The Ultimate Landlords Guide
Being a landlord in the UK is arguably harder, and more costly, than ever before. Every year rules tighten, new laws and restrictions are imposed, and to top it off we have a material and contractor price hike the likes of which has not been seen in decades. It is no surprise that many have decided to sell up and move their investments elsewhere in the past few years. But as scary as it can all sound, being a landlord can still be a great investment and source of passive revenue if you set things up right from the start. Our team have created a one stop guide for new (and current) landlords so they can better understand what cost to be aware of and what the rules really are.
Buying A Property
Finding a property is usually the start of most landlords journey, some will already have one via their own means such as inheritance, moving abroad, etc. But if you are looking to get onto the buy to rent property ladder there are a few things to consider:
Find A Reliable Mortgage Broker
Do not be shy of shopping around here, there in no one size fits all mortgage and most decent brokers will have an initial chat at no cost, there are also lots of good comparison sites to check out such as https://www.confused.com as a good staring point. Don’t forget to speak with your bank too who might be able to offer you a more competitive option with other benefits too.
Buy to let (BTL) schemes
The initial allure of such schemes has faded dramatically in recent years, but if the yields are good then it can still be a worthwhile investment in the longer run, especially if you are able to stick up a good fee offer with an estate agency for the letting and management side of things. A good rate would be 6-8% for let and manage, with the average being 10-15%. We suggest checking out this article by The Times before making any moves in this area: https://www.thetimes.co.uk/money-mentor/article/buy-to-let-tips/ which covers all the essential bits.
Most properties will need at least a little bit of (some will need a lot) TLC to get them ‘rent ready’. Finding trustworthy and cost effective trades can be a real battlefield! There are a few options here:
1. Hire a project manager via an agency
2. Ask around! Friends and family are often your most trusted source of referrals
3. Get at least 3 quotes for any major works. This way you can negotiate and learn if any proposed costs are way off mark
Sadly this is a cost that is all too often underestimated, we suggest getting a trusted builder over prior to purchase if you can in addition to getting an independent survey to avoid any nasty surprises in remedial works. Not everything can be predicated of course, but it certainly helps to litigate the risk as much as possible.
So you own a property and you are ready to rent it out, the next big hit you will need to consider is estate agency costs. A lettings fee should cover a number of things, and this can vary a bit from agency to agency, but as a rule of thumb a reputable agent should include all of the below at no extra cost as part of your lettings package/fee:
Marketing Package; Photos, Floorplans, Portal Listings, Printable's
Arranging All Compliance Documents (EPC, Gas Safety Checks, EICRs)
Quality Tenancy Sourcing & Viewings
Full Tenant Referencing
Deposit Registration & Holding (with TDS)
AST Contracts & Admin/Paperwork
A usual let only fee is around 8-12% but you can get deals as low as 2-5% if you shop around, especially if you instruct for the management too this will put you in a position to negotiate a better price (we will get into management fees a little further down the list!).
This part can seem scary, especially to a new landlord, but it’s actually one of the easiest bits so don’t fear! Compliance is simply a check list that needs to be carried out at varied intervals, all of which we have summarised below. To rent a property in the UK you need to have all of the below:
EPC (Energy Performance Certificate)
An energy performance certificate lets renters know the energy efficiency of your home. They rate from A to G (with A being the best score). Since 1st April 2018 all rental properties must have at last a E rating, so if your home falls below this you will need to consider better wall/roof/flooring insulations and/or new windows as these are usually the easiest ways to improve your ratings. The government has a great guide on this and most EPC surveyors can also advise on where you can make the easier and lost cost effective improvements. You check if you property already has a valid/in date certificate for free on the national register here: https://www.gov.uk/find-energy-certificate
Average Cost: £55 + VAT
Renewed Every: 10 years
Gas Safety Checks
If your property has a gas cooker, boiler and/or fireplace you need to have an annual gas safety check carried out at your property. This will also need to take place every year/when you have tenants living in house, the fines are pretty high and strict on this one so definitely don’t miss a deadline! We always suggest getting a gas safety check AND service for your boiler together to ensure your system is under guarantee and running well. This will offer better protection between checks too as a reputable gas engineer will honour their work.
Average Cost: £75 + VAT (covers up to 2 appliances check & service)
Renewed Every: 1 year
EICR (Electrical Inspection Condition Report)
Electrical inspection condition reports are a newer requirement which became mandatory on the 1st June 2020, however good landlords have always carried out checks. This ensures all electrics are safe in your property, namely the RCD (circuit boards) are up to modern standards and that the electrics pose no immediate fire risks and meet the governments health and safety standards. They are one of the more expensive of the compliance reports, especially if there are any remedial works required to get your property up to standard, but they do last 5 years and are well worth it in the long run for the safety of your tenants and property. Again, we suggest doing a PAT test of all your appliance alongside this report for extra protection, they usually only cost an extra £25 and are well worth it.
