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letting process

Letting process

 

The Property Letting Process - How to let or rent your property

Our step-by-step guide is aimed to help you, the landlord, make the right decisions at the right time to make the most of your property investments. If any of your questions are not answered here we would be delighted to take the time to discuss them with you either face-to-face in our offices, over an email or by phone on 020 7287 4244.

The letting process – a summary.
What is the rental value of my property?
What do I need to do before I let my property?
Why should I use an agent?
How much does an agent charge?
How do I choose an agent?
Should I let my property furnished or unfurnished?
What do I need to know about viewings?
How do I know they’ll be good tenants?
What safety requirements am I expected to meet?
What is the significance of an inventory?
What does property management involve?
What should I know about rent and tax?


The letting process – a summary

01 Property valued by agent
02 Estate agent instructed
03 Property marketed (online, window, newspapers, etc.)
04 Potential tenant viewings
05 Potential tenant offers
06 Term and rent agreed
07 Reserve deposit taken
08 References checked
09 Agreement signed and deposit taken
10 Property prepared for tenants
11 Inventory taken and agreed by all parties
12 Tenants move in

What is the rental value of my property?

A professional letting agent will arrange a convenient time to visit you at your property and assess its true market value. Be wary of those who claim that they can perform the valuation from a distance, as they will need to:

• Assess the size and condition of your property
• View the additional features of your property that could affect its value
• See the location of your property and its proximity to transport, shops, schools, etc.
• Analyse the recent and current market for similar properties
• Make a determination of the demand and supply factors relating to your property.

Rental valuation is not an exact science, but a professional letting agent should be able to provide you with a value at which they feel they could successfully market your property. Always clarify whether the value they provide you with is what you should ask for your property or what you should expect to be offered by a prospective tenant.

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What do I need to do before I let my property?

If you are thinking of letting your property, there are a number of things that you will need to investigate before you go ahead and do so.

• First, if you have a mortgage on your property, you will need the permission of your lender to rent the property out. Most lenders will gladly provide you with this; some will be a little more difficult to persuade, but all will want to be asked.

• If you are considering letting a leasehold property, you will need to check your lease to see what restrictions there are within it.

• You will need to possess or attain certain safety certificates to legally let a property that you own. Most importantly, you must ensure that all gas pipe work and appliances are safe and annually maintained by a Gas-Safe registered professional. A copy of the safety certificates should be provided to the new tenants before they move in. Outlet can arrange this for you even should you wish to let the property yourself.

• You should speak to your building and contents insurance company, as they will need to be informed that you will be letting the property. It may be that this will not even affect your policy, but not to inform them could risk you being left not covered in the event of an insurance claim.

• You must also make sure that the furniture in the property complies with fire safety regulations. If not, you will need to remove these items from the property and replace them with more suitable ones.

• Finally, you should make sure that the property is clean before the new tenants move in. You will require the property to be returned to you in the state you let it to the tenants.

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Why should I use an agent?

Estate agents have many valid uses. Aside from being property professionals who are there to value, show and let your property for you, they will have:

• The marketing budget to promote your property in multiple media both on and offline to present your property to a very broad audience

• Specialist legal documentation in the form of an Assured Shorthold Tenancy agreement that has been tried and tested in the field to protect your property and rights when letting out your investment

• A database of candidates, any of whom may well be looking for a property such as yours to rent, reducing the likelihood of your property being left empty for periods and losing you valuable rental income

• The ability to investigate references from prospective tenants and even run credit checks, to ensure the financial stability and responsibility of those they refer to you

• The expertise required to manage your property for you (if asked to), meaning that they would take over all responsibility for servicing the needs of the tenant, repairs and the collections of rent.

For peace of mind you will definitely find that it is quicker, safer and simpler to instruct an agent to find you a good tenant.

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How much does an agent charge?

All initial rental valuations of your property should be free. You pay a commission only if and when the agent lets your property. Rental commissions charged vary from one agent to another, but as a general rule of thumb expect to pay anything from 10% to 16% of achievable rental.

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How do I choose an agent?

When deciding which company to use watch out for those suggesting inflated values, as overexaggerated rental values can leave properties languishing on the market and lose you weeks of rental income. Some pointers that may help you decide:

How friendly and polite are the staff? Give them a call on the phone or visit them at the office. Remember not only will you have to communicate with them on and off, but they will also be dealing with the applicants viewing your property. Arrogant and rude staff put off possible tenants more than anything else. Is the agent a member of the Association of Residential Letting Agents (ARLA)?
Do they have clear and helpful advice both on their website and printed material?
Do they have a modern and well-maintained website through which to market your property?
Do they have comprehensive marketing, signboards, internet portals, magazines and leaflet distribution?
How long have they been in business? And how quickly do they usually let property?
Finally, your gut instinct is always a good indicator.

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Should I let my property furnished or unfurnished?

This is a decision very much up to the individual landlord. Letting it furnished will provide viewers with a vision of how their home will look, increasing the likelihood of a swift offer. It will mean that tenants will not have to buy furniture themselves, which will suit many at the lower to middle end of the rental market, but at the upper end (in size or price) tenants are likely to want to bring their own, so flexibility is key. If the furniture quality warrants it, you can ask more money for the property than if it was unfurnished. The downside of letting a property furnished is that your costs will increase, as you are then responsible for providing – and from time to time replacing – furniture suitable for a rental property.

