Becoming a landlord is a huge financial commitment. Do you own a property or are looking into buying a property to rent out? If so, this is our complete guide to help you become a landlord. This guide will talk you through the first and most important steps to becoming a landlord.
What Is the First and Most Important Step to Take to Become a landlord?
The first step very much depends on your current position to become a landlord. This depends on whether you already own a property that you are looking to rent out, or if you are looking to purchase a property to use as a rental property.
If you already own a property that you can rent out, you will need to give some consideration to a few things.
The age and current condition of the property. If your property is an older property, and less modern, we recommend you do some renovations. Making these changes can increase its rental value.
Before you can rent out a property there are some criteria that must be met. This includes a few tests and certificates. For example;
- An up-to-date Electrical Inspection Condition Report (EICR)
- An up-to-date Gas Safety Check
- To date, Wired smoke alarms
- A fitted carbon monoxide alarm in each room where there is a gas, oil, or solid fuel-burning appliance. (These should be fitted lower than smoke alarms e.g. on the wall, not the ceiling)
- An in-date EPC
If you are looking to rent your property privately, you will also need to be a licensed landlord with Rent Smart Wales. However, if you are looking to join our Guaranteed Rent Scheme you won’t need to worry about paying for this as we would manage your property.
We know this process can sound daunting, if that is the case, your local Northwood office will always be there to help guide you through the process of getting your property ready for rental. Find your local office using the button below.
If you are looking to buy a property to rent out, there are a few other things you should take into consideration.
- It would be helpful to research areas that you are interested in buying in and figure out the rental yield is in these areas. The best way to work out the rental yield of a property is to divide the proposed rental income by the property value, then you should multiply it by 100. Anything between 6% and 8% is considered to be good.
- You should also put some thought into what type of property you would like to buy. Whether you buy a flat or a 2/3 bedroom family home. You should take into consideration what achieves the highest rental value. This will obviously also depend on the budget you have available.
What Financial Outlay is Involved in Becoming a Landlord?
A large amount of financial outlay can be involved in becoming a landlord. However, a majority of the time the rental income that you will receive will cover most of these costs. Some examples of the financial outlay involved in becoming a landlord are listed below;
Mortgage Repayments
If you don’t already own a property then you will have two options. You either need to purchase the property fully with cash or get a buy-to-let mortgage. To be able to get a buy-to-let mortgage, you generally need a deposit of between 20% and 25% of the property’s value.
Insurance
You can look into getting landlord insurance. Different insurance companies will do different types of cover, so take a good look into what you want your insurance to cover. For example, the insurance may cover things such as contents, buildings, theft or damage as well as much more.
Fees
If you decide to buy a flat/apartment you will likely need to pay a leasehold fee and management fee to the block management company.
If you decide to not go with the Northwood Guaranteed Rent Scheme, there are some extra costs that you will have to take into account. These can include;
- Set up fees and monthly commission charges from the agent.
- If ever needed, the court costs and eviction process.
- Void Periods
- and more…
What Paperwork Do I Need To Have Ready Before Offering My Property For Rental?
- An EPC – A certificate showing how energy efficient the property is. An EPC rating can range from A which is the most efficient, to a G which is the least efficient. To be able to rent out a property you currently need to have an EPC of E or above, however, this is due to change from 2025, you will then need an EPC of C or above.
- A Gas Safety Certificate – If the property has any gas appliances, the property will then need a valid Gas Safety certificate before you can rent it out. The gas check must be completed by a Gas Safe Registered Engineer.
- You are also required to have wired smoke alarms on each floor of the property. Due to the new legislation that is coming out on the 15th of July, you are also now required to have Carbon Monoxide Detectors in every room that has a gas, oil, or solid fuel appliance.
Read the blog below for more information on the new legislation that is being introduced on the 15th of July.
