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20 Steps

TenantVERIFY®

20 Steps to Successful Landlording

Being a successful landlord is very satisfying and can be very rewarding both financially and emotionally - after all you are providing a very worthwhile service to your tenants and the community as a whole.

Success for the DIY landlord demands a certain amount of discipline, a good working knowledge of the rules and regulations and a systematic approach.

Following these steps will save you time and trouble - if you do it properly you'll wonder why you even considered paying an agent to do it for you!

1 - Be clear about your Landlording Strategy - have a plan!

2 - Do you Homework First - know the rules and regulations!

3 - Develop your own Operating Philosophy!

4 - Do your Research Thoroughly - know the local market!

5 - Use a Comprehensive Application Form!

6 - Screen Tenants VERY Carefully!

7 - Always have a Written Agreement!

8 - Deal Fairly with Security Deposits!

9 - Keep the Rent Near Market Levels!

10 - Use Banker's Standing Order Rent Payments!

11 - Be Safety Conscious - you are responsible!

12 - Bear in Mind the Discrimination Laws!

13 - Have Adequate Insurance Cover!

14 - Keep the Property in Good Repair!

15  - Act Quickly if Problems Arise!

16 - Watch Out for Harassment Claims - respect tenants' privacy!

17 - Security - Tenant and Landlord!

18 - If you Use Agents, Select them Carefully!

19 - Put Everything in Writing and Create an Audit Trail!

20 - Avoid Expensive Litigation!

Follow these guidelines and you should be on your way...!

Be clear about your Landlording Strategy - have a plan!

Are you in the bottom, middle or upper part of the lettings market?

If you are in the DSS, HMOs and student sector of the market, expect more problems, more management time, and you will need a good knowledge of the Housing Benefit, HMO rules and student market etc. Financial returns though, should be commensurately higher!

If you go for the middle (working and professional) or upper end (professionals and company lets) you should have fewer problems, providing you select your tenants carefully.

Make sure your property matches your target market in terms of type, location, condition and facilities.

Do your Homework first - know the rules and regulations!

Think of your lettings investments as a business, even if you're doing it as a sideline to your main job. It requires a certain amount of discipline and commitment.

Have you got the time to manage your lettings or do you need to pay someone to do it for you? Distance is a factor, because travel time added to management time can become excessive.

However, rental property can be efficiently managed using a surprisingly small amount of time - just follow these steps and the information we give on this site.

Just like any other business, at the start, it's a good idea to have a Business Plan.  Include financial projections, especially if you are using some form of loan or mortgage finance to purchase your investment properties.

Remember, you may need certain permissions for your landlording operation, from:

  • The local authority planning, building and environmental health departments, depending on the type of letting and whether alterations are involved.
  • Your mortgage company
  • Your Insurers
  • Your landlord or freeholder

You also need to master the basic letting rules and regulations, the landlord and tenant's legal obligations and some of the laws that governing lettings, these change often, so keep up-to-date.

Visiting and reading this site should help - it's designed to take the effort out of learning about landlording by bringing everything you need together in one place.

We'll direct you to useful books and other information sources.

It's also a good idea to join your local Landlord's Association. You will learn a lot by attending meetings and speaking to other landlords.

Develop your own Operating Philosophy!

The old saying, honesty is the best policy applies to landlording as much as to any other business, but perhaps more so. For a start landlording has a bad image in some quarters (though it's improving) and this has to be overcome.

When you are under the scrutiny (not that you will come into every-day contact) of your tenants and so many other agencies: your local authority, The Fire Officer, The Environmental Health Officer, The Health & Safety Executive, Rent Officers, The Inland Revenue, the Town Planners and Building Controllers, and the courts, to name a few, then successful landlords tend to be those that operate within the rules and with some integrity.

Treating tenants with respect while setting out to provide value for money and a professional standard of service is an approach that the authorities will generally support is the best policy.

If you can show that you are a good landlord and follow the rules you are likely to get full support from the authorities if things go wrong.

Do your Research Thoroughly - know the local market!

Don't buy a property just because you like it, you think you could live in it, or you just plain fall in love with it!

"The market rules" every time, and you must make sure that what you buy will let. Get to know the area well, speak to residents and local estate agents, and keep an eye on the local papers to see what's letting locally.

