A Checklist for Renting Out Your House

A Checklist for Renting Out Your House

Appraisal and Home Inspection
Renting
By Dikran Seferian January 19, 2022

Renting a house out for the first time can be a stressful process. Getting familiar with all the legal matters involved in leasing a property is important for a new landlord. Besides the legalities, there are also other important measures to be aware of. It is therefore a good idea to have a detailed first rental checklist that you can follow through.

Leasing out a property can be a decent investment with a lot of benefits. Essentially, you’ll be earning passive income and even saving up for retirement. To make the most out of your rental, however, staying organized is key. Following the guidelines to a T will allow you to avoid unnecessary — and perhaps costly — mistakes.

Obtain Permission

In the case of a standard residential mortgage, you may need consent from your lender. Your mortgage company may give you permission if you’re planning on renting out your property on a temporary basis. Otherwise, if you don’t intend on returning to your house in the near future, you may have to switch your mortgage to a “buy and rent out” kind of deal. In this case, you’ll need to be up to the lender’s eligibility standard and account for higher interest rates. If you have a leasehold property, however, you’ll still need to get permission from the freeholder. 

Get an EPC Inspection

An energy performance certificate indicates the energy efficiency of your property. You’ll essentially need an EPC rating prior to searching for potential tenants. Consider reaching out to local authorities to ask for your area’s EPC equivalent. After getting the certificate, you can try to improve the rating based on suggestions. Make sure to mention your property’s EPC rating in the advertisements as well.

In many cases, tenants are usually aware of the issues that entail a low EPC rating. Such issues include difficulty in warming up the house over the winter as well as generally high energy costs. A decent EPC rating will get you better tenants besides allowing you to ask for a higher rental price.

House Licensing

You will need a license if your property is a large shared living space. This refers to homes that are rented to five or more residents from two or more households. In this case, the residents would also be sharing bathrooms and kitchens. In certain cases, you may still need a license even if you’re renting the house to fewer people. This essentially prevents unwanted behavior from both parties. Consider contacting your local council to find out about shared space licensing.

Property Marketing

Professionally Taken Photos Are Key to Good Property Marketing

Professionally Taken Photos Are Key to Good Property Marketing

Make sure the house looks as visually appealing as possible before advertising it. This also includes taking care of any maintenance tasks if necessary such as getting rid of mold and taking care of leaking pipes. As for finding tenants, you could use the help of a trusted local letting agent. These professionals are usually familiar with the local market and can make sure that your property goes to the best tenant as quickly as possible. Should you prefer taking matters into your own hands, however, ensure that the photos of the property are taken professionally and the ad is well-written.

Gas and Electrical Safety

Make sure to have a gas safe-registered engineer carry out a gas safety inspection on an annual basis. It is generally your responsibility to take care of any defects that come up. The results of the inspection will be detailed in the gas safety certificate. Remember to give a copy to your tenant.

As for electrical safety, it is crucial that you run an inspection of the house’s electrical system. Upon completing the inspection, you’ll get an Electrical Installation Condition Report (EICR for short). Make sure to take care of any necessary repairs mentioned in the report within a specified timeframe.  You may also want to obtain written confirmation from the electrician who carried out the repairs.

Smoke and Carbon Monoxide Detection

You may be legally required to provide fire detection devices. Every floor of the property should have at least one smoke alarm installed. In addition, you’ll need to place a carbon monoxide detector in rooms where there’s a solid fuel-burning appliance such as a gas or oil burner.

Fire Safety 

Fire Safety Measures to Take Before Leasing Your Property

Fire Safety Measures to Take Before Leasing Your Property

Local fire safety regulations may require you to make sure that all upholstered furniture in the property is fire-proof. Neglecting this important step can result in a hefty fine and possible imprisonment in certain regions.

Check the Insurance

A regular home insurance policy doesn’t apply in the case of renting out a property. Your mortgage provider will ask you to get a landlord insurance plan. Even if your property is unfurnished, you may still need a small amount to cover for any drapery, carpeting, and white goods such as watching machines and fridges.

