LANDLORDS CENTRE– What do you need to know?

Q1  Where do I start?  

Q2  Do I need a letting agent or can I do it myself?

Q3  How much do letting agents charge?

Q4  How does a letting agent estimate the value of my property?

Q5  What if I want more rental than the agent’s valuation?

Q6  I’ve seen several letting agents. How do I choose between them?

Q7  How should I furnish the property?

Q8  How should I prepare my property for viewings?

Q9  How should I conduct a property viewing?

Q10  How long will it take to find a suitable tenant?

Q11  How do I increase my chances of getting a suitable tenant?

Q12  How do I go about vetting a potential tenant?

Q13  When I have accepted a tenant what should I do?

Q14  What are my obligations during the let?

Q15  I’ve heard horror stories about sitting tenants. Can I be sure I’ll get my property back at the end of the tenancy?

Q16  Is it guaranteed that the tenant will pay the rent?

Q17  Do I need specialist landlord insurance?

Q18  What safety requirements doe the law expect me to meet?

Q19  Do I need a solicitor?

Q20  What does property management involve?

Q21  How is rental income taxed and are there any deductibles?

Q1  Where do I start?

You’re best starting point is to find out the rental value of your property. Calling out a number of letting agents for a free valuation would be a good start. They will also be able to guide you on what you ‘should’ or ‘should not’ do to make your property more attractive to the tenant market. Ask their advice in relation to what type of tenant you should be directing your property towards ie. students, DHSS, professionals or corporate tenants. A common question from Landlords is “What is the best type of tenant?” Most agents will probably tell you that there is no such thing as a good or bad ‘type’ of tenant but that “there are good and bad apples in every barrel” and therefore it is more important when choosing a tenant to vet them thoroughly rather than to simply be happy with the ‘type’ of tenant you have.

Q2  Do I need a letting agent or can I do it myself?

This depends on whether you have the expertise, time, patience and resources to do it yourself. Paying to advertise your property, fielding calls, being available for viewing, vetting tenants and drawing up contracts can be a costly and time consuming business.

If you want piece of mind it is well worth using an agent.

Q3  How much do letting agents charge?

The initial rental valuation of your property is free. You only pay commission if and when the agent successfully lets your property i.e. ‘No Let, No Fee’ (except for advertising). To let and manage your property, administering rental payments, maintenance and tenant enquiries the typical fee is between 10 – 12% of the rent collected.

Q4  How does a letting agent estimate the value of my property?

Be wary of any agent who just asks you the price you want for your property and agrees with your figure. The agent should be able to demonstrate why they think your property could achieve the valuation price they state.

A professional letting agent will visit you at your property to have look around ad provide you with a rental valuation based upon a number of criteria:

• General market demand from tenants.
• The popularity of your area (shops, schools, transport etc.)
• Prices recently achieved for letting similar properties nearby.

From this rental valuation you and the agent can decide what price your property should be marketed at taking into consideration market factors at that time.

Q5  What if I want more rental than the agent’s valuation?

Letting agents will give you a price they feel is achievable under current market conditions. But you can ask your letting agent if it would be appropriate to test the market with a higher price, then lower the price if need be after an agreed trial period.

Q6  I’ve seen several letting agents. How do I choose between them?

Sometimes people immediately pick the agent who puts the highest value on their property. But you should not be swayed by the valuation alone. If a valuation is exaggerated you could lose weeks of rental income, whilst your property languishes on the market unlet.

Your gut instinct aside here are some marks of professionalism that you should look for:

• Polite, friendly and well trained staff – visit the agents office.
• Specialist team dedicated to letting.
• Clear and helpful advice literature.
• Well maintained web site with full property details or members of LetsNI.com
• Efficient, computerized administration system.
• Comprehensive marketing e.g. newspapers, signboards, brochures, internet.

Q7  How should I furnish the property?

You may offer the property to let as being ‘furnished’ or ‘unfurnished’. Once your letting agent has seen your property they will be able to advise which is more appropriate but it can usually be more beneficial to market as being available as either ‘furnished’ or ‘unfurnished’ leaving it being more appealing to a wider tenant base.

