into consideration how much rent you will earn from the property on top of your current income.   But in some cases your other income will not even be looked at because the potential earnings from the property will be enough to secure a loan
  • Interest Rate - buy to let mortgages tend to have slightly higher interest rates due to the fact it is a second mortgage and you will make a profit from the rent
  • Larger Deposit - most mortgage lenders will require a minimum deposit of 10-25 per cent of the property's value to secure a buy-to-let mortgage. However, each mortgage lender has different rules for this so make sure you shop around for the best deal

Along with a buy-to-let mortgage there are other costs involved, these include;

  • Maintenance costs
  • Insurance
  • Safety certificates

These should always be taken into account before you buy a property to rent.

Landlords Insurance

Although landlords are not required to have landlord's insurance by law, you will probably find that it's more cost effective to pay out for cover for your rental property than for the repairs to your house should it be damaged or destroyed.

If you have a buy to let mortgage on the property then your mortgage lender may insist that the building be insured in the case of a fire or malicious damage, which is included in the Landlord's Insurance. They may also ask that the house be only let to professional tenants.

These days, landlord insurance policies cover everything from a tenant refusing to leave to having to pay to re-house them after a fire, someone dying due to loose roof tiles, or damage caused by a tenant (but always check your policy with your insurance provider).

Many landlord's insurance policies also cover any loss of rental income due to a fire in the property, that is the rent you lost while rebuilding goes on and the cost of re-housing the tenant.

You should also make sure that you're landlord's insurance includes legal protection. This covers the landlords for loss of rent if a tenant refuses to pay and can also cover the legal bills incurred from getting the tenant out. Whichever insurance package you agree to, every landlord's policy should include property owner's liability, which will cover anything that happens to your tenant - even as a result of your negligence.

Don't forget to let the insurance company know when a tenant moves in. If they are not informed that someone is living there when things go wrong, the insurance company may refuse to pay out on your insurance policy in full.

10 tips for landlords

  1. Always have an application form that requests;
    • Details of last 3 years residences
    • Contains date of birth
    • National Insurance Number
    • Next of kin details.
  2. Ask for a copy of;
    • Driving license
    • Passport or other proof of identity.
  3. Always use a tenant credit referencing service.
  4. Ask for sight of the last 3 or 6 months Bank statements.
  5. Beware of people in a rush, or "living with their parents". This may sometimes cause problems in the future.
  6. Try to make an unexpected home visit - that way you may see how they look after the property and confirm they actually live there.
  7. Advise them to take out insurance to cover their and your belongings (ask for a copy of the insurance certificate).
  8. Serve a S21 notice at the start of the tenancy. That is the day they move in. They will usually sign a copy of the notice at that time, providing the evidence you need to prove the notice has been served.
  9. Think about taking 6weeks and not four weeks deposit to avoid the scenario where they do not pay the last month rent, and there is still damage when they leave.
  10. Make sure you have Insurance in place that covers "Injury to people residing in or visiting the premises".
   
   
 
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