Demand for rental property in Leicester has never been so high making it the perfect time to become a first-time landlord with Belvoir Leicester. Whether you’re looking to rent rather than sell your property, or just looking for a property to invest in, in this guide we break down the key considerations for anyone considering becoming a soon-to-be-first-time landlord in Leicester. In addition, you can also check our First-Time Landlord Lettings Checklist.
First time landlord guide
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Costs vs return
There are two potential income streams when letting a property. Firstly, there’s rental price and then following that comes from investment capital growth when the property value increases. However, there are also several fees associated with buying a property such as valuations, property surveys, legislation costs, estate agent advice and services as well as mortgage arrangement fees. As the property market has its ups and down you have to be careful that your outgoings don’t exceed the anticipated rental yield otherwise you won’t make a profit.
Calculating rental yield
Rental yield is how much profit you make from your property in a year, as a percentage of its value.
To calculate rental yield, you’ll need to take your annual rental income from tenants and divide it by the value of the property.
For example: if you receive £12,000 a year in rent on a property worth £200,000, divide 12,000 by 200,000 and multiply the result by 100 to get the percentage. In this example, your yield will be 6%.
Tax on buy-to-let properties
Be aware you may need to pay income tax on the profit you earn from letting out your property in Leicester. The profit is classed as what you have left from your rental income after deducting ‘allowable expenses’. These allowable expenses include letting agent fees, landlord insurance, maintenance and repair costs.
Preparing your rental
There are several different ways you can furnish your property to bring in additional benefits. For example, if you are looking to achieve a quick rental then supplying white goods is always a great incentive. If you’re hoping to attract working professionals then consider furnishing the property to a high standard as this is always seen as a bonus. And finally, if you’re targeting towards students then investing in desk and chairs will help meet their studying needs.
The ground rules that apply to all of these properties is that decorating in a neutral colour is the best way to go as it has the highest appeal and will match most furnishings aesthetics. With this in mind satin paints are most practical for cleaning and a mid-tone carpet is best for not showing dirt or stains.
Rules for Houses in Multiple Occupation (HMO)
HMO is a house occupied by five or more people, forming two or more households. These people then share facilities such as the kitchen or bathroom. Current landlords of this type of tenancy then there are a few things to abide to:
- Check smoke detectors are installed to a good quality
- Electrics are to be checked every five years
- Adequate cooking and washing facilities are provided
- Ensure the property is not overcrowded with separate rooms for each couple, each single person over 21, and for every two young people aged over 10 years.
- Communal areas are to be kept in clean and working condition
Rights to take back possession of your property
There are a few reasons in which landlords are able to take back possession of their property before the end of the tenancy. For example:
- Late or non-payment of rent
- Anti-social behaviour which may result in damage and reasons for tenants to lose their deposits
- Any breach to the terms of tenancy agreement
- Property has become unfit to live in under the standards of service
- Repossession by the landlord’s mortgage lender
Protecting your money
At Belvoir Leicester, we pride ourselves on being trustworthy and reliable, making us Leicester’s Best Estate agent. An estate agency who works tirelessly to find you the right tenant, the right sale or the right property.
We are members of the following schemes and accreditations, so that you can be sure that throughout this process your money is being handled legally, safely and with respect.
Safeagent
The Safeagent Scheme (Safeagent) is a government backed, accreditation scheme for lettings and property managing agents. This helps to offer peace of mind to both tenants and landlords, by assuring them they are dealing with a regulated firm who is held accountable to the following criteria and requirements;
- A customer complaints procedure
- Professional Indemnity Insurance
- Client Protection Cover
- Registered to Tenancy Deposit Scheme(s)
- Standard of Service to be met – e.g. gas/electrical safety checks (where required)
- Aware and able to inform tenant and landlords of rights and responsibilities
- Advise clients in regards to protection and insurance – both buildings and contents
- Ability to create and produce correct and valid legal documentation
At Belvoir Leicester we are proud to be an accredited firm with Safe Agent Scheme, so our landlords and tenants can feel safe in trusting us and our services. You can be sure you are choosing an agent who not only values your property, your money, but also the standard of service you receive whilst dealing with us.
In all industries there is a possibility that a company may cease trading. If that was to happen to your agent… what happens to your money? If your tenants rent or deposits haven’t been registered or passed on correctly, you could not only be out of pocket, but also liable to pay back any missing money yourself! We understand that application fees, deposits and rent are all relatively large sums of money and we strive to ensure that they are protected, as are you.
In order to display a ‘safe agent’ logo we have had to take out Client Money Protection Insurance (CMP) – this then pays out should any monies have been mishandled by your agent, as well as accounts that are regularly externally audited.
The Property Ombudsman
All agents are required to register with an Estate Agent Redress Scheme – this provides an independent and unbiased platform where customer complaints can be dealt with. As seen above, having this scheme and system in place is also a requirement in order to be registered with the Safeagent accreditation scheme.
The Property Ombudsman (TPO) is one such approved scheme. In order to be allowed to advertise membership of TPO and display the logo on documentation and in branch, an agent must follow the guidelines set forth in the Code of Practice for Residential Estate Agents. This includes additional customer protection, which goes above and beyond the minimum that is required by law. An agent may still be registered to the scheme, but may not display the logo if they do not choose to follow these additional measures.
Belvoir Leicester voluntarily subscribes to The Property Ombudsman Code of Practice, and in all areas aim to provide a comprehensive service and level of protection to both our landlords and tenants.
Tenancy Deposit Scheme/Deposit Protection Service
Any Assured Shorthold Tenancy that is entered into after 6th April 2007, is required by law to have its deposit registered into a regulated deposit protection scheme. Belvoir Leicester works with two such schemes – TDS and DPS.
If you choose a managed service with Belvoir Leicester for your property, not only will we take responsibility for collecting the deposit prior to the tenants moving in, we will register this to the relevant government approved scheme. At the end of the tenancy, we will also carry out a final inspection of the property, and inform yourself and the tenant of any claims we will be proceeding to make from said deposit. We will also deal with any mediations that are needed during the claim process.
