In part 3 of our A to Z of Lettings, C is for Contract – a key component of every tenancy.
As a tenant or a landlord, with each new tenancy you are involved in you will sign a contract called a Tenancy Agreement. The vast majority of these will be Assured Shorthold Tenancy agreement, relating to the terms of the Housing Act. This is a legal document, so it is important that you have read and understood what you are signing, because once the agreement has been signed and dated, you are contractually bound for that period. So, if you come across anything in your agreement you are unsure about, talk to the agent about it, or go to your local Citizens Advice Bureau or a solicitor to have it approved and talk about any concerns. We’ve seen plenty of cases of tenants or landlords breaching their agreement because they haven’t read the agreement – it can be rather embarrasing all round!
Everyone involved in the tenancy signs one of these - make sure you've read it!
An Assured Shorthold Tenancy Agreement can last anywhere from 6 months to 3 years and contains many standard clauses that protect both tenant and landlord – first and foremost the rental amount and payment dates, but also the way in which the property is to be treated – decoration, cleaning and garden maintenance for example. It outlines how notice can be given by both parties, and grants the tenant peaceful enjoyment of the property, preventing a landlord from arriving on the doorstep unannounced. It may contain clauses specific to your property and tenancy, or they may be more general, but make sure you understand your obligations!
For more information on tenancy agreements, or if you would like one prepared for you, please contact one of our offices to discuss your requirements and queries.
In part 2 of our Lettings A to Z, B is for Buy to Let – stage one of the whole process!
B......Buy to Let
When buying a property to rent out, bear in mind that you are not looking for your dream home. What you are looking for is the property that will be the lowest maintenance, for the highest yield. Yield is the ratio between cost of property, and annual rental income. 7% is generally considered a good yield to be achieving – i.e. if the property cost £200,000, then the annual rent would need to be £14,000, or £1166 per month.
To get an idea of a yield, it is best to use a property agency that has both Sales and Lettings experience, who can help you with an estimate of a rental value, as well as advising you on market tends in that area. Most local agents will be happy to help – you as a potential buy to let investor are after all a potential client, so they should be very keen to help you as much as possible make a sensible financial decision!
When looking at properties, you need to be looking for low maintenance homes – no hot tubs, £30,000 kitchen conversions or crumbling old country estates – they’ll just cost you a fortune in repairs if things go wrong, which unfortunately is inevitable at some point! Instead, the best bet is often a relatively new property, with low maintenance requirements! The common rule is, if in doubt, ask your local agent (estate or letting) for some pointers!
Sifting through loads of property details can be daunting - don't be afraid to ask for advice!
Our top five tips for buying to let are as follows:
- Look at location – who do you want to rent to, and where will they be looking for?
- Yield – how much money will you make on the property compared to what you buy it for?
- Look for newer properties that with any luck will have less maintenance issues.
- Avoid leasehold properties – you will likely have to pay block management charges on top of ground rent and a lease.
- Have a contingency fund in place in case of an empty period or and serious issues that come up and require quick repair/replacement.
In the first part of our A to Z of lettings, A is for ARLA!
The Association of Residential Letting Agents (ARLA for short) is a professional body for letting agents, the only professional self-regulating body concerned solely with lettings and letting agents. Membership is voluntary, but it provides training and internal industry regulation for its members. We would always recommend using an agent that is a member of ARLA as it should act as a mark of quality and expertise.
In their own words:
“The Association of Residential Lettings Agents (ARLA) is a professional membership and regulatory body for letting agents and letting agencies in the UK. ARLA recognised the requirements of the residential lettings market were so detailed and specific that a separate organisation was required to promote standards in this important sector of the property industry.”
As an ARLA agent has to attend training seminars and updates regularly, you can be assured that they will be up to date on legislation changes and well placed to advise you on your best path to take in many different situations that can arise. For more on why you should use an ARLA agent, have a look at our past blog here.
Many of FoxWood Maclean’s staff have completed, or are currently studying for, ARLA qualifications, so you can be assured that any advice we give reflects the most up to date legislatitive changes and training.