Average Cost: £55 + VAT
Renewed Every: 5 years
That covers the majority of the mandatory checks to get your property rent ready, but there are also some other non-mandatory checks and additional/less common mandatory ones to be aware of that COULD apply to your property depending on its facilities and set-up:
Water Risk Assessments
This test checks your water system for Legionella bacteria which causes a form of pneumonia via inhalation of droplets of water. Whilst uncommon, it is the responsibility of all landlords to assess their properties for risk. Don't worry a very simple initial assessment will show if water systems in your properties are at risk (most modern properties are not classed as at risk). Most normal domestic systems are considered very low-risk due to the regular usage and flow of water which means limiting standing water. Therefore these tests are not mandatory unless you have an open tank system which are (thankfully) nearly non existent in the UK.
Average Cost: £65 + VAT
Renewed Every: 2 years (closed tank) or quarterly (open tank/roof tank)
Asbestos Checks & Management
If you have asbestos in your property you must carry out a professional report and they will decide if you can/should either label the asbestos, seal it, or remove it. The appropriate course of action depends on the particular circumstances of the situation but we always suggest removing at the renovation stage where practically possible. If you do opt for whatever reasons to label/seal it you will need to carry our an assessment every 5 years to prove you are continuing to manage it correctly.
Average Cost: £120 + VAT
Renewed Every: 5 years
Lift Inspections (LOLER)
If your property has a private residential lift that serves just your property (not including common parts) then you will need to have this checked every 6 months at minimum by law. We personally suggest having quarterly checks under a maintenance contract with a reputable firm, this should cost around £500-£700 + VAT per year depending on the exact lift specifications.
Average Cost: Approx. £500-£700 + VAT per year.
Renewed Every: 6 months
Inventory Check In Report
One of the last steps in your journey will be to arrange the check-in condition report, this essential document captures the condition of your property and its contents in great detail and will serve as your legal point of reference at the end of the tenancy should their be any damages you wish to deduct from your tenants deposit. This is a very important document, so always check it carefully and make sure it has highlighted and captured everything it should have (or you will pay the price later).
Average Cost: £100-£250 + VAT
Renewed Every: New Tenancy
Prior to your tenants moving in you will also want to ensure the property has been professionally cleaned to a high standard, this should include carpets, windows, all appliances, and insides of cupboards. The price can vary hugely on this, and the cleaning firms can be very hit and miss sadly, but generally the price should be based on the number bedrooms in your property as per below:
Average Cost: £150 + VAT (Studio/1 Bed), £200 + VAT (2 Bed), £250 + VAT (3 Bed), £300 + VAT (4 Bed), £400 (5 Bed), etc.
Renewed Every: New Tenancy
Lastly, if you want a stress free tenancy we highly recommend instructing a managing agent to handle all your property matters. The usual fee for this is 6-8% of your annual rental, but you can get fees as low as 2-5% (especially if they are also your letting agents as mentioned earlier). A good managing agent will also be able to take care of all of the above compliance for you before renting, and the required renewals! Their fee should include all of the below as standard, although again this can vary a lot from agency to agency:
Updating Utility Companies
Detailed Tenant Welcome Packs & Property Guides
Issuing HMO & RTR Notices
Rent Collection (Client Money Protection & Rent Guarantees)
Bi-Annual Property Inspections
Arranging Reactive & Planned Maintenance
Fully Vetted Contractor Work Guarantees
24/7 Emergency Maintenance Line
Landlord Post Forwarding Services
Full Tenant Management
Service Charge & Ground Rent Handling
Invoice & Receipt Logging
Landlord Float Holding & Monthly Statements
Deposit Deductions & Release Handling
Post Tenancy Repairs/Refurbishments
Arranging Inventory Check-In/Outs
Renewing Compliance Documents
We hope this guide has proved handy, we have made a quick fire checklist below too which can be printed off and used to run through everything you need to get your property rent ready for your tenants.
Rent Ready Checklist ☐ Renovation/Remedial Works Quotes
☐ Find A Letting Agency
☐ Find A Management Agency
☐ EPC (Energy Performance Certificate)
☐ Gas Safety Certificate
☐ EICR (Electrical Inspection Condition Report)
☐ Inventory Check In Report
☐ Pre-Tenancy Cleaning Services
Of course Chesham Property London can assist with any of the above, so get in touch today for a no obligation chat with our team who will be happy to answer any questions.