ECA International has officially listed London as the fourth most expensive city in the world, but it makes for a brilliant playground for landlords. If you’re considering becoming a London-based landlord, you’ll be full of questions because you know that any shortcomings will be extremely costly. Luckily, we’ve got your back by putting together the following guide, which covers everything from budget setting to energy audits.

Budget for Ongoing Costs

Buying a property and getting it ready for tenants to move in is only the beginning of the road when it comes to associated costs. You will need to have a budget prepared for the continuing costs, which include maintenance, mandatory checks like the EICR London, void periods, and mortgage costs. Additionally, if you choose to use a letting agent, their fees will need to be paid as well.

The best way to prepare for the continuing costs is to build a budgeting strategy, which includes methods to reduce costs in the future. For example, you can find ways to lower energy bills and maintenance expenses.

Conduct Locational Research

The beginning of any business involves researching the market, including the demographic and average rental costs. Additionally, you need to pull up Google Maps to figure out the benefits there are to live in the area. For example, is it close to great schools, public transport links, and attractions (of which there are plenty in London)? Acquiring this information will let you start focusing on the type of tenants you’d like to host.

When you eventually come to find your first tenants, your research will allow you to beat the competition and bring in revenue.

Property Preparation

If you walked into a shop and found the walls were cracked, the floors were peeling up, and the windows were broken, you’d most likely turn around and walk out. This concept transfers directly to setting up your property and allowing prospective tenants to look around. If they’re not impressed with the state of the place, they’ll turn around and find somewhere else to rent.

To avoid losing out on business, spend time carrying out maintenance tasks including fresh coats of paint, filling cracks, and replacing electrical outlets.

Make Health and Safety Efforts

Landlords are responsible for making sure their properties live up to health and safety regulations, which means spending time checking off the health and safety aspects. For example, you will need to have sufficient carbon monoxide and smoke alarms – and they’ll need to have batteries. As well as this, you should check for wonky fixtures including broken fixtures and stairs.

Before you’re allowed to move in with any tenants, you’ll also need to have an electrical safety test carried out, which makes sure all wiring and fixtures are up to code. Having an EICR in London performed by an electrician can be challenging, so get in touch with a business that’s committed to electrical testing. After having the initial test, you will need to have your EICR certificate London renewed every five years.

Contacting Agents

Successfully putting a property up for rent can be challenging, and the longer you go without tenants, the more money you’re pouring down the drain. Therefore, to reduce the stress and increase your chances of securing a tenant, get in touch with a letting agent and leave it to the experts. As well as telling you how to make your property more appealing, a letting agent will optimise your ad to make sure the right tenants come through.

Sourcing the Right Tenants

Being a landlord means allowing people to live in your home on a fixed-price contract, but that doesn’t mean you have to let just anyone in. The best place to start finding tenants is by checking with loved ones to see if they know anyone looking to rent. Sourcing a tenant this way may feel smoother because you have a mutual connection already.

The next avenue to explore is contacting an estate agent. They can either take control of every aspect of the property management, or you can scale them to suit your circumstances. For example, you can deal with the maintenance side while they manage legalities and tenant sourcing.

You also need to make sure that the tenants you find can afford the rent, which is why you can carry out a financial background check. The best way to do this is through a reputable referencing agency, which will assess savings, current employment, and any associated debt like CCJs. If you’re not satisfied that a prospective tenant can afford the rent, you can decline their application or have a guarantor referenced, which will cover the rent if the tenant fails to pay.

Covering Your Assets

Even after spending time finding the correct tenants and completing all maintenance tasks, things can go wrong that can leave you out of pocket. For example, a disgruntled tenant decides to wreck the place on the way out, which would be expensive to replace. To avoid upsets like this, it’s always best to cover assets by taking out suitable landlord’s insurance. As well as covering physical monetary expenses or loss of rent, landlord insurance will pay for legal expenses associated with having tenants evicted.

Spending Time on Tenancy Agreements

The tenancy agreement exists to protect both the landlord and the tenant, so it’s essential to make sure you get it right. If you’re not 100% sure about what needs to be included in a tenancy agreement, you can get in touch with a lawyer to draw one up or you can use the government’s recommended tenancy agreement.

No matter which way you go about creating the agreement, it’s essential to make sure every word is concrete. This means using absolute phrases that have zero wiggle room for misinterpretation. If you’ve written the agreement yourself, make sure you have a legal expert take a look over it.

Managing Relationships with Tenants

You rely on your tenants to respect your property and pay their rent, and this will be easier to achieve if you have a positive rapport with them. If you communicate effectively and take care of any maintenance requests swiftly, your tenants are more likely to have respect for you.

If a letting agent is taking complete control of your property, you won’t need to engage with any tenants. However, this is still a source of income, so you will need to check in regularly to make sure the letting agent is holding up to their end of the contract.

Having an Energy Audit Completed

The UK is currently in a period of high inflation levels, meaning energy bills and the wider cost of living are rising rapidly. Therefore, to attract the right tenants, you’ll need to do everything in your power to make sure the property is energy efficient. To find out where your property is currently, check the (EPC), which is a document you must provide to all tenants.

If appropriate measures aren’t taken and the property should have a higher rating, tenants are entitled to ask their landlords to take measures to improve the EPC rating.

Being a London-based landlord is fulfilling, but there are countless preparations and considerations to make before listing a property. You need to set a budget, research the market, source tenants, and make sure the property meets health and safety standards.