Ten tips for would-be landlords

TOP TEN TIPS FOR WOULD-BE LANDLORDS
If your house won't sell, how easy is it to rent?

You need to move but do not want to put your home on the market: after all, there could scarcely be a worse time to sell. The obvious solution is to let your home. If you are about to join the influx of reluctant landlords with unrealistic expectations and no idea about tenants' rights, follow this guide:

1 Study the local market

“Sellers thinking of renting their home because of a difficult sales market need to make the decision very carefully because the main choice a professional landlord would have to make to maximise rents - the choice of property - has already been made,” says Nicholas Leeming, of propertyfinder.com.

2 Talk to your lender

If you do decide to go ahead, and if you have a mortgage, you need to clear it with your lender (and also to notify your insurer). In many cases, the lender will not require you to switch to a buy-to-let loan, but this is not always the case.

3 Do your sums ...

“Once void periods and overheads are included, you'll need to aim to raise rental income of around 125 per cent of your mortgage payments to make renting your home a sensible option,” Leeming says. Landlords face other costs too, such as compulsory inventories, gas and electricity safety certificates and minor repairs.

4 ...and try to be realistic

Do not be greedy: remember that the enemy of every experienced landlord is not a slightly lower monthly rental income but long void periods in which the property is not rented at all. “Many new landlords miss out on opportunities to let their property by refusing to budge on the asking rent,” says Lynn Hilton, a partner at the estate agent Cluttons.

5 Head must rule the heart

“There is a tendency for people to become emotionally attached to a property if they have lived in it before letting it,” says John Heron, of Paragon Mortgages, the buy-to-let lender. “You have to look at the property like a business and run it as such.”

6 Think about your tenants

Although you cannot choose a property to fit in with local demand as a traditional buy-to-let investor would, you may be able to make adjustments. “In a busy student town, for example, bedrooms are key, and you will be able to maximise rents by converting any extra space or a second reception room into another bedroom,” Heron says.

7 Spend some money on it

Your plan to rent out your property may be for the short term, but you may need to make some changes, particularly the decor, if you want to attract tenants. “Don't scrimp on fixtures and finish,” Heron says. “High-quality items will last longer, attract better tenants and allow you to optimise rents.”

8 Follow the rules

There is a host of legal obligations and regulations to follow. You need to ensure that the furniture, gas and electricity systems comply with health and safety regulations and that your tenants' deposit is insured and protected by a tenancy deposit scheme. If you are renting out a large property to five tenants or more, you may have to apply for a houses in multiple occupancy licence from the local council. The rules are complex: go to www.communities.gov.uk . Remember that from October all landlords will have to have an energy performance certificate available for tenants to see. Familiarise yourself with the tax rules. Go to: www.paragonmortgages.co.uk/ files/taxguide.pdf .

9 Pick tenants with care...

Failure to carry out proper checks on tenants can be costly. The National Landlords Association offers a tenant check that includes bankruptcy and county court judgement searches for £28 (£6 to NLA members). Once your tenants are in place, treat them as clients. “Respond quickly, politely and effectively to their requests, especially when something has broken down,” Heron says.

10 ... or pay a lettings agent

If you know that you will not have time to vet tenants and manage your property effectively yourself, consider a lettings agent. Management usually costs about 10 per cent of the rental income per annum, but is often well worth it. “If you are unable to deal quickly and efficiently with your tenants' demands, they won't stick around,” Leeming says.