Location, location, location have been said to be the three most important factors when investing in property. Residential lettings are no exception.

Is there a healthy demand for letting in the area?  What type of property lets best? Which type is most profitable? Is the property near large employers, a College or a University? Are there good public transport links? Are there shops, fast food outlets and restaurants, laundry facilities, tourism and entertainment venues?

What are the long-term trends? Is the area improving, or declining?  Are there any potential problems, trouble spots - flooding, riots, radon gas, subsidence? Are there any future developments in the pipeline like shopping centres, roads or transport links which could improve the area?

If it's a town or city, is there a trend to more urban living?  What will be the long-term effects that these and other factors have on rental demand and property values?

Have a Comprehensive Application Form!

A Tenant's Application Form (Tenancy Proposal Form) is crucial and the most important document after the lease agreement - see Agreements & Forms

The application form records permanently the tenant's declaration as to identity, accommodation and employment histories, income status, references, and personal details  - Smoker? Pets? Other Occupants, Children etc.

It also confirms the tenant's understanding of the property to be let, the type and length of tenancy and basic terms, the likely costs and expenses to be paid and the rent and deposit required.

This form is an important legal document which forms the basis of the tenant screening process. It should provide sufficient information to enable the landlord to contact the tenant, or his relatives, even if he absconds.

The form also provides valuable evidence for Ground 17 of the Grounds for Possession under the Housing Act 1996: a false statement knowingly having been made by the tenant or someone acting on his behalf.

Ground 17 underlines the importance of a Tenancy Application which seeks factual information from the tenant.  See also Tenant Screening.

Screen your Tenants very Carefully!

Always remember this: no tenant at all is 100 times better than a problem tenant! Landlords are always anxious when they have an empty property, but don't be too hasty in taking on the first person that comes along.

Always do a credit check. It is not an absolute guarantee but a basic check is quick and quite inexpensive, and it's a good safeguard against real problem debtors.

Be thorough in taking up references etc, but don't waste too much time about it because you may lose an excellent tenant. See the section on tenant screening and tenant verify

This is one aspect where DIY landlords have the advantage over letting agents - they can generally deal with applications more quickly, often at week-ends and outside normal working hours and also make quick letting decisions.

Always have a Written Agreement

All new tenancies, since 28 February 1997, are automatically Assured Shorthold Tenancies (ASTs), unless specified otherwise, so landlords are now on much safer ground than pre '97.

It is possible to create such a tenancy legally by oral agreement (must be confirmed in writing within 6 months if the tenant requests it) and the conduct of both parties.

But any landlord doing this is asking for trouble, and most tenants would prefer to know where they stand by having their tenancy agreement in writing.

Never, ever, under any circumstances allow a tenant into premises (handing over keys) without the signing of an agreement in front of a witness and paying the first month's rent and security deposit. If you accept a cheque, allow time for clearance.

The agreement forms the basis of the landlord-tenant relationship specific to your property, as opposed to general legislation rules. For example, you may want to bar pets, to insist on payment by banker's standing order and insist on notice if the property is to be left empty more than 14 days etc.

Without the agreement you will find it difficult to prove even the obvious points - when the tenancy actually started, how long it lasts and what the rent should be.

No written agreement may also cause real problems if court action is taken later for eviction etc.

Good agreements are easy to understand (plain English), up-to-date with current legislation and have taken into account almost all eventualities.

Use a good quality "off the shelf" agreement or have one prepared by an experienced solicitor - not all solicitors though have expert knowledge of landlord-tenant matters - see Agreements & Forms. Better still; go directly to our online agreements section

Deal Fairly with Security Deposits

Always insist on a security deposit, which is usually equivalent to one month's rent, and handle this with integrity.

To discourage tenants from using the security deposit as their last month's rent payment you may decide to use a different amount - 6 weeks for example.

Don't make the deposit too high though (no more than two months) as it may be seen legally as a premium. This would imply a long-leasehold and could allow a tenant to assign the lease to another tenant without your consent.

The tenant may need the deposit back for his next tenancy so always repay it promptly if everything is in order.

Your Tenancy Application Form and the Tenancy Agreement should deal with and fully explain the procedures with deposits.

