Letting the family home can be a nerve-racking business. We have all heard horror stories of the local conman moving in and wrecking the place and not paying the rent. But it doesn’t have to be like that. Here are my five top tips that will help you to enjoy a successful let.
One: Use an agent, and a good one at that. Yes I know we have all seen and heard bad tales of duff agents disappearing to Bangkok with all the rent money, but believe me, these crooked agents are few and far between. Yes an agent will cost you money, but who works for nothing? You can expect to pay anywhere between 7.5% and 15% of the gross rental in agent’s fees, but good agents invariably earn that money. If you don’t use an agent how are you going to carry out a credit check? You can always ask the agent to see the references too, why not? And can you be confident in the tenancy agreement you use. An agent’s agreement will be tried and tested and usually bang up to date.
And how long is it going to take you to let the house yourself? Good agents always have a register of potential tenants readily to hand, and even if they don’t have the perfect one for you, they will locate you a tenant quicker than you could do it yourself. If they let the property a month earlier than you could, and the rental was 1,000 per month, think how much of their fees they have already covered by doing so. An agent also acts as a buffer between the two parties and that is invaluable. If you have no agent and two weeks after the let commences and there is a burst pipe, the tenant will ring you up at work, or on holiday and demand that you come and fix it. You could be several hundred miles away; you could be on the other side of the earth. An agent will field those calls for you. Believe me, a good agent will pay for their fees quite comfortably over the course of a year. So ask around about who is good and who is not. Quiz the agent too until you are satisfied that they are the correct person for you.
Two: If you can empty the house of furniture, then do so. Why? Well for a start any furniture containing foam should be of recent manufacture and contain the necessary safety marks. Secondly if the expensive TV you have included in the let goes on the blink two weeks later, you are obliged to replace it with a set of equal value. The same applies with all appliances. Many tenants have their own anyway, so let them use theirs, and when they go wrong, the tenant bears the cost of repair or replacement and not you. Good furniture has a habit of getting marked and broken too, so take your priceless possessions out of the house.
Three: Check all safety aspects, especially for gas and electricity. Make sure everything is in prime working order and that you possess the necessary safety certificates where required. The last thing you would want is a tenant gassed to death in their beds within the first month of the let, or any time come to that! You would be responsible, and you could end up in prison, and who could argue with that? So never economise on safety issues, and check that everything is just as it should be.
Four: When you get the house back don’t expect it to come back as it was when you let it. Why? Because if a tenant is in that house for two or three years there is bound to be some wear and tear. Just as if you were living there yourself. You must expect some wear and tear on carpets for example, so be realistic and budget for a redecorating job and probably replacement carpets too. Some people fancifully imagine that the tenant will do all that for them, at their expense. It does happen, about once in a blue moon, so be realistic and understand that you might need to spend a little money to return the property to how you would like it.
Five: Budget for taxes. I cannot tell you whether there will be any tax payable on your collected rent because I don’t know where you live and what laws apply to you, but as a norm imagine the rental income may be taxable at 25%. Imagine you had a let at 1,000 a month and the let ran on for three years. That’s 36,000 gross rental, that could produce as much as a 9,000 tax bill at the end of it all. So don’t go off on world tours spending every last bean until you have checked out the tax position as it applies to you, in your territory in your time. It is normal for some tax to be paid on some part of that rental money, so be aware of it, and budget for it, and you won’t have a nasty surprise waiting for you at the end of it all. Good luck.
David Carter’s latest published work is SPLAM! Successful Property Letting And Management. Splam! contains over 240 pages of hints and tips on how to start your own property business on a limited budget, and how to successfully let residential property. You can view actual extracts of the book at http://www.splam.co.uk and order a download or a hard copy at this site or you can go direct to the publishers at http://www.lulu.com/dc He also runs a holiday cottage website where you can access over 7,000 holiday cottages, apartments and villas worldwide at http://www.pebblebeachmedia.co.uk Don’t you deserve a holiday? Well of course you do! You can contact David on any matter any time at firstname.lastname@example.org