Category: investment deals

I am delighted to share with you my property of the week which is BRAND NEW to the rental market!

Renting a property is as simple as purchasing the property and letting it out, you need to ensure the property in maintained and that you money set aside to cover these expenses. Although lenders will typically require the rental income of your investment property to be at least 125% of your mortgage payment amount, this doesn’t always mean that the property will generate positive cash flow or give sufficient net profit to cover all the expenses of maintaining the rented property over the typical 15 to 20-year ownership.

As well as regular and one-off maintenance expenses, allowances need to be made for times when there may be no rental income. Tenants may stop paying their rent and the property is sometimes empty between tenancies, and you still need to be able to cover the mortgage and other costs during this time.

It is therefore vital that you budget properly to ensure that the investment is worthwhile and not going to cost you money month-on-month, before you commit to buying a property to let.

As a landlord, no matter whether you have one property or a large portfolio, it’s important to keep on top of all the paperwork associated with owning buy to lets. Here are ten key pieces of documentation you should have up to date and to hand:

1. Energy Performance Certificate. Before a property can be marketed for rent, the landlord must be in possession of a valid EPC and the rating displayed on all advertisements. A copy of the certificate must be available for any prospective tenants to view and provided to the tenant.

2. Gas Safety Certificate. This certificate proves that the gas system in the property has been checked by a Gas Safe registered engineer within the last 12 months and determined to be in full working order. A copy of the certificate must be provided to the tenant and in a House in Multiple Occupation (HMO), it should be clearly displayed in a communal area.

3. Domestic Electrical Installation Certificate / Electrical Installation Condition Report. The certificate is issued when a system is installed or updated and the condition report when it’s tested. In an HMO, the electrics must be checked, legally, every five years; in a single let property, while there is no specific timescale for regular inspections, you are obliged to make sure the electrical system is safe. Electrical Safety First recommends inspections are carried out on change of tenancy or every five years, whichever comes first. There is no requirement to provide tenants with the paperwork, but it’s important for you to be able to prove when the last inspection took place, in case of any problems.

4. Fire Risk Assessment form. As part of your responsibilities under the Housing Health and Safety Rating System (HHSRS), you have an obligation to identify potential hazards in the property and take reasonable steps to minimise the chance of a tenant suffering injury. The best way to prove you have done this is to complete a risk assessment form, freely available online here or from your local fire service and, to ensure there is no challenge to the validity of the form, it’s a good idea to have a qualified fire safety professional carry out the assessment on your behalf. Keep the form safe and revise it every time there’s a change to the hazards in the property and at least every few years.

5. Assured Shorthold Tenancy, or other tenancy agreement. It’s vital that you don’t move any tenant into the property without being in possession of a signed tenancy agreement, which demonstrates that the tenant is aware of their rights and responsibilities and agrees to comply with them. If you need or want the tenant to leave at any point during their tenancy, it’s essential you can quickly and clearly identify the date the tenancy started and the terms of the agreement, to enable you to serve the correct notices at the right time(s) and help prove any breaches of the terms.

6. ‘Right to rent’ check paperwork. It’s important to keep a record of all correspondence and other information obtained when verifying that your tenant has the legal right to be in the UK. If they should be found to be illegal immigrants at any time, you must be able to show that you took every care to check their status. Remember also to make a note of any visa expiry dates so that you can re-check for valid extensions, etc or outsource this process to an qualified agent.

7. Tenant’s personal details. If anything goes wrong during the tenancy, such as the tenant leaving without notice, falling into rent arrears or suffering an injury, you should be able to quickly access all their details those of their next of kin, emergency contact and any guarantor.

8. Inventory. A thorough inventory should be taken at the start of the tenancy and, importantly, should be signed by the tenant to confirm that they agree with the contents of it. It’s advisable to take this inventory to the property every time a periodical inspection is carried out, so that any damage to the property can be addressed as it is discovered, rather than waiting until the end of the tenancy, which may be some time down the line.

9. Tenancy deposit protection information. If providing an AST and taking a deposit, you have to provide your tenant with details of the scheme you’ve used to protect their deposit, as well as related prescribed information. If you use a custodial scheme, you will need the deposit ID reference and also your repayment ID, in order to apportion and release the deposit at the end of the tenancy.

10. Landlord insurance policy schedule. Emergencies can happen at any time and you need to be able to quickly lay your hands on your insurer’s details and information about what to do if you need to make a claim.

This is an exciting one!

This property will suit both types of investor – those looking to renovate and sell on and those looking for a buy to let.