The following is a definitive guide to aspects that need to be considered when you prepare your residential property for rent. Whether the property is a purpose-built buy-to-let or you’re starting to rent out your own home, this crib sheet will help ensure you tick the requirements off.
WHAT RENT TO AIM FOR
Your managing agents should advise on the current market rental value for the property. If you’re not using an agent, then the rent would be established through comparable properties on the market. Rightmove and Zoopla are your friends here. Properties with the same specification, location, and date provide a feel for what other landlords are asking for in the market. Obviously, these are asking prices and not agreed values, so they’re not definitive. The real definitive comparable is if you find a letting agent that has agreed to a deal in the building or street recently. Although you’re not going to employ them, they are unlikely to part with this knowledge.
PREPARING YOUR PROPERTY FOR RENT
There may be steps you could take to improve the marketability of the property you’re looking to rent. Ideally, the property should appear in good order externally, and the inside should be thoroughly cleaned. Furthermore, any necessary refurbishment and repairs are carried out before prospective tenants are shown the property. Decoration-wise, neutral colour schemes are best to appeal to the widest possible audience. Furthermore, if available, the white goods should remain on the property as an added incentive for the tenant.
An agent will have a photography company take marketing images for you to show off your property in its best light. If you’re self-marketing, make sure these photos show the strongest aspects of your property with good lighting and a tidy set-up. This will drive more views and competition for the property.
COMPLIANCE REQUIREMENTS FOR RENTING PROPERTY
You will also need a current Energy Performance Certificate (EPC) for the property and an Electrical Installation Condition Report (EICR). Furthermore, a compliant gas safety certificate, smoke alarms, and carbon monoxide alarms as and where required. These are covered in more detail in the compliance requirements for residential lettings.
CONSENTS TO RENT YOUR PROPERTY
If your property is subject to a residential mortgage, you are moving out and wish to rent the dwelling out. You may be required, under the terms of the mortgage, to gain permission from the lender first. Furthermore, if the property is held by you on a long leasehold, check your lease, as you may need permission from the freeholder to let the property.
LICENCE AND/OR PLANNING PERMISSION REQUIREMENTS TO RENT PROPERTY
Licencing and/or planning permission requirements are uncommon when letting a normal residential property to one family. Although in certain parts of the country, local authorities do require every rented residential property to be licenced. As with other licencing schemes, local authorities can charge a fee for issuing a license. Furthermore, failure to comply with the licence conditions can lead to a penalty being imposed on a landlord. For example, Oxford City Centre introduced residential licencing in 2022.
When letting a ‘house in multiple occupation’ (HMO), many local authorities require licencing of the landlord and the premises. We touch on this in the guide to HMO investment.
MARKETING YOUR PROPERTY FOR RENT
You will want your property to be marketed to the widest audience as quickly as possible. Before this is possible, the required compliance checks need to be completed. These have been touched on previously and in detail in compliance requirements for residential lettings.
Agents will advertise to all applicants registered on their system, as well as Rightmove and Zoopla. If you’re advertising your property on your own, OpenRent is a very cost-effective platform to get your property on Zoopla and Rightmove.
From experience, when organising viewings, it is best to organise them one after each other on a viewing day arrangement. Not only is this more time-efficient, but the main point is that it creates a scarcity perception for the prospective tenants. By seeing other people looking at the property, it spurs people on to make quicker and more competitive offers.
HOW TO PICK THE RIGHT RESIDENTIAL TENANT TO RENT YOUR PROPERTY
REFERENCING
Referencing is a key aspect of ensuring you have a reliable tenant. A company that covers residential referencing as a one-stop shop is The Lettings Hub. They provide a robust and detailed report; furthermore, they have a very responsive call desk.
The referencing process checks that the prospective tenant has a secure income and a satisfactory credit history. It’s hard to guarantee a prospective tenant will not default, damage the property, or cause other problems. Although doing as much due diligence as possible is the best way to mitigate it. As part of the referencing application, the tenant would provide their employer and previous landlord references. This information helps run the credit reference for the tenant.
GUARANTORS
In circumstances where the tenant is unable to show complete affordability for the property, they may need to offer a guarantor. The guarantor is also put through the referencing process to ensure that they can afford the property. Furthermore, a guarantor’s agreement needs to be signed to document the commitment to support payments when required.
RIGHT TO RENT CHECKS
Under the Immigration Act 2014, all landlords now have the legal responsibility to carry out a ‘Right to Rent’ check. This ensures that prospective tenants and other permitted adult occupiers have the right to live in the UK. This is done by gathering their passport and proof of address.
In addition, the Immigration Act 2016 introduces the obligation for landlords to evict any tenant whose time-limited right to rent has expired and not been renewed. The new rules have been introduced to facilitate this.
THE TENANCY AGREEMENT FOR RENTED PROPERTY
For residential letting, the agreement normally uses an ‘assured shorthold tenancy’ (AST). The tenancy agreement is a binding contract for the landlord and tenant according to the terms within it. It is very important to use an up-to-date and properly drafted tenancy agreement to ensure that the form used is relevant. The Renters Reform Bill of 2023 has introduced the change of standard tenancies to periodic assured tenancies. We cover the changes this creates in The Renters Reform Bill 2023.
Other types of agreements you may come across that can be implemented include:
COMMON LAW TENANCIES
Common law tenancies are used for rents over 100,000 per year or when renting to a company. This agreement gives freedom of terms and would sit outside the protection tenants would have under periodic assured tenancies.
ASSURED TENANCIES
These are governed by the Housing Act of 1988 and are commonly periodic tenancies. The tenants who live at these properties have likely done so for a long period of time. The tenants have security of tenure, and the landlord is only able to gain possession with a court order or if the tenant chooses to move. Rent reviews are allowed and are negotiable.
RENT ACT TENANCIES
These are governed by the Rent Act of 1977. The landlord cannot evict the tenant unless he or she gets a possession order from the courts. When the tenant dies, their spouse can take on the regulated tenancy. Furthermore, if a family member is living in the home, they are eligible to continue the tenancy as an assured tenant. A rent act tenancy has a controlled rent review and is called a “fair rent”. The maximum rent is prescribed by the rent office, commonly aligns with RPI, and doesn’t consider the effects of demand on the market.
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