If you’ve found yourself with a property to rent, whatever the circumstances, you’ve come to the right place.
What Are My Costs – First-Time Landlord?
To get to this position you may have weighed up options to leave the property empty, sell up, or pass on…
But the choice to rent it out has costs associated to start out, and costs that run throughout the tenancy. This guide will help clear the way and iron out exactly what to budget for before putting it on the market.
Instruct a managing agent, or manage it myself?
This decision should be well thought out, based on research, and compare your experience and knowledge to a seasoned estate agent. And have a good read-up on tenancy and safety legislation. The time and experience a managing agent can have could prove priceless whilst you’re attempting to manage your property from thousands of miles away.
How much should I advertise my property for?
Use the experts. Most letting agents will usually come out and have a good around your property for free. It isn’t as easy as plucking a figure out of thin air, they will usually have the resources to scour the market and produce comparable reports to showcase what similar properties have achieved recently.
Having a rental valuation conducted doesn’t take very long, however, be wary of agents that overvalue your property to gain your business. It’s a classic ploy, to entice you with the dream of achieving an inflated figure and winning your business, just to have the property on the market longer than necessary.
Eventually having to call you to have the awkward conversation with the suggestion of lowering the asking price. It would be a wise choice to get a few different agents over, as well as conduct your own research to get an accurate indication of what you should expect.
Remember, a higher rent will not necessarily mean higher-quality tenants. Priced well, you’ll have a larger target market to appeal to, meaning a larger source of applications to consider.
What costs should I expect from a managing agent?
You’d be paying a management agent for a service; to manage the tenancy for any tenant they bring in.
To start with there will usually be a letting fee, which is commonly either a fixed cost or a percentage that is deductible from the first month’s rent. Included in these costs would be the initial marketing services such as photographs, floorplans, virtual video tours, marketing on their websites and portals, a marketing ‘to-let’ board etc.
Different agents will have different costs, the cheapest isn’t always the best so clarify and weigh up what services they offer for the costs.
What if I only want an agent to source the tenant?
Most letting agents will have a ‘Let-only’ service available, they will find, reference and vet the tenant, draw up the tenancy agreement and possibly conduct the inventory too (at a cost). Following this, ongoing management would be carried out by the landlord and the agent would no longer be a source of contact regarding the management of the property.
A Let-only service is usually chosen by experienced landlords that are competent and confident with any issues that could arise.
The main considerations for the options shown above should be based on the amount of time available, experience, and confidence to deal with any type of tenancy and property-related issue.
How should my property be left before I hand the keys over?
It’s suggested that a pre-tenancy deep clean take place before any prospective tenant moves in. It sets a standard in the minds of all parties involved and leaves no room for excuses if the property isn’t left in the same condition come to the end of the tenancy.
It can be carried out by yourself, or there are plenty of professional cleaning companies that clean to a commercial standard. Costs for this service will vary, and it would be advised to get a few quotes and weigh them up.
How can I make sure the property is kept in good condition?
A thorough inventory rules out any confusion about how the property was given to a tenant. The costs of this will vary from agent to agent, as well as based on the size of the property. It will be a worthwhile investment, as when a tenant moves out, you’ll have a comprehensive report to refer to. It’ll rule out whether any issues or damage are new, or pre-existing as per the document.
What costs are incurred to make my property safe to rent out?
There are a few different certifications to conduct before you decide to put your property on the rental market. Many of these are compulsory and must be carried out to ensure you can legally tenant that property.
Lasting ten years, this certificate should be maintained. A free-to-use online register is available to check whether a property has a current EPC, and if so, how long is left till it expires.
This is only applicable if you have a main gas feed into the property. Some properties, such as blocks of flats, rely on electric heating and water and don’t have a gas feed. It is an annual check and should be always kept up to date and must be conducted by a Gas Safe Registered engineer.
A qualified electrician will carry out this report, to ensure the electrical installations in the property are safe and fit to be used. This certificate must be renewed every 5 years, as stated by the expiry date shown on the certificate.
The number of detectors will vary depending on the layout and size of the property. Typically, a smoke detector will be installed in hallways and living rooms, and a heat detector in the kitchen area.
Carbon Monoxide detectors must be installed in any property that has a device that runs on gas oil or solid fuel.
The test is conducted to check the safety of electrical appliances in a property. All appliances are to be tested, including fixed units such as white goods. A re-test should be conducted yearly.
This assessment determines the risk of exposure to Legionella bacteria. There are initial costs, with annual checks.
Be ready for any miscellaneous costs that might arise, having a contingency will be handy in case of any costly surprises. For example, take on board any recommendations an estate agent gives you, whether it be general redecoration, furniture, a new kitchen or bathroom, or any further maintenance work.
Their recommendations will be based upon the considerations of tenanting the property to ensure it is easily tenanted, and no immediate complaints are made. This benefit alone should outweigh any initial costs.
A well-kept and maintained property is one that will entice good quality tenants to be satisfied and stay longer.
Money management is a huge factor with a rental property, you’ll need to ensure you do all you can to not end up in the red! Get in touch with a property expert to take over this aspect and manage the costs for you!