The Ultimate Guide for Renting Out Your Property For the First Time
Renting out your property for the first time involves getting many things in order before a tenant can move in.
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From decorating and furnishing the house to your legal responsibility as a landlord and preparing tenants for the move-in day, there are a good few things to tick off your list before you can officially rent out your property.
In this ultimate guide, we’re covering all the aforementioned topics as well as the importance of professional photographs, setting the right price for your rental, choosing the best type of tenancy agreement for you and questions you should ask your tenants.
You can also expect to learn more about tenant referencing, rent collection services and break clauses, amongst other things.
Our guide will help you to navigate what needs doing and get you on the road to renting your property out quickly and efficiently. Let’s get going!
Outgoings vs Income
As a landlord you want to make sure that you’re making some money from the rent you charge, and this means ensuring you don’t spend more than you make. Besides the actual purchasing of the property, you must also take into consideration the day to day costs of keeping the property up.
Day to day costs include:
- Letting agent’s fee
- Mortgage interest
- Landlord’s insurance
- Annual safety checks
- Rent insurance and general building maintenance.
It’s important you factor all these costs in so that you don’t find yourself shelling out more than you can afford.
Landlord legal responsibilities
There are a number of legal responsibilities you are required to fill when you are a landlord. Some of the most important obligations are:
- Meeting safety standards. It is a legal requirement that a smoke alarm is installed on each floor of the property with a carbon monoxide detector in rooms that have a coal fire or wood burning stove.
- A gas safety certificate. It must be provided for each gas appliance alongside ensuring that electrics are all safe to use.
- Fire resistant furniture. Which is easy to spot as often this is indicated on the furniture label.
- Proper water supply. Ensuring that the water supply is working properly will not only protect you legally but also will protect your tenants from Legionella’s disease.
- Energy rating for the property. Which itself must be a minimum E. If a property is rented out with an energy rating worse than an E, you can face a fine of £4,000.
A landlord is also in charge of any repairs the property may need during the tenancy and protecting a tenants deposit in a government deposit scheme. Any arguments that arise in relation to the deposit can be sorted directly between you and your tenant, or you can request to use the scheme to finalise the decision.
It is also vital that you check that your tenants have a right to rent in the UK.
Read our official guide: “What are your responsibilities as a landlord?”
Homes in Multiple Occupations (HMO)
There are a different set of rules for different types of rental properties. If you are renting to five or more people that come from at least two different families, who have to share facilities such as the kitchen and bathroom, you need to follow the HMO rules.
Alongside your normal legal obligations you must also ensure that smoke detectors are installed, the electrics are serviced every five years, that the property is not overcrowded (there should be a separate room for sleeping for each couple, each single person over 21, and for every two young people aged over 10 years), there are adequate cooking and washing facilities and that the communal areas and shared facilities are clean and in good condition.
There is also a national minimum room size that must be adhered to. The national minimum room sizes are as follows:
- A minimum of 4.64 square metres for one person under 10 years old,
- A minimum of 6.51 square metres for one person over 10 years old
- And a minimum of 10.22 square metres for two people over the age of 10.
- Any room that has a ceiling height of less than 1.5 metres cannot be used as a bedroom.
Make sure to contact your local council to understand whether you need an HMO license, as you could face a fine of up to £20,000 if you fail to have one on request.
Furnished or unfurnished?
Deciding whether to rent out your property furnished or unfurnished is a big decision, and there are advantages and disadvantages to each.
Offering your property unfurnished is likely to attract a longer term tenant and may save you some money in the short term, as you’ll avoid splashing out on furniture. Long-term tenants also mean shorter void periods when the property is empty.
Yet, an unfurnished property is less appealing to many tenants. With a furnished property you are likely to be able to attract a tenant faster, while also adding to the rental value (though this is minimal). However, you are more likely to deal with multiple tenancies, as those looking for longer term stays tend to like unfurnished properties.
In summary :
✓ attract a longer term tenant
✓attract a tenant faster
✓ save you some money
✓add to the rental value
✓ shorter void periods
𝘅 deal with multiple tenancies
𝘅 less appealing
While a furnished property will include all furniture needed for daily life, an unfurnished property tends to only have the basic necessities, such as a fridge, oven, cooker, etcetera.
Read our official guide: “Should you rent out your property furnished or unfurnished?”
Using professional photos
First impressions certainly count when you are looking to rent out your property. This is why it’s a great idea to have a professional take photographs of your rental to use when you list it.
Professional photographs elevate your property listing and attract more prospective tenants, enticing them to come for a viewing. This, of course, increases your chances of finding a tenant. An added bonus is that you can reuse these pictures whenever you relist your property.
Even if you have a good camera and understand what makes a good and bad photo, it’s unlikely you’ll be able to capture all the best parts of your property, unless you’re a professional.
Without these professionally taken shots, you run the risk of pushing tenants away, before they’ve even walked through the door!
Read our official guide: “Why you should use professional photos for your rental property.”
Setting the right price for your rental property
The price you set for your rental property will determine whether or not you attract tenants. Therefore it is really important that you understand the market in your area and know roughly what rent your property is worth.
As tempting as it might be, it’s very important that you don’t set your rent too high. This is the quickest way to discourage tenants, especially in a saturated market.