It is also a good idea to look into rent guarantee insurance. This essentially covers your rental income in case your tenants are unable to pay. Landlord home emergency cover, on the other hand, can be helpful in the case of heating, plumbing, or electrical failures. 

Tenant Referencing

It is important to have the confidence that your tenants will pay rent when it's due, treat your property well, and be decent neighbors. Referencing the tenants is a good way to get this assurance. For instance, consider asking potential renters for proof of income. You may also want to conduct a credit check to make sure that the tenant has a good credit history and is not in debt.

Should your tenants fail the reference check but you reckon they’d be a good fit for the house, consider asking them for a guarantor. You can get references from former landlords or — if the tenants are renting for the first time — from their employer. Consider contacting the intermediary to make sure the provided information is true.

Draw Up a Tenancy Agreement

Points to Include in a Rental Agreement

Points to Include in a Rental Agreement

Make sure to arrange a suitable tenancy agreement for the tenant and yourself to sign. You can find templates of this agreement online. Otherwise, consider hiring a rental agency to have one arranged. The lease agreement will generally include:

  • Name of the tenant and the landlord
  • The agreement term
  • The rent amount and method of collection
  • Terms regarding security deposit and other fees
  • Right to entry
  • Prohibition of unlawful or disruptive activity
  • Maintenance agreements
  • Responsibility for property damage
  • Right to have pets (or not)
  • Limitations regarding tenancy such as subleasing

The right of entry refers to the conditions in which you’re allowed to enter the house. You may, for instance, enter the property to carry out repairs and maintenance when necessary.

Consider having a legal expert go over the lease agreement once it’s ready. Then, review it with the tenant to make sure there’s nothing more to change. Once you’re both on the same page, the agreement can be signed and dated.

Prepare an Inventory

Another important step is to prepare and carry out an inventory of everything in your property and the condition each item is in. The tenants will then sign the inventory to show that they’re on the same page. Consider giving them a few days to go over it and perhaps ask for any changes. Should any damages take place during the rental period, the inventory can give grounds for deducting from the security deposit.

Inform Tenants About Their Rights and Responsibilities

A Government-Approved Rental Guide Includes the Rights and Responsibilities of Both Parties

A Government-Approved Rental Guide Includes the Rights and Responsibilities of Both Parties

Consider providing your tenant with a copy of a government-approved rental guide. This document should list the rights and responsibilities of tenants as well as landlords. Not taking this measure can make it difficult for you to take legal action should your tenant break the agreement in any way. 

Security Deposit 

Taking a security deposit at the beginning of the tenancy is not always necessary. However, doing so will allow you to cover any damages caused by the tenants. Should you decide on taking a security deposit, you will essentially have to return it to the tenant after the rental period — minus any deductions that account for damages.

If your tenants are on government aid, however, they can pay the rent after moving in. Consider looking into real estate law guidelines for any other exceptions.

Check Tenant’s Right to Rent 

Due to the current situation regarding immigration, many legislations will require you to check the legal status of your tenant. Consider checking the immigration status of your tenant by taking a look at their identity documents. These documents include:

  • Passports
  • Identity cards
  • Permanent resident cards
  • Travel documents
  • Right to Rent paper from Home Office Immigration
  • Proof of Registration

While you can carry out these assessments yourself, an alternative way is to have an agency take care of the matter. Make sure to check with local and state laws to make sure the process is carried out lawfully. You will also need to report the tenants’ status afterward.

Move-In Checklist

Once your tenant is moving in, consider going through a final checklist together. A move-in checklist is essentially a document that indicates the current state of the house. The document normally includes:

  • The name, address, and apartment number of the tenant
  • The move-in and move-out dates
  • The inspection results at the beginning and end of the rental period
  • State of each room at the beginning and end of the rental period
  • Proof that the safety devices work
  • Your signature and the tenant’s

Once the move-in checklist is agreed upon and signed, make sure to leave your contact information and see if the tenant has any special requests. Should the tenant be requesting an accommodation for a disability, for instance, you’re legally required to provide it.

DS

Written by
Dikran Seferian

Written by Dikran Seferian

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