Becoming a landlord can be financially rewarding and like any other job - when you do it well it can be very satisfying. When letting property you need to be up-to-date with all the regulations and rules involved with renting and tenants' rights. However, you can reduce any potential problems right from the start if select your tenants carefully.
Here are a few systems you might like to employ to ensure that you get the right tenants into your property.
Estate agents often use a 1 page flyer to promote their properties. You can increase your exposure to good tenant pools by making sure your property is advertised well. Click here for a template to create a 1 pager about your property to assist with agents working on your behalf.
Make sure that you carry out viewing appointments with prospective tenants yourself. This way you will get to meet them face to face and ask them about themselves and their situation. You could gather alot of information doing this. Use this Viewing Appointments form not just to schedule viewing appointments with prospective tenants but also to ‘pre-qualify’ them by
asking certain key questions.
It is advised that you also get your prospective tenants to complete a comprehensive Application Form - include details to verify that they are who they say they are, previous accommodation and employment record, details of their income, credit history, references and personal details e.g. Do they have any children or pets? Are they a smoker? How many people will be living in the property?
The application should also cover the length and type of letting, the basic terms and the rent and deposit required. The application also informs the tenant that credit checks and references checks will be made in accordance with the Data Protection Act. The more details you have officially in writing the better.
The application is an important part of your screening process for a good tenant. Remember, once a tenancy agreement is entered into it can be difficult for landlords to evict troublesome tenants.
Always check the prospective tenant's credit history and identity checks, and take up the references given. It's advisable to verify the references by telephone. If you talk to a previous landlord enquire about promptness of rent payments, any lease violations, noise levels or any complaints from other tenants. A future problem tenant can seem perfectly valid and respectable when you first speak to them or meet them. Its best to be guarded in this respect and check, check and check again before you hand over the keys to your front door! Most landlords worry most about not having a tenant in their rental property, but having a problem tenant can give you more headaches and work out more expensive in the long run.
Click here to download an example Reference Application Form.
Ensure you go through all the checks - a genuine tenant will understand the time involved. If you are not positive you could ask for a Surety Agreement from a relative willing to act as a guarantor, but trust your instincts and only rent to those tenants you feel comfortable with. If both parties are keen to proceed then you can take a holding deposit, while you go through the checks.
Once someone has agreed to let your property, presenting them with a terms of business document is both fair and minimizes misunderstandings later on. Click here to download an example Terms of Business.
Landlords need to be aware of the recently introduced Tenancy Deposit Scheme. Starting from 6th April 2007 all deposits given to landlords for an Assured Shorthold Tenancies (covering most residential letting from 6 months up to 7 years) in England and Wales, must have a Tenancy Deposit protection scheme. This means the deposit must be lodged either with the custodial scheme - this is free to use, or there is an alternative insurance-based scheme. With the insurance plan the landlord retains the deposit and pays an insurance premium to protect against failing to repay the tenant the deposit, in case of any dispute.
It can be very useful to join your local Landlord's Association - you'll find lots of information and help from experienced landlords and advice on regulations.