A rental property should be let with at least the kitchen equipment (oven and hob, fridge and freezer, washing machine – known as ‘white goods’). If you decide to furnish the property, the furnishings should comply with safety regulations, should not include anything that you will not be prepared to repair or replace (TVs, stereos, etc.) if it breaks, or anything that is of personal value to you.

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What do I need to know about viewings?

Everybody loves to see a clean, bright spacious property. So, before a viewing, make sure that your property is free from clutter, swept clean and, for day viewings, curtains should be left open, while at night all lights should be on. All the senses must be considered, so if there are any cooking smells you should open windows and, to create a pleasing environment, flowers or scented candles (so long as they are not overdone) can provide both an aesthetically and aromatically pleasing viewing.

Your agent should conduct viewings for you, but if you happen to be home make sure that you provide all the information you are asked for and are as friendly as possible. Prospective tenants know that if they decide to take the property, their relationship with you could mean the difference between a good and a bad renting experience.

Your agent should come back to you with feedback almost immediately, providing you with information about a prospect’s situation, their offer, their references and the term they wish to rent your property for.

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How do I know they’ll be good tenants?

There will never be any guarantees, but a professional letting agent should gather references and conduct credit checks on prospective tenants whose offer for term and rent has been accepted subject to these checks.

A credit check will show if they have any county court judgements (CCJs) against their names and what their history for paying their financial responsibilities is like. References can be taken from their employer and previous landlords to tell you more about their character and nature as a tenant.

The contract (Assured Shorthold Tenancy agreement) will protect your rights, and taking on a rental insurance policy could protect you from financial loss should tenants default on their rent responsibilities. However, the best way of ensuring that you have good tenants is to be a good landlord. Make sure that you meet all tenants personally, take the time to get to know them, provide them with all contact numbers for you or your managing agents and look after them as you would hope they would look after your property.

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What safety requirements am I expected to meet?

The law states that as a landlord you must make certain checks BEFORE the property is let. Outlet can advise you on this matter and, where necessary, arrange for the required testing. Currently the following regulations apply:

The Gas Safety (Installation and Use) Regulations 1994
Under this regulation, it is the duty of the landlord of any property to be rented to have all gas appliances and their associated pipe work tested on an annual basis before occupation by tenants. A copy of the Gas Safety Inspection certificate must be given to the tenant before the signing of the tenancy contract. If there is no valid certificate then Outlet will assist in this matter immediately, at the landlord’s expense.

The Electrical (Safety) Regulations 1994 / Plugs and Sockets (Safety) Regulations 1994.
It is a criminal offence to supply unsafe electrical equipment in rented accommodation. Landlords must ensure that ALL electrical equipment, appliances and electrical supply is safe. Electrical items must be examined by a qualified electrician prior to the tenants taking occupation. Outlet, if required, can instruct an approved contractor to carry out this check on a landlord’s behalf.

The Furniture and Furnishings (Fire and Safety) Regulations 1988
It is a landlord’s duty to ensure all upholstered furniture complies with these regulations.

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What is the significance of an inventory?

Your inventory is your record of the contents and condition of your property before a tenant moves in. A professional inventory should be taken (including photographs, if there is anything of value or note in the property) before every new tenancy. All parties should check the inventory and sign that they agree to the entire document. Then, when the tenant is to move out, a check-out inventory should be conducted to assess the state of the property and its contents to determine whether any deductions should be made from the deposit before it is returned on the expiration of the tenancy. Some estate agents conduct the inventory and schedule of condition reports, while others use independent companies to perform them.

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What does Property Management involve?

For the greatest likelihood of a stress-free letting experience your agents will offer you their Property Management service. You will hand over not only the keys, but also the responsibility of looking after the property and all the needs and demands of the tenant the agent finds for you. Service levels differ, but in essence you pay a little more for the ability not to have to deal with any of the little things that can have landlords run ragged by the whims of their tenant.

• Collecting rent and chasing late payments
• Arranging contractors to maintain or repair any facet of the property
• Handling all tenant requests and enquiries
• Being available in the event of an emergency
• Preparation of annual income and expenditure ready for annual tax returns

For more information on our comprehensive property management service click here

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What should I know about rent and tax?

Rental income is taxable as income and therefore it is important that you speak to your accountant about the tax implications and potential tax deductibles that you will be responsible for and entitled to. See more at direct.gov.uk

It is also noteworthy that if you own a property that is not your main residence (i.e. one that you rent out), you will have a Capital Gains Tax (CGT) responsibility after a set period of time has expired, which makes it VERY important that you know this area of taxation. For further information, contact your accountant or see more about CGT at direct.gov.uk

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Should you have any more questions or wish to discuss further the aspects mentioned above, please feel free to contact us on 020 7287 4244 or by email. We also have a free information pack for all potential landlords. Please do not hesitate to contact us for your copy.

Should you require a FREE valuation, please call us or register your interest here.

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