National Landlords Association give advice to new landlords

As we are coming to the end of January and our theme of ‘preparation and permissions’, I asked Richard Price, Director of Operations at the National Landlord Association to give a bit of practical advice to landlords.

Richard kindly answered my questions as follows:

What are the main qualities needed to be a landlord?

Being a successful landlord isn’t just about dealing with property, it’s about dealing with people and being flexible enough to adapt to changing circumstances. I find that reasonableness and honesty are both essential qualities to have. In any walk of life, what goes around comes back around so if you offer an affordable and reasonable service you will reap what you sow in the long run.

However, when the going gets tough you have to remember it’s your investment on the line, so you must be resolute and be able to stand your ground when needed.

If a landlord wants to self-manage, what are the most essential topics to be aware of and be educated in?

A rental property is a business and, like any other type of business, the key to survival is maintaining a healthy cash flow.

You must have a degree of business acumen or brush up on your basic business knowledge and it’s important to have a plan in place before entering the market. It requires active management and there’s risk involved so it’s wise to have all bases covered.

The knowledge and skills needed to be a landlord are considerable and it is important that you’re aware of the law and your responsibilities.

For example, if you propose to let your mortgaged property, or a room within it, you may require permission from your mortgage lender; or if you plan to let to multiple occupants or shared accommodation such as student housing you may also require a license from your local council.

However, what’s paramount is that you put your tenant’s safety first and ignorance is not an excuse. Neglecting something that can cause injury or death to your tenants will send the unknowledgeable landlord to jail.

What are the top three considerations when purchasing a property to let?

There are a number of factors to take into account when purchasing a property. Here are our top three tips:

1. Potential income – It’s better to plan for long-term sustainable yields than rely on capital appreciation, so the potential rental income of the property is vital. Look at other properties on the market or talk with local agents who may be able to offer valuable insight.
2. Location – A good location is a must and will make your property much more desirable. Check the distance to local travel links and amenities and remember that times and distances cited in paperwork may be ‘as the crow flies’.
3. Price – Every vendor wants to maximise his or her sale price but you are in a position to leverage your position as an investor, so buy with your head and not your heart and offer according to your valuation. Check out recent sold prices – these are readily available online and can differ greatly from asking prices.

When preparing a property to let, what are the five most common mistakes made by landlords?

It’s easy to overlook the little things but make sure to steer clear of these common mistakes:

1. Set your budget – You must make sure to set a budget/ financial plan. The NLA advises landlords to work ten rent payments into a budget rather than 12 in order to be able to absorb a shortfall should it occur.
2. Vet your tenants thoroughly – It’s important to find reliable tenants who will look after the property and meet rental payments. You should thoroughly reference them before granting a tenancy and check things such as their credit history, employment status and any previous references. It’s also highly advisable to arrange a viewing beforehand in order to be sure they are genuinely interested, and so you can meet them in person.. It will also help manage their expectations of how you expect the property to be kept.
3. Use a tenancy agreement and create an inventory – You should use a best practice professional agreement which sets out clearly the terms of the tenancy. It’s also essential to draw up an inventory and schedule of condition which describes the property in detail, along with the property’s contents and furnishings. This allows you to compare the state of the property before and after the tenancy and thus is a vital tool in evidencing any necessary deductions from the tenant’s deposit after allowing for fair wear and tear.
4. Maintain good records – A rent schedule will allow you to keep a record of when rent has been missed as well as what action you took in order to chase it up. It’s also another form of evidence if you need to demonstrate any necessary deductions to the tenants deposit at the end of the tenancy or in the event you need to make a money claim through the courts. Record all contact for whatever reason in a log, and be sure to keep records that are a statutory requirement such as for tax purposes and gas safety checks.
5. Get the right cover in place – It’s surprising how many landlords don’t realise they need a specialist insurance policy. One thing is for sure; standard building insurance will not do and it’s imperative to have the appropriate cover for things such as loss of rent, public liability, , alternative accommodation and more. Only specialist insurance policies provide you with this cover and that’s why you need to take out comprehensive landlord insurance to protect your investment. NLA Property Insurance has been developed specifically for landlords landlords.org.uk/services/nla-property-insurance

What final advice would you give to a new landlord just setting out?

While it can impact potential returns any prospective landlords should think carefully about whether they will need professional support. In the end, you are setting up a business which provides someone else with a home, and they have a right to expect a service provided to a professional and safe standard in return for their money.

Above all, get advice; speak to local letting and estate agents who can provide invaluable market intelligence, and join a professional landlord association which will offer you all the tools and services you might need along your landlord lifecycle.

Get best practice guidance – The NLA’s latest campaign is all about managing risks in your lettings business. Download our landlord’s guide to rent arrears here

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Many thanks Richard for your comments – I hope they will be helpful for landlords.