The following is a simple guide in relation to both:

Furnished:

White goods to include fridge/freezer, washing machine or washer/dryer, cooker or oven and hob. Dining table and chairs, three piece suite or as appropriate, beds, wardrobes, dressers, bedside lockers. Simple modern furnishings suit most people. Do not leave any personal effects such as vases or ornaments. If you do not want to repair any items such as T.V.’s or Hi-fi’s do not provide them. A good tip which can be cheap and effective is to scatter framed prints throughout the property giving it a more homely feel and taking the boring look off bare walls.

Unfurnished:

You should still provide standard white goods as above.

Q8  How should I prepare my property for viewings?

First impressions do count, and the following tips should help viewers to appreciate your property at its best:

• The most important thing is to ensure that the property has been cleaned from top to bottom especially the kitchen and the bathroom.
• Make the place as tidy as possible and open the windows to let in fresh air.
• Put some flowers in the main room.
• Fully draw back the curtains o get maximum daylight in the rooms.
• On dull cold days, if you’re in at the viewing time, turn on all lights and light the fireplace.
• Close all windows that are affected by background noise (traffic, trains etc.).

Bear in  mind that interested tenants can sometimes be a bit later than the viewing time arranged. With this in mind, when a viewing time is arranged (and you want to be there), be clear about the window of time that they have if you mean to go on afterwards. This will also help discourage lateness.

Q9  How should I conduct a property viewing?

There are no hard and fast rules here, but do:

• Ensure that you have all keys readily available to open any garage, French windows, fire escapes etc.
• Give time, if necessary for viewers to discuss the rental property alone before they leave. Simply moving out of earshot will make this easier.
• Always ask the tenant what he or she likes or dislikes about the property ie. if they disliked the fact that you had no electric shower maybe it would be an idea to put one in.

Q10  How long will it take to find a suitable tenant?

This is the one question that all landlords ask but unfortunately no definitive answer can be given. Your property could literally be let within 24hrs or it could take 3 months depending upon market demand.

There are however influencing factors and probably the main one is the marketing of the property. Today more and more people are now turning to internet before they open the pages of the local newspapers and therefore it is essential that your property is advertised on a web site.

Q11  How do I increase my chances of getting a potential tenant?

That’s easy – advertise your property here on LetsNI.com to gain the following benefits:

• We never miss a tenant enquiry as our web site is working 24/7, 365 days a year to find you a tenant.
• Our database matches and sends your property details to interested people who have already registered their requirements on our ‘homes by e-mail’ facility.
• Your property is presented to a huge target audience – “Over 70% of professional tenants now use the internet when seeking accommodation”.

Q12  How do I go about vetting a potential tenant?

A good letting agent will do this for you, vetting tenants in the most thorough way they can. This can involve doing a professional credit check and perhaps obtaining written references. The former will tell the agent whether or not the prospective tenant has any county court judgements against them, and the tenants ability to afford to pay the rent.

If you are not using a letting agent then we strongly advise that you at least obtain two written references from the prospective tenant. One of these should preferably be from his or her current landlord or a past landlord. Always follow up the references and if possible contact the previous landlord to ensure that there have been no arrears of rent and that the property was been maintained in good condition.

Q13  When I have accepted a tenant what should I do?

When you have accepted a tenant your letting agent will be able to deal with all the paperwork including lease agreements etc.

If you are not using a letting agent we strongly advise that you have a lease agreement signed with the tenant and insist upon rent being paid by standing order wherever possible. We would also advise that you draw up an inventory in relation to the contents of the property and that all services i.e. gas, electric, telephone are transferred into the tenants name. An invaluable tool for this process is the "Residential lettings kit" which supplies the necessary legal agreement and documentation to hopefully avoid any future problems.

Q14  What are my obligations during the let?

One of the landlord’s main obligations by law, is to let the tenant have “exclusive, quiet enjoyment” of the property. If any repairs related to letting are needed during the tenancy, you should arrange for these to be carried promptly. As the tenant is paying for the use of the property it is only fair that anything that goes wrong is put right.

It is also important that your property complies with all relevant safety regulations (see Q18).