Deposits are always a source of potential disagreement between landlord & tenant. One option, which has advantages for both parties, is to use an independent inventory clerk and/or the Independent Housing Ombudsman Deposit Scheme - see Deposits.

Keep the Rent near Market Levels

Always try to keep the rent at or near market levels - you owe it to yourself, your financiers and your potential heirs. Your research of the local market (section 4 above) should give you this.

Ultimately the rent received determines the value of your investment so if you had to sell the property with a sitting tenant, on a below market rent, the property value could be adversely affected.

Short-term lets don't warrant the hassle of rent reviews and increases, but longer term residential lets, say over 2/3 years, should have their rents reviewed and the agreement should provide for this.

Rent Reviews are particularly important when letting commercial properties which tent to have much longer leases.

Some landlords feel that good long-term tenants should have the reward of staying on the same rent, but this becomes a dangerous philosophy as time goes by.

The rent is no longer a fair return on the investment, the property value is affected, and may not cover repair costs. Eventually the tenant is faced with a big rise, which usually then triggers a move.

Don't try for too high a rent though. This usually results in longer void periods and you lose out more in the end - see Rent Reviews.

Use Banker's Standing Order Rent Payments!

Banker's standing orders are the best thing ever invented for landlords!

Without the standing order most DIY landlords just would not have the time to manage their properties as a side-line to a normal day-job.

Standing order payments have several advantages besides saving time - they are regular, there's no anxious waiting for cheques coming through the post and you know straight away if there's a problem.

No landlord should spend time travelling to collect rents, only do it in emergencies. Some tenants will delight in giving you the run-around in this situation!

If a payment fails to materialise it means one of two things: the tenant has ordered the bank to stop the payment, or there are no funds. You can then act immediately - see standing order mandate.

Be Safety Conscious - you are responsible

Landlords have a serious obligation to provide safe premises, installations and appliances for their tenants. They must also ensure safe use of equipment by providing clear operating instructions.

Safety is potentially one of the greatest risks a landlord faces, but it need not be a problem if it's managed properly.

There are severe penalties for non-compliance - both criminal sanctions and civil law damages apply.

Due diligence (taking all reasonable steps) is essential - General Safety and Safety Checklist.

Bear in mind the Discrimination Laws

Remember the discrimination laws. You are not allowed to discriminate (and nor would any reasonable landlord want to) on the basis of race, religion, gender or disability etc. However, you are allowed to discriminate on the merits of the individual/s as qualifying tenants.

Have Adequate Insurance Cover

Landlords have many potential liabilities and it is vital that they carry sufficient insurance cover. The landlord is responsible for insuring the property itself and should insure their own contents. Landlords are strongly advised to take out specific landlord insurance covering tenant and third party risks (public liability).

Other types of insurance include loss of rent and rent guarantees.

Tenants should be advised to insure their own contents. Tenants’ policies also cover a range of other basic risks.

There are specific policies available for landlords with student lets and HMOs, and for the tenant.

Keep the Property in Good Repair

The old saying, a stitch in time saves nine, was never truer than with property. A small thing like a leaking gutter or a blocked drain, if left unattended, can result in horrendous damage.

Landlords with the inclination and good DIY skills have an advantage as the cost of repairs is high, and good tradesmen are hard to come by, especially at short notice.

If you use tradesmen on a regular basis you are more likely to get them to come when you need them in an emergency, but it pays to look after good people when you find them.

The starting point is buying in good condition. Have the property surveyed and don't forget the wood survey - a nasty case of rot can be very expensive to eradicate.

You may be able to buy property cheaper if you are willing to renovate or develop it, but this requires a fair amount of experience and skill and usually, money.

Good well maintained property will attract good tenants and will enable you to set a certain standard. Aim to keep the property maintained and always respond to problems promptly.

Mid-tenancy inspections (normally 6 monthly, and preferably done by an independent person) are a good idea to monitor the way the tenant/s is keeping the property. A report should be completed using the original inventory/schedule of condition as a basis.

If problems are arising the tenant can then be alerted in writing, warning that additional costs may be being incurred for damage or cleaning beyond normal wear and tear.

