HAVE A PROPERTY - CAN YOU BECOME A LANDLORD

Are you thinking about letting your property? The process of letting a property can be a complex and time-consuming, but the rewards can be considerable when you get everything right.

Before seeking tenants you should ask yourself the following questions.

Can I let my property? Any person who has a mortgage or is not a freeholder will need to secure the necessary permissions before they are able to let the property. Conditions may be imposed such as ensuring the property is insured with a suitable landlord insurance policy. Also you may be required to pay a higher rate of interest on the mortgage.

Permission from Lender
Things you must consider if, there is a mortgage on the property. If you have a mortgage it will be a term of that agreement that you get the lender's permission before you let the property, even if you are just letting one room in it. This is because the mortgage lender will be concerned that you are not doing anything that may affect the value of their investment and their ability to recover the loan they paid you to buy the property. You will need to check the terms of your mortgage. For many Buy to Let mortgages permission to rent the property may be automatic, but even in Buy to Let mortgages there may be conditions on the type of let permissible e.g. ‘assured short-hold tenancies only' or a restriction on housing benefit tenants. If you are unsure of the requirements, speak to your legal adviser assisting with the purchase. You will probably need special permission from the lender if you want to rent the property out as ‘rooms' or bedsits which would create a House in Multiple Occupation. If you purchase the property as an owner-occupier on a standard mortgage for home owners, you will need to obtain permission to rent the property to tenants. The lender may increase the cost of the mortgage if they give permission to rent the property out. Usually a lender will not object to one room being rented out to a ‘lodger'. Also, a lender is highly unlikely to grant permission if the mortgage is in arrears.

Freeholder
You need permission from the free-holder: If you are a leaseholder then your lease or contract will contain a clause that you must get the freeholder's permission to sub let or part with possession. This permission may not be unreasonably withheld, but it is very important that you get the permission. If you let the property out and then later seek permission you will have already breached your lease. Such a breach can result in your freeholder taking legal proceedings against you. The freeholder's permission will generally be a formality, although it is usual for the freeholder to make a small charge for granting their permission. Refusal will only be where it is reasonable. For instance, if there have been complaints about noise from former tenants this might be discussed and you might be required to satisfy the freeholder that you will be renting to responsible tenants. If the freeholder does refuse permission you should make sure you have read the lease and know what it says about this, and then seek the freeholder's reasons for his refusal. You may be able to satisfy his misgivings before you need to take further advice.

! Warning! Do not attempt to let your property before obtaining the proper permission - the consequences could be dire.

Should I let my property? Consider whether or not it is the right option for you, given the obligations placed upon you when you become a landlord. You may decide to let and manage the tenants yourself or prefer to use an us.

Is there anything that I am required to do in order to enable the property to be let? Perhaps there is something you need to do in order to make the property legally rentable, i.e. HMO licence, Gas Safety check compliance with Health and Safety regulations.

Are there any outstanding issues, with the property which were created from my last tenant? Make sure all matters were taken care of so that the problems do not appear during the new tenancy. As an example the previous tenant formally vacated and you have not assumed they have abandoned the property.

Building Insurance
There is adequate landlords' buildings insurance in place. The property must be properly insured and your cover should extend to people "residing in or visiting the premises". Damages arising from Personal Injury claims are now very high indeed and this is the sort of thing that could bankrupt you.

Managing Your Property Yourself
If you intend on managing the property yourself, without the aid of an agent, you should consider whether or not you are willing to deal with the problems that may arise during the course of the tenancy. The area of lettings is, unfortunately, a minefield which could expose you to a legal or financial risk. Are you prepared to put the time in and deal with what may come your way? Are you prepared to attend training courses to keep you up to date on the ever-changing legislation? If the answer is ‘no' then perhaps you should consider employing the services of a managing agent.