How To Set-up a New Tenancy
The task of getting in new tenants can be extremely daunting. Afterall, there is a lot of legislation to adhere to and some hoops to jump through. Luckily there are plenty of lovely (local) High Street agents that will be glad to help for a small fee. But, first things first, you must decide, are you hiring the services of a letting agent or are you self-managing? If it’s the former then plenty of guidance and direction and they will do the whole shabam from tenant find to tenant management. There is an in-between option where you can opt for a’ tenant find only’ service and as the name suggests they seek the tenant, qualify them and you do the rest. There is a third option ‘you’ the landlord takes on everything start to finish. Luckily there are some on-line agencies that make this process easier and streamline your efforts should you walk this path. The first option (agent) is the easiest but most pricey as you can slip off your shoes and do nothing. Or you can take the third option which is the most cost-effective but rather time consuming. So you will have to consider it from all angles and see how it fits your life.
As I like to live dangerously (haha), I chose to do it myself. But jokes aside, I chose this option because I wanted to learn from ground up what it entails so I understand my business from a personal level. Call me mad but I know some of the new age landlords are rolling their eyes reading this. But, if you safeguard yourself and are transparent this will reduce the number of calls you get in the middle of the night when a tenant calls you to say they have locked themselves out. So without further ado let’s get stuck in. I enlisted the services of ‘OpenRent’; now you can do this via the National Residential Landlord Association (NRLA) but my membership had expired and I decided on the former. ‘Spareroom’ is a similar company and they can also aid in setting up your tenancy, (a noteworthy mention). I will break it down in bullet points to keep it precise and clutter free.
I registered with OpenRent and completed most of it (if not all on-line)
Read/Decide: I was going to choose their full tenancy creation but opted for some of their services separately instead. Reason being, I’d already met and knew my prospective tenants and felt the full ‘tenancy creation’ would be a waste of money if I’m not using all their services. But new customers should always go for their full package as they help you find the tenant and as part of the price you could advertise your house for free. As I explained, I skipped this part and went straight onto the ‘referencing’ bit. I also skipped the ‘viewings’ section as I didn’t need this service but just to let you know, this is available for those that are not local to their rental properties.
References; you can’t overlook these and they are extremely important as you can’t claim your insurances (rent protection) if you have not correctly referenced your tenants. For £20 per person this was not too bad. Unfortunately at this point my primary tenant had failed the checks but this is not an issue if you get a guarantor (someone that vouches to pay) then you can still go ahead. Unfortunately for me the guarantor also failed his referencing on the basis of affordability but being the sucker I am I was quickly convinced by the tenant that prompt payments will not be an issue. Now, I would not recommend this to anyone but because I had already developed a professional relationship with this person (cleaning) company I went for my gut feeling. (Mr & Mrs tenant, please don’t let me down).
I used the tenancy agreement from the NRLA website as (£10) I liked the wording/layout (i’m a bit OCD like that). This was sent via email and in person on my planned visit, where I carry out a full inventory check, but more on this later.
Inventory check, this was easy. As my property was a former airbnb I used their sheet to go through this with the tenant. They were happy with the content. Albeit, two beds needed to be removed, long story and a bit off topic.
Deposit: once both parties were happy then a deposit was collected. By the way it is a legal; requirement in England & Wales that you will have to register your deposit with a scheme. I can write a whole new topic on this as it's huge but for now just trust what I am saying and go register your deposit and let the tenant know when this is done. I did this via the tenant handbook and of course this is a whole blog in its own right.
Key handover; now we are getting closer and your tenancy is about to come to life by relinquishing your keys. Give them three sets of keys and don’t forget to retain a set for yourself. By the way, has anyone been there and not made a copy for themselves? just curious (haha).
Now for the legals; book your gas/electrical engineers to carry out all safety checks and send them to the tenant. One thing I didn’t like about openrent is that they took ages finding a ‘Gas Safe’ engineer and in the end I had to find my own. A bit of time was wasted there.
Landlord Insurance; this includes buildings and contents and it is important that you safeguard both yourself and the tenant should the unfortunate happen. You're looking around £250.
Handyman! yes even a spanking brand new property like mine needed the odd tweaking here and there.
Rent collection and move in date agreed. Once the finances (5 weeks deposit/1 months rent in advance) were collected a move in date was agreed and hardcopy signatures taken. This is optional extra as I had opted to get e-signatures and paperwork all complete on-line.
Fun bit…tenant gift hamper! It’s all official, you can both now enjoy.
I will write a part two to this and tell you exactly what goes into a tenant handbook and other things to consider. I feel the post has gone on a bit, but I needed to cover the important elements so you are good to go.
Happy Tenanting!