Fri, 20 May 2022

What first time landlords need to know

7Newswire
04 May 2022, 21:33 GMT+10

Side hustles are a big business. With the cost of living rising, more people than ever before are looking for ways to make money on the side or make the money they already have work for them. One in five people in the UK rent from private landlords, making property rental one of the fastest-growing areas to earn additional income.

The ideal situation for becoming a landlord is by renting out a property you already own but no longer use. For example, suppose you and a partner have moved in together after living separately.

However, if you have the available funds buying a property with the express intention of renting it out is also an option. Given the low rate of interest on savings accounts and the volatility of the stock market, it could be a more reliable and lucrative source of income for you.

All that said, taking the plunge into being a landlord is not something to undertake lightly. Doing extensive prep beforehand will give you the best possible start and avoid any headaches later. It is important to note that different countries and possibly even local authorities will have different requirements for landlords. This article will look specifically at becoming a landlord in Scotland. If you are not based in Scotland, you will need to check the specific requirements of your areas.

Registering as a landlord

Before you can even begin to think about looking for tenants, you will need to first register as a landlord. You do this by applying to the Scottish Landlord Register; once approved, you will receive a registration number which must be included in all adverts for your property.

The Register has been put in place to protect both tenants and landlords by ensuring properties are safe to live in, and the appropriate safety checks have taken place.

What legal certificates you will need

To apply for your landlord registration, you will first need to ensure you have the appropriate safety certificates and evidence of certain facilities for the property in question.

These include:

  • Gas safety certificate
  • Electrical installation condition report or a current electrical installation certificate
  • Electrical appliance test details
  • Fire, smoke and heat detection details
  • Carbon monoxide detector
  • Public water supply
  • Energy performance certificate
  • Legionella risk assessment
  • Rental property insurance

Multiple occupancies

If you plan to rent a property to more than two individuals that are not related, you will need to apply for an HMO license (house in multiple occupations). The requirements for HMO properties are far more extensive, and current guidelines can be found here.

Tax responsibilities

With the extra income from a rental property comes additional responsibilities. You must declare all income generated from your rental property to HMRC. If you have purchased a property with the specific intention of buying to let, there will be further tax implications. You don't want to lose any of your hard-earned income by failing to report it accurately, so it is recommended that you work with a landlord accountant to ensure everything is in order. They may also be able to help you save money by fading ways to offset taxes with the expense spent on the property.

Do you need landlord insurance?

Absolutely! Landlord insurance is vital to protect your asset- the property. While home insurance covers things like contents and accidental damages, you will need further protection as a landlord. Landlord insurance will typically also cover loss of rent and liability, to name just a few.

Decorating and furnishing your property

Anyone with a small amount of experience as a tenant is more than likely to have come across unloved and poorly maintained properties for rent. Some landlords will no doubt say it is not worth wasting money on decorating or furnishing a rental property to a high degree as you run the risk of having to redo the work or replace items should you find yourself in the unfortunate situation of having tenants who do not take care of the place. However, it is worth bearing in mind that things often take the shape of their container. If you present your tenants with a well-maintained and attractive property, they will want to take care of it. It is unlikely you will attract the type of considerate tenants you want if you offer a messy and unloved space that constantly needs repairs.

These six tips are just some of the basics of becoming a successful landlord. If you are serious about using property rental as a means to create additional income, it is worth paying close attention to them, so you do not unexpectedly run afoul of any local laws. While it might seem that there is a lot of preparation (and cost) to get started, the rewards will certainly make it worth it.

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