Q15  I’ve heard horror stories about sitting tenants. Can I be sure I get my property back at the end of the tenancy?

This is quite a rare scenario nowadays but it is still important to ensure that you either use a professional letting agent or have the necessary legal agreement in place to protect you if the tenancy does break down. The "Residential lettings kit" also provides a "Notice of termination" document which could be served on the tenants giving them one months notice to vacate the property.

Q16  Is it guaranteed that the tenant will pay the rent?

It can never be guaranteed that the tenant/s will pay you rent or not damage your property. The secret to successful management of rental property is to reduce the risk of this happening at every stage from the initial tenant selection process to the final “check out” of the tenants from the property. A professional letting agent will do all they can to protect your rental income and property by: taking adequate references; taking a deposit; setting up a direct debit for rent payments; using correct agreements; having a strategy for chasing late or unpaid rent; regular property inspections.

Q17  Do I need specialist landlord insurance?

“Over 50% of all rented property is either NOT insured or has a policy that excludes letting”. Easyrentals in association with ‘Homelet’ offer a comprehensive range of low cost insurance products to cover all risks associated with let property in Northern Ireland. Click on the link for an instant quotation.

Q18  What safety requirements does the law expect me to meet?

Legislation requires that safety checks be made before the property can be let. Your letting agent should help you understand these and provide assistance where possible e.g. arrange for testing of appliances. The current regulations currently apply:

·         Gas safety (installation and use) Regulations 1994 (as amended):

This act requires the landlord of rented property to have any gas appliances and their associated pipe-work to be tested on an annual. It is essential that this work is done before tenants take occupation. If the property does not at present conform, a gas corgi engineer can advise on what is necessary. Note that one copy of the current record of the gas test certificate is to be kept on the premises.

·         The Furniture and Furnishings (Fire) (Safety) Regulations 1988 (as amended):

You need to ensure that all upholstered furniture complies with these regulations. Generally these cover the need for fire resistant filling material to upholstered articles, and the passing a match resistant and fire resistant test. It is therefore essential that all furniture which would contain filling material i.e. suites, mattresses etc. have the relevant fire safety labels showing that they conform to the 1988 regulations. If there is no label or you are in doubt simply remove or replace the item.

·         The Electrical Equipment (Safety) Regulations1994; Plugs and Sockets etc. (Safety) Regulations 1994:

Landlords must ensure that ALL electrical equipment, appliances, and electricity supply is safe. Instruction booklets or clear instructions must be provided for these. Plugs and sockets that are newly installed must conform to the appropriate British Standard or approved alternatives. Plug and socket regulations are not retrospective, but any relevant equipment included in a new tenancy after the start of the new regulations must comply.

The above information is correct as at June 2004. Legislation changes so always consult your lettings agent or update yourself in relation to relevant legal requirements.

Q19  Do I need a solicitor?

No you do not need a solicitor to let your property. A good letting agent will have professional indemnity insurance and will be able to provide you with all the advice, expertise and legal agreements you need. If you manage the property yourself and are having difficulty in relation to getting the tenants out or obtaining arrears of rent then it may be beneficial to contact a solicitor.

Q20  What does property management involve?

This is where the agent looks after the property on behalf of the landlord after the tenant has ‘moved in’. Property management takes the onus of the landlord by dealing with day-to-day- tenancy issues, property repairs and emergencies. Because even the smallest of issues can become time consuming and occur at inconvenient times, many landlords find property management a ‘must have’ while others see it as challenge and a chance to take control of their own investments.

Property management usually includes:

• Administering rent payments and statement of accounts
• Monitoring rent payments and chasing late payments.
• Property maintenance by arranging repairs.
• Property inspections to check condition is maintained by tenants.

Q21  How is rental income taxed and are there any deductibles?

As many letting expenses can be offset against tax on rental income, most agents advise their client seeks professional tax advice.

Examples of tax deductibles are:

• Letting agent’s fees.
• Insurance.
• Ground rent.
• Repairs (not improvements).
• Legal and accounting costs.
• Some loan interest.
• Wear and tear of contents.
• Unused personal allowances.