Best practice for new landlords

Becoming a buy-to-let landlord can be a very profitable use of your capital. That is not to suggest that it is easy to do, especially if you’re taking on the management of the property portfolio yourself. As such, having the right knowledge and putting the right plan in place is important.

Whether you are doing it for the first time or are a portfolio landlord, it is important you keep on top of your record keeping. Good record keeping not only helps you keep track of income and outgoings, but it is also important for staying on top of administrative tasks, like when insurance renewals are due. It can also be a lifesaver if you are unfortunate enough to face a tenant dispute.

It is fair to say you will experience periods when your property is vacant; generally, this is after one tenancy has ended and you are advertising the property for new tenants.

If you manage it well, you may have a new tenant lined up to move in soon after the previous tenant leaves, but you cannot assume this will happen. On average, a house will be vacant for up to four weeks a year. You need to allow for this either by holding a contingency sum in your bank account or by retaining the surplus rent, after mortgage and other costs, in the account to cover you when no rent is coming in. As a minimum, it is worth holding the equivalent of three month’s rent to help you through these periods.

You need to think about the costs associated with a rental property. Not just the mortgage, but insurance, maintenance and the costs involved with keeping up to date with legislation, such as current energy efficiency requirements and gas safety certification. Have your contingency fund available to cover this, and as with vacant periods, think about keeping it topped up by retaining surplus rent in your bank account.

By undertaking a regular inspection, you have the opportunity to check the property to ensure it is being looked after, but this can also give you the opportunity to catch up with your tenant.

Not only does this allow them to draw any issues to your attention, so you can deal with them before they become a major problem, but also gives you the chance to check on them, find out about their work situation and any plans for the future.

You may come away with a view that they are planning to stay longer term or may be struggling financially.