How to be a Landlord

There are many topics to consider before being a landlord. Consider these points:

Are you intending to be a "Buy-to-Let" investor or are you an "Accidental Landlord"?

You may have recently inherited a property or you are finding it hard getting someone to buy your house. You could even be looking to invest your hard earned cash and widen your financial portfolio by joining the buy-to-let market.

Whatever the reason, due to the current housing market, the number of accidental landlords is on the increase and many are investing in buy-to-let properties.

The legislation on the private letting industry is complex and although many new landlords are successful and continue to expand portfolios, many find themselves in difficult and costly situations.

This guide is designed to ensure that you ask yourself the right questions before you are blind-sided by unconsidered costs and potentially contentious clients/tenants.

What type of property are you going to buy?

Broadly speaking there are four market groups:

  1. Professionals and higher end market
  2. Working tenants
  3. Local housing allowance (LHA) tenants
  4. Students

The type of property you own and its location may determine the market you aim for. Different markets will command different rent levels and will require different standards of letting. There are advantages and disadvantages with all types and below are some issues you may wish to consider:

  1. All renters will expect a high level of customer care from landlords with expectations generally rising in line with the amount of rent paid.
  2. Professionals will insist on higher standards and possibly en-suite facilities;
    • - Young professionals tend to be more mobile and may lead to higher voids and increased re-letting expenses.
  3. Housing benefit renters (LHA tenants); whilst commanding a lower rent are likely to be more stable renters.
  4. Renting to students sees higher occupancy rates which can maximise income. Although, student lets may not extend for a full year


Before purchasing a property to let out, you need to take into account your finances. You need to consider the benefits and financial risks very carefully. Here are a few things you may wish to keep in mind:

  • Buy-to-let mortgages allow property investors to acquire a mortgage to purchase a property to let out. Rental income then covers mortgage repayments.
  • Achievable rent. Take into account and the amount you would need to charge to cover your mortgage and other outgoing costs.
  • Demand for rented accommodation in the area which you are considering investing. For example, in many areas, including popular inner city locations, there may be an oversupply of rented accommodation and therefore it could be difficult to rent the property out.
  • Profit margins
  • Outgoing costs, including repairs and letting expenses as well as advertising and professional fees.
  • How long you can afford to have the property vacant.
  • Ability to pay your mortgage if the tenant stops paying rent or you have an unexpectedly large repair bill.
  • The potential Return of Investment (ROI).

Are you intending to manage the properties yourself or through an agent?

Self-Managing Landlords

This is for landlords who are confident that they know their responsibilities and best practice in managing properties. This option saves you the cost of an agent, but can require a considerable amount of individual time. You may also require professional advice. Landlord Associations are a good source of advice and assistance that a self-managing landlord would require.

Letting Agents

If you enter into an agreement with an agency, you should get a written contract stating their level of service and fees etc. Landlords are bound by any agreement or contract made by their agent on their behalf with a third party (tenants). If the agent agrees to something which the landlord had not authorised, the landlord is still bound by the agent's action, unless it is something obviously outside the authority of a normal agent. For example, if the agent fails to carry out an annual gas safety inspection, the landlord will be held liable for the failure as well.

There are 3 options when it comes to letting agents managing your properties:

Letting Only

This is where an agent markets the property, advises on rent levels, finds a tenant, undertakes reference checks if required and provides a tenancy agreement. Once the tenancy has started, the landlord undertakes all management of the property. The agent charges the landlord a one-off fee for this. The amount will vary but is often based on the rent (usually one months worth of rent). They may also charge administration fees. You need to agree what deposit is to be collected, and ensure it is held in accordance with statutory tenancy deposit protection measures if it is taken after 06 April 2007.

Letting and Rent Collection

The second option is where the agent does all of the above and also collects the rent during the tenancy. Other management functions such as repairs and arranging possession of the property at the end of the tenancy, if needed, are still dealt with by the landlord. The agent is likely to charge a one-off fee and then a monthly fee (a percentage of the rent, perhaps 5 per cent) for collecting the rent. This arrangement may be confusing for the tenant as it is not clear who is responsible for which areas of management.

Full Management

The third option is for the agent to act as a full managing agent. They deal with all management issues, repairs, rent collection, starting the tenancy and some steps towards the tenancy. For example, they may serve notice but not take court action. This is obviously more expensive (perhaps 10 to 15 per cent of the rent), but it is worthwhile if the property owner either does not have the time to manage the property, or lacks the expertise. You need to agree with the agent what repairs they can do without asking you, and what repairs you want to get involved in. You will have to pay for the repairs, hopefully out of the proceeds of the letting.

In view of this you should be very careful when choosing an agent, and choose one who will carry out their responsibilities properly. You should also be very clear when giving agents any special instructions, preferably putting these in writing.

Other questions that you need to ask yourself:

What are the other liabilities and responsibilities?

Have you fully considered the tax implications?

Do you have an accountant and solicitor to act on your behalf?

How do you intend to find tenants?

Do you know what questions to ask and credit checks to do on new tenants?

How do you manage the property and tenant during their occupancy?

What do you do if the tenant does not pay their rent on time?

Do you know how you can legally evict a tenant?

How can you recover outstanding rent arrears?

Who can you turn to for advice?

Will you need an HMO licence?

Are you aware of Article 4 Directives?

The answer to all these questions and more is available to members of The Residential Landlords Association. Join today from just £79.95 per year and we can answer all the questions you need answers for.

The RLA operates a fully manned advice team which can answer all these questions and it arranges training courses for landlords and agents around the country.

Alternatively, sign up for our newsletter to receive the latest landlord news and information.

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