The easiest way to ensure you’re not overcharging for your property, is to do your research. Make sure you understand what similar properties in your area are being rented out for, so that you can base your rent off of these figures.
Read our official guide: “How Do I Set The Right Price For My Rental Property?”
Choosing the right type of tenancy agreement
Despite it not being a legal requirement, a tenancy agreement is highly encouraged. This is because a tenancy agreement protects both you and your tenant from any disputes. However, it can be tricky to know which is the best to choose.
There are several items that a good tenancy agreement should have. These include, but are not limited to:
- the property address,
- address of everyone involved in the tenancy,
- the price of rent,
- how this rent will be paid,
- the deposit amount
- the scheme where the deposit will be registered and suggested terms of the tenancy. (Check out the full list here.)
There are also several types of tenancy to choose from, depending on the type of let you have with your tenants. These include: Assured Shorthold Tenancy (AST), Statutory Periodic Tenancy, Tenancy at Will, Excluded Tenancy, Company Let and Regulated Tenancy.
Read our official guide: “The Different Types of Tenancy Agreements”
Questions to ask an incoming tenant
As a landlord, it is expected that you will be bombarded with questions from your new/ potential tenants. It’s important to remember that this question and answer should go both ways! There are few things you should make sure to quiz your tenant on when you meet them.
To get the conversation going, it’s a great idea to ask tenants about their current living arrangements. This can then lead on to asking about whether they have any pets, about their interests and how frequently they travel.
A really good way to ensure that the conversation feels natural is to encourage them to ask you as many questions as they like too. This way you can both learn about each other.
Read our official guide: “What Questions Should You Ask An Incoming Tenant?”
Right to Rent check
Once you’ve decided upon a tenancy agreement for you and your tenants, you’ll need to think about a Right to Rent check.
A Right to Rent check requires landlords to establish a tenant’s legal status, and whether they can legally rent a property in the UK. To perform a Right to Rent check you will need to check the ID and Visa documents of your tenants.
There can be some hefty fines in store, if you do not check your tenant’s Right to Rent and it ends up that they cannot legally rent in the UK.
Read our official guide: “What is a Right to Rent Check?”
As a landlord, you will need to check if your prospective tenant is a suitable fit for your rental property. This simply means if they will be able to pay the rent and have a good rental history.
In general, tenants are expected to – earn 2.5x the annual rent – to be eligible to move in. By completing tenant referencing, you will be able to determine whether this is possible. Of course, there are some exceptions, for example, when it comes to students.
A tenant will need to provide documents, including bank statements, that will enable you to make an assessment of whether or not they can afford to rent your property.
Credit/ debit card checks can also be done to check the tenants credit score. The higher the score, the lower the risk for you.
At Mashroom, we use RentProfile to carry out these checks. If you’re looking to start the tenant referencing process, contact us!
Read our official guide: “Your Guide to Tenant Referencing”
Tenancy check-in and check-out
Check-ins and check-outs mark the start and the end of a tenancy.
A check-in is where the landlord/ agent/ and the tenant visit the property and are made aware of the condition it is found in. A check-out is the same, but at the end of the tenancy.
It is certainly in the best interest of the landlord to ensure that the tenancy check-in and check-out happen, as it can help to solve any disputes with tenants.
It’s advised that a third-party agency carries out these checks with both the landlord and the tenant present, and creates a check-in or check-out report. Having the reports in writing once again will help both parties understand and respect the condition the property was found in or left in.
Check-ins and check-outs are a vital part of a good inventory.
Read our official guide: “A Guide to Tenancy Check-In and Check-Out”
An inventory is a list of everything that is in the property when the tenant moves in. It should also describe the condition of the property and that of what is found in it.
Inventories are as important for tenants as they are for landlords, as they help to ascertain if any damage was caused by the tenant during the tenancy. As a landlord, it is very useful as it gives you more of a guarantee that your property will be left in the condition it was found.
It’s in the interest of both parties to make the inventory as detailed as possible, and that it is conducted at the very beginning of the tenancy.
Read our official guide: “A Guide to Inventories For Tenants”
Rental Collection Services
A rental collection service works by, well, collecting your tenant’s rent for you. It’s a generally stress-free way to ensure rent is collected on time, and if you use Mashroom, it’s free!
Using a rental collection service can be super helpful for landlords, as it can be easier to solve any rental disputes using a third party.
Additionally, it ensures everything is collected on time, and if your tenant is late, the agent will let you know and then deal with it.
It’s a great way to take the stress out of rent collection.
Read our official guide: “Guide to Rental Collection Services”
Especially in today’s climate, situations and circumstances can change quickly- for you and your tenant. This is where break clauses come in.
A break clause is when — a tenant can opt to leave a rental property early; usually around six months before the end of the contract, with a notice period of around 1-2 months.
As a landlord, you are not legally permitted to include a break clause in your contract, and it is your tenant’s responsibility to check whether there is one if they want to leave the tenancy early.
If you have not included a break clause in your tenancy, a tenant is still allowed to ask you to leave the property early, if their circumstances have changed. You are under no obligation to accept.
Read our official guide: “What is a Break Clause?”
Renting out your property for the first time
Renting your property out for the first time can be overwhelming, but we hope our handy guide has helped you get everything in order!
Renting out is a great way to get some extra income, and can be pretty stress-free if you’re organised.
Always contact a professional if you are in need of any further guidance.