Act Quickly if Problems Arise

If problems arise, act quickly and always carry out what you have said you will do. Take action immediately so that tenants know you mean business:

  • If rent payments are missed - find out why and set out a course of action. Put it in writing. There may be good reasons, in which case allowances can be made, but don't let the situation last long - you may have to go for repossession.
  • If tenants damage your property - you need to inspect the premises from time to time. We've found that providing a basic cleaning or care taking service keeps things in order.
  • If the tenant reports repair work - not responding to tenants' maintenance problems will not only affect your property, it could bring on problems with rent payment. Never give tenants an excuse not to pay rent! Having access for maintenance is also a good opportunity to inspect the premises.
  • If your tenants are causing problems with the neighbours - again, act quickly so that they can see you are doing something about it. You may have to take it up with the local authority and possession proceedings may be in order.
Watch out for Harassment Claims - respect tenants' privacy

Tenants have an "estate in land" , an interest in the property and a right to quiet enjoyment; to treat the property as their own (within the terms of their agreement)

Landlords turning up and making demands, without warning, could be deemed to be acting unreasonably. Making threats, withdrawing services or making life otherwise difficult for tenants and their guests is even worse.

Always give tenants a minimum of 24 hours notice for access to the property for whatever reason.

If you do have an unreasonable tenant, where relations have become strained, carefully document you contacts with them, or your attempts to carry out you duties such as Gas Checks, inspections etc., and take a witness when you see them.

Security - Tenant and Landlord

The property needs to be secure for the benefit of your tenants. If tenants' possessions are lost due to lack of a reasonable level of security then they may bring a claim against their landlord.

Your insurance company and your local Police Crime Prevention Officer will specify and advise on door and window locks etc.

For personal security, dark allies and walk-ways should be well lit and doors and gates fitted with secure locks.

If you are meeting strangers to show them around your properties:

  • Make sure you have recorded all their contact details and leave a copy at home or at the office.
  • Take someone with you if you feel vulnerable on your own.
  • Carry a mobile telephone of you can
  • Be ready to make a quick exit if you sense danger.
If you Use Agents, Select them Carefully

If you use an agent to let and/or manage your property be careful. Not all agents have the necessary skills and experience, and some have excessive charges - see The Which? Report April 2001.

Agents who are members of RICS, NAEA, ARLA or NALS are more likely to do a professional job.

Put Everything in Writing and Create an Audit Trail

Have a file for every property & every tenant. It's important to have this information on file,  particularly for Inland Revenue purposes. All files should be kept for several years after the property is sold or the tenants  have left.

The property file should include everything to do with that property:

  • Purchase details, date and price
  • Copies of all solicitors and agent's correspondence
  • Property Survey details
  • Land Registration details
  • Mortgage/Finance details
  • Insurance details
  • Permissions for letting from freeholder, mortgagor, insurers.
  • Plans, Planning approvals, any permissions from local authority and copies of all correspondence.
  • Record of all repairs, alterations and improvements
  • Annual Income and expenses accounts

Tenants' files should include everything to do with that tenancy:

  • The Tenancy Application and Tenancy Agreement or counterpart lease.
  • References and approvals.
  • Copies of all correspondence with the tenants and authorities.
  • Annual Safety Check Lists
  • Gas Safety Checks and CORGI Certificates
  • Electrical Checks
  • Record of Entry and Exit meter readings
  • Inventory
  • Deposit details and receipts
  • Write on the outside of the file for easy reference:
    • Date Entered/Agreement Date
    • Length and Type of Tenancy
    • Deposit Paid
    • Rental Amount and due date
    • Tenant's Contact Details.

Use a good accounting system, preferable one of the computerised ones. If you manage large numbers of properties you may need to consider one of the specialised Property Management Packages.

Avoid Expensive Litigation

Litigation (going to court) can be horrendously expensive and should be avoided if at all possible. Following the rules and guidelines here should keep you out of trouble.

If disputes arise with tenants try very hard to discuss, negotiate and settle in an amicable way.

If you have cause to re-possess a property, this should be a reasonably straightforward process, if you have followed these guidelines and you carefully follow the possession procedures.

If you have money owing, and you want to avoid the costs of going to a solicitor, you can use the Small Claims Court, which again should be reasonably straightforward.

In both cases it is possible for a private landlord to process these, but if you don't feel confident, and some cases can be complex and beyond the competence of an amateur, see your solicitor.