With banks offering very little reward to encourage savers, now may be a good time to reconsider where you place your money in order to gain a richer return. Not only do the products currently offered to savers offer little incentive, but the reputations of some of the largest banking corporations in the UK are constantly under scrutiny, making investors wary.
Becoming a landlord is a sure fire way to increase your annual income; offering reasonable yields, the demand for rental property is steadily on the increase as more and more people are finding it difficult to secure a mortgage or save for that 10% deposit.
However, the road to becoming a successful landlord isn’t as simple as buying a house and allowing someone to move in. You will need to know what is legally required of you and to ensure that your property meets all the local health and safety standards as set by your local council authorities.
When renting out a property it is important that both the tenant and landlord know their rights. As a landlord, you do have legal rights and obligations to protect both yourself and your investment. Here are a few things any prospective landlord should know.
Upon signing a lease agreement with your tenant it is your right as a landlord to obtain a security deposit. This deposit should comprise the first monthly rental payment and the security deposit itself. The amount you charge a tenant is limited to an amount as set by your local authority landlord tenant laws but is usually no more than two month’s rent.
A security deposit is paid as a way to make sure that when a tenant leaves your property, you have the funds to replace or repair any damages. Money can be deducted from your tenants deposit for any of the following reasons
- Damage inflicted on the property due to abuse or neglect
- To pay any outstanding utility bills left unpaid by the tenant
- To pay any rent left owing
Setting and Collecting Payments
As a landlord you are entitled to receive full payment of rents on a set date as agreed in your compliant rental contract. If you and your tenants have arranged a fixed term tenancy agreement, you as the landlord, are not permitted to increase the monthly rental charge. This can only be done once the current lease has expired. If you do intend to higher your monthly rental rate, this can only be done when writing a new agreement.
In the event that your tenants are late in meeting their rental payments you can request late fee charges providing these charges have been outlined and agreed in the initial rental agreement.
Maintenance and Repairs
You can have access to your property in order to carry out and maintenance and repairs however, you must give your tenants prior notice. It is usually acceptable to advise tenants of your intentions 24 hours in advance.
If your tenant wants to make alterations to your property such as redecoration of certain rooms, they cannot do so without seeking permission from the landlord.
If your tenant does damage the property a landlord is within their rights to demand the repairs be carried out and paid for by the tenant. If the tenant does not repair or replace anything which is damaged you are well within your rights to withhold an amount from the security deposit to pay for the repairs.
The simplest thing to do would be to hand over your property to a local lettings agent and they will help and advise you on the things that need to be done before a tenant moves in, but if you do choose to go down this route, you need to remember to cost any agency fees into your budget. Most rental agents charge a monthly fee based on a percentage of your rental value.
Taking the first steps into becoming a landlord can sometimes be daunting, but armed with the right information and understanding the pitfalls will ensure you success and hopefully an investment with a strong growth and profit returns.