The UK’s private rented sector is booming. According to a recent report by PricewaterhouseCoopers (PwC), the number of households in the buy-to-let market has “more than doubled since 2001, rising from 2.3 million to 5.4 million” last year. The professional services firm projects this figure to rise to 7.2 million by 2025, resulting in one in four UK households being private rental accommodation.
Whilst these figures indicate a promising trend, they also raise the potential of bad tenants. It’s unrealistic to expect every assured shorthold tenancy (AST) to be immune from tenants who are either prone to not paying rent or leaving the property in a mess. The worst case scenario would involve tenants being guilty of both contract breaches.
Whether you’re a new or experienced landlord, it’s therefore important to remember your rights which include: changing the rent, according to the local market rate at the time; getting your property back after the first six months of tenancy, should you want or need to; and taking legal action to evict tenants if they don’t comply with the above.
As a new landlord, you will have also recently learnt about the many responsibilities you’ll need to undertake – making sure you choose the right tenants for your properties is one of the initial ones that will serve in your best interests.
To help you with the process, here are our five tips for new landlords:
Before agreeing a tenancy
- Who’s your ideal tenant?
Prior to deciding on a tenancy agreement, it’s important to begin with a clear outline of what makes an ideal tenant. What is their job? Would be they in a relationship? Will they have children? Considering such criteria will help you to find the right match for your property.
For instance, if your rental property’s selling point is its nearby public transport links, then you’ll want to attract tenants who are City professionals looking for a quick and easy commute to and from work. If, on the other hand, your property is close to schools and public parks, then it makes sense to market to families who would benefit from these amenities.
- Run thorough background checks
Whilst being mindful of your above criteria, it’s vital to do the following when screening prospective tenants:
- Employment and rental histories: gather bank statements from the past three months as well as references from the tenant’s employer and previous landlords. These key pieces of information will indicate whether or not the tenant has the capability to pay rent on time.
- Interview tenants face-to-face: look at the tenant’s passport and proof of current address to confirm their identity. Ask open-ended questions to determine their motivations for wanting to move from their existing residence. The answers will allow you to decide how closely the tenant matches the criteria you initially set out.
To ensure you’re opting for a reputable letting agent, should you wish to use one, make sure they:
- Are registered with an industry association such as NALS or ARLA;
- Are registered with a redress scheme such as The Property Ombudsman;
- Will provide you with a full property management service – this will be useful as your letting agent may collect rent arrears on your behalf, provided a process on how to do so has previously been agreed upon.
At the start of a tenancy
Your process of finding prospective tenants may end with those who appear ideal. But this doesn’t guarantee that they’ll remain as such further down the line. So to minimise the impact of this potential issue, you should carry out the following procedure:
- Create an inventory
To prevent disputes over the state of your rental property, have an independent party draw up an inventory (with photos) – a list detailing the contents and condition of your property, along with any furniture and appliances provided for tenant use.
It’s also crucial to secure a deposit (usually six weeks’ rent). But be aware that if you’re letting using an AST, you’re legally required to protect your tenant’s deposit in a government-backed tenancy deposit scheme (TDP) within 30 days of receiving it. So if you want to deduct damages from your tenant’s deposit, you’ll be able to use the inventory and photographs to obtain quotes for repair work and, in turn, prove that the tenant is at fault.
During a tenancy
As a landlord, there are other pieces of information to be aware of. If used correctly, they will form part of your arsenal in the event of a bad tenant:
- Your rights
You should have a written tenancy agreement in place such as an AST. This states the duration of the tenancy as well as the amount of rent, how often it’s payable, and when it’s due. If your tenant fails to pay at least two months’ worth of outstanding rent – particularly after you have reminded them at regular intervals of their rent arrears – you have the right to serve them with a Section 8 Notice. The advantage of this notice is that you only have to give the tenant 14 days’ notice and you can serve it at any time during a fixed or periodic tenancy.
- What you’re not allowed to do
You can’t pay unexpected visits to your rental property; you’re legally required to justify your visit and give your tenant 24 hours’ notice. Not following this process may be viewed as harassment.
For more information on how to find the right tenants and to remove the stress of managing your tenancies, call 020 7078 0214 to talk to one of our expert letting agents who will be happy to guide you through the process.