Tips on finding the right tenant
Decisions, decisions, decisions.
You’ve bought a buy-to-let property, made improvements, redecorated and generally got the place pretty splendid.
Now comes the hard bit - finding a decent, reliably rent-paying tenant.
In Part 6 of our Buy to Let series rental property specialist Paul Offley is going to tell you how to do that.
The first thing to work out is whether you want to find a tenant yourself or pay a professional to do a tenant-find, says Paul who runs the lettings division of the Nottingham Estate Agency and the Harrison Murray Estate Agency.
Finding your own tenant is obviously cheaper, but it can bring headaches. Do you really want the hassle of traipsing potential tenants through numerous viewings of your property, chasing up tenant references, doing credit score checks and making sure your tenancy agreement is legally watertight?
Paul’s advice will assume you’re using an agent, but the same principles apply if you’re doing everything yourself. Most agents will charge a flat fee for a so-called “tenant-find” - anything between £150 and £300 - and most will be prepared to negotiate. Make sure you know what they are offering.
Some agents will charge extra to draw up a tenant agreement, do an inventory of the property and get references.
A basic tenant-find will see an agent market your property: in their offices, in the local press, on their website and various online property portals. Find out where an agent is going to advertise and make sure you’re happy with that before signing a contract with them.
When an applicant has been found that you’re happy with, the agent will take a fee from your prospective tenant (good for weeding out time-wasters) that will pay for them to run credit score checks, identity checks and get references. Checks and references are important. Don’t be tempted to skimp on them should you decide to find your own tenant, says Paul. If you haven’t made sure a tenant is genuine and doesn’t have a bad credit score and outstanding Court Judgements against their name it could invalidate insurance policies you may take out to cover your mortgage if they fall behind with their rent.
When your tenant has signed a contract (aka a tenancy agreement) and paid their deposit (usually a month-and-a-half’s rent) an inventory needs to be taken of the property prior to them moving in. Many agents - though not all - will offer this as part of your tenant-find. The inventory (preferably accompanied by photographic evidence) needs to be comprehensive, detailing the condition of the property and everything in it. If the property is damaged and the tenant denies responsibility, the inventory will be crucial - giving you the documentary evidence that will be needed to withhold some of tenant’s deposit when they move out.
All tenant deposits must be handed over to a government-backed tenancy deposit scheme (TDS). Fail to do this and you won’t have a legal leg to stand on if you want to withhold some of your tenants deposit when they leave. The deposit is protected by the TDS and any disputes between a landlord and tenant are resolved by an impartial adjudicator.
Make sure the contract is in order and all the paperwork is completed before your agent releases the keys of the property to the tenant, advises Paul. Any mistakes will be harder to untangle once the tenant has moved in.
The final thing you may want to consider, which we’ve already touched upon, is rent protection insurance. If the tenant stops paying their rent, for whatever reason, these policies will cover your mortgage for a set period of time - usually six or twelve months. Some policies have a one-month excess (meaning you have to pay the first month’s mortgage repayment) others have no excess. A typical six-month policy should cost about £75, but there are differences between them. Some agents will throw in a six-month policy for free as part of their tenant-find. Taking out rent protection insurance is a personal decision. If you have the means to cover the mortgage if a tenant misses a few rent payments then it might not be necessary.
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