FINDING A TENANT
You could try finding a tenant yourself using a classified advert in the local paper, but is is usually better to engage a local Letting Agent who is part of a Estate Agency. Letting Agents usually charge around 10% of rental income to find tenants. If you want Letting Agents to manage the whole tenancy they normally charge about 15% of rental income. The advantage of using an agent is their ability to reach potential tenants quickly through their large budget advertising. As well as photos of properties on the windows and walls of the Estate Agents office they advertise every week in all the local newspapers. Always choose an established agent who has experience in the letting field, not just selling properties. A good agent will offer to value your property and give you a realistic monthly rental figure. They will be able to advise on the legal implications of renting your property and provide a Tenancy Agreement setting out the obligations that the tenant (and landlord) must adhere to. This should be an Assured Shorthold Agreement of not more than 12 months duration. Make sure that the clauses include provision for inspection visits, so that you can ensure that the tenant is not wrecking the property, ideally these should be quarterly.
WHAT TO CHARGE
In renting your property, the asking price is critical in attracting potential tenants. Too low and you could lose thousands of pounds, too high and nobody comes to view. Contrary to popular belief, Letting Agents do not set letting prices. All they do is estimate a reasonable property rent based on their knowledge of the property market. At the end of the day tenants determine the price of renting a property based on what they are willing to pay.
There are two ways of dealing with the utilities issue, water, gas, electric etc. The first is to insist that the tenant informs them at the commencement of the tenancy and signs contacts with each to pay for the period they are in occupation. If you choose this option then ensure that you give the tenant a list of the utilities with their phone numbers and the account numbers for the property. The key issue is to avoid a host of large bills from the utilities when your tenants move out. If you are at all unsure phone the utilities yourself and inform them that the property is being rented from this date and that the tenant is legally liable to pay for all utility bills. This way if the tenant does not register with the utilities you will soon be informed by them of this. The alternative option is to calculate the monthly cost of all the utilities and add this to the rent. Make allowances for the higher usage of electricity and gas during the winter months. Never include telephone service as an option as there is no way to calculate future usage.
Have a diary set-up so that you can manage your viewings. For each potential tenant make sure that you have taken their name and number just in case you have to re-arrange the appointment, and also in case they are late and have just got lost.
Before a viewing:
- Have a print out of your property details as they may want to take this away
- A blank piece of paper so that you can take any notes while you are showing the tenants around
- You have planned a route through the property
Showing the people around:
- Always lead tenants through the property. When you open a door to the room enter first, pointing out all of the positive points of the room.
- If a room is too small to fit everybody in then allow tenants to enter the room while you stand outside pointing out all the positive points.
- During the course of viewing gather some information about the tenant for example.
- About their job
- When are they looking to move
Gathering information about the tenant, may determine who you rent to if you have several potentials to choose from.
Of course a good Letting Agent can do most of this for you freeing up your time for other things, you can also obtain useful feedback which is well worth having, just ensure you ask the agent to get feedback before viewings start.
REFERENCES AND CONTRACTS
Once you have found a tenant, your Letting Agent should complete the following tasks.
- Request references from previous landlords and from their employers.
- Do a credit check.
- Go round with the prospective tenant checking the inventory and both date it. If more than one person is renting make sure that all Sign and date it. This should be done the day of tenants move in.
- Make sure all name sign and date the assured shorthold tenancy agreement. So that if one defaults on rent payment, the remaining tenants are responsible to make up the difference so that you are paid in full.
Then sit back enjoy the additional monthly income and consider buying another property on a Buy-to-Let mortgage, your Letting Agent can provide more information.