#3 Landlords – all you need to know about renting your property
Being a landlord has many benefits – owning a rental property is the chance to earn a largely passive income, can be a great investment, and can give you the independence and freedom to be your own boss. Landlords also benefit from tax-deductible business expenses and the option to sell the property when the market conditions are at their best.
On the flip side, at least to begin with, there’s a lot of admin to deal with and some really crucial regulations to be on the right side of. But with a good estate agent in your corner, it doesn’t have to be overwhelming or onerous.
In this series of features about how to sell, buy and rent a property, we’re sharing Keatons’ expertise and know-how to help make the life of a landlord easier. In the hot seat is Ross Fowler, a director at Keatons with over 20 years of experience in London’s residential lettings industry. Ross has successfully overseen several of Keatons’ East London lettings departments and has a highly respected knowledge of the local housing market. There’s no-one better to navigate the rules and regulations with, and to build great tenant relationships with.
The Insider: As a landlord, what do I need to know before I rent my property?
Ross Fowler: We usually start off with a quick conversation to determine what your requirements are, and if a home visit is necessary or not. We’ll discuss time frames, the housing market and how it’s currently performing, and will give you a general idea of our range of fees and charges.
It’s typical for us to follow up with a home visit, when we’ll discuss how long it’ll take to rent the property and our strategy for achieving the best price (that can be supported with a valuation letter if needed). We’ll also advise if anything needs to be done to the property, such as small items of maintenance, and will go into depth on what our service entails and the fees and charges involved. The regulations and certifications needed are extremely thorough these days, which helps to keep tenants safe, so we run through all the details and how we can support you. We’ll also plan a photo shoot and how best to present the property. It usually takes about an hour to talk through all these things.
TI: What regulations and/or legal requirements does a landlord need to have – safety certificates etc?
RF: The main things are a gas safety certificate, which is an annual check by a qualified gas-safe engineer, an electrical installation condition report (EICR), which checks the entire circuit and is valid for five years, and an energy performance certificate (EPC), which uses the same grading as appliances and in the rental market lasts for 10 years.
Currently, a property needs an EPC with a minimum of 39 points, an E rating, but may be due to increase to a D rating in 2025. Unfortunately, practically everything in London is period so gets a terrible rating of E or F (and that’s becoming more relevant due to increasing oil and gas prices). People are becoming more aware of energy-efficient homes, and are increasingly happy to pay a premium for them.
Landlords need to install a smoke detector on every floor, and if a room has a coal fire or wood-burning stove a carbon monoxide detector must be fitted.
You’ll also need to know about the landlord deposit scheme. It’s a government-approved scheme that provides deposit protection for tenants; deposits are required by law to be held in it. An inventory check-in is also recommended, showing the condition of the property and the meter readings.
The landlord licensing schemes are borough dependent and in three categories, selective, additional and mandatory. It’s a very detailed area so we’d go through the relevant information with the landlord when necessary. Lastly, if you’re a landlord based overseas, we’re required to report your status to HMRC.
We’ve got more on the rights and responsibilities of landlords here.
TI: What’s the difference between short and long term rentals?
RF: Short lets are for less than six months, and are offered fully furnished and inclusive of bills. They tend to attract people on holidays, or visiting with work. Long term rentals have contracts for six months or over, typically one to two years, and rental usually doesn’t include bills. Some contracts contain a break clause after six months, and are renewable if terms are agreed.
TI: How much revenue can a landlord expect to earn a month?
RF: That’s a really hard question to answer! But ballpark figures, depending on the type of property, can be around £1,600 a month for a one-bed, in Hackney for example it’s anywhere between £1,500 and £2,000 a month. For more on how much rent to charge, click here.
TI: What fees does an estate agent typically charge?
RF: At Keatons, it varies from 8-16% plus VAT, depending on the level of service. Our 8% plus VAT rate is for our Essential service, we have a mid-range Financial service at 11% plus VAT, then 14% plus VAT is for our Comprehensive, fully managed service with a property manager. It’s worth noting all of those fees go down two percentage points after the first term.
TI: What responsibilities and/or legal requirements does a landlord have when something goes wrong? Eg the boiler breaks, the oven won’t work, there’s a leak etc
RF: The landlord is responsible for the general upkeep of the property and any appliances that were provided in the property. However, depending on the issue, the tenant may be liable. For example, condensation might cause some damage but the tenant is responsible for the daily upkeep of the property including ensuring proper ventilation. We’ve got more on the costs of being a landlord here.
TI: What are the benefits of offering a property furnished over unfurnished, and vice versa?
RF: A staged, furnished property can attract more rent, but will usually only work for the first tenancy – when it comes to marketing it a second, third or fourth time you’ll have less control over how it looks, unless the tenant has moved out. If you let it unfurnished, you’re not responsible for the upkeep of furniture, or swapping furniture in and out for a new tenancy, but I’d recommend being a bit flexible to begin with, at least initially – listen to offers and to what potential tenants seem to want to maximise your rental.
TI: What advice would you give for making a property look as attractive as possible?
RF: Open the curtains and blinds to create lots of light, and if you’re offering it furnished, position the furniture to maximise the space available in the room. Clean, declutter and keep all the surfaces clear, particularly places like the kitchen and bathroom window sills, and strategically place fresh flowers and fresh fruit.
Fix any obvious defects, particularly things like hallway scuffs. The professional marketing photos are your main opportunity to maximise those viewings and find a good tenant, so make the most of them. You’d be surprised how many people don’t make the beds and clear away the laundry!
TI: Can a landlord veto potential tenants, or back out of the rental?
RF: They can – until the contract is signed the landlord can change their mind, but it’s very uncommon; perhaps the landlord has lost job their job and needs to sell the property. Once the tenancy agreement is signed it’s legally binding for the length of the contract term.
TI: How much notice does a landlord have to give if they want to evict tenants or put the rent up?
RF: It depends on the contract but a minimum of two months notice is standard by using a Section 21 notice. The notice period works both ways – tenants and landlords have the same break clause. During the term of the contract, the rent can’t be increased unless it’s been specifically agreed within the body of the contract. An example where this might happen is if a building is covered in scaffolding that’s due to come down in four months, while the scaffolding is up the rent may be reduced by 20% for four months. However, it’s a legal requirement that the rent change has to be a set figure, not a percentage figure.
To evict a tenant if you cannot use a Section 21 notice, or in conjunction with, you need to serve a Section 8 notice based on one of 17 grounds, including non-payment of rent.
Link to other blogs in series:
#1 Selling your home – all you need to know
#2 Buying a new home – all you need to know
#3 Landlords – all you need to know about renting your property
#4 Tenants – all you need to know about renting your home
#5 All you need to know about how to choose an estate agent