Letting property in York, what should a landlord pay for?
The popularity of buying and letting property in York shows no signs of abating as people look for better returns on their money than they would enjoy from bank accounts, for instance.
However, in addition to the legal obligations and tax requirements necessary for becoming a landlord there are also other issues to contend with too.
Here at Redmove, one of York’s leading letting agents, we’re frequently asked from people thinking about becoming landlords what they are expected to pay for.
This is a crucial question because as an investor you will need to know what sort of outgoings and expenses you are expected to pay in order to calculate your yield or return.
It’s also important that when investing in York property that you are not out of pocket or making a loss on your rental investment.
That’s why we are happy to deal with these questions because it shows that a landlord is being realistic about their investment in York property.
Letting property in York – ask the experts at Redmove
Essentially, all of a landlord responsibilities when letting property in York will be detailed in the tenancy agreement – as will the obligations of the tenant.
There are some things that a landlord is compelled to pay for by law and other bills are by negotiation.
A landlord has to ensure the supply of electricity, gas and water are in a good, working and safe condition.
Landlords are also responsible for carrying out the repairs to the exterior and structure of the property whereas a tenant will be liable for the decoration inside and also the garden upkeep.
This will mean that the landlord is responsible for the guttering, roof, exterior pipes and drains. They are so responsible for the windows and exterior walls and doors – though not if the damage has been caused by the tenant.
A lot of a landlord’s responsibilities are detailed in the Landlord and Tenant Act 1985 and section 11 deals with the issues of utilities.
Legal checks when letting property in York
By law a landlord letting property in York must have their gas equipment checked by a Gas Safe registered engineer every year and a certificate must be issued. The certificate must also be given to the tenant.
The means of heating water also needs to be checked which also includes the boiler, the oven and hob, if they are gas fuelled, and the central heating system must work.
The law also requests that the electrical installation is checked periodically, it’s a bit of a grey area exactly how long this should be done but most landlords opt to do it no longer than every five years, and this will check the electrical sockets and wiring in the property.
We should also highlight that some landlords may believe they can exempt themselves from their legal obligations by passing them over to the tenant in a tenancy agreement. These mandatory requirements cannot be negotiated out of.
As a leading York letting agent, we would advise clients to save between 10% and 15% of the rent received every month to pay for essential repairs and any general maintenance that needs to be carried out.
Other costs for a landlord will include having the relevant building and contents insurance. There are specific policies for landlords and we should also point out that a normal insurance policy will not be valid to cover a tenant or a rental property.
Landlord insurance is crucial
It’s also important to remember that a landlord is not obliged to provide insurance cover for their tenant’s belongings and it’s up to a tenant to ensure that they have adequate insurance for themselves.
If a landlord has a property that is unfurnished they are still required to have insurance cover for things like fixtures and fittings, even though they may not have anything else in the property.
Landlords letting property in York are also required to pay any leasehold rates, if the property is a leasehold, and block management charges. The landlord must also pay for the private road fees or charges if the property is freehold and is in a private road.
There is also a growing trend, particularly among young tenants, for the rent to include all of the bills for the property.
These agreements allow tenants to budget more easily because they are responsible for paying the energy and utility bills such as gas and electric, water and council tax.
The tenant must also pay for their telephone and broadband service.
Landlords should invest in a thorough inventory check
Once a rental property has been bought by a landlord and they have found tenants, then they will need to pay for an inventory to be made of the property which will detail, in words and pictures, exactly what is in there and its condition.
Generally, a landlord will be required to pay the cost of the inventory check-in, and the tenant will pay for the checking-out process. However, agencies and landlords may agree to operate differently.
Other costs a landlord will incur will be paying for their letting agent fees and any mandatory checks that are undertaken, especially a credit check.
Landlords will also need to pay for cleaning, if necessary, of the property before a tenant moves in and they will need to have an EPC certificate organised.
It’s also important too that landlords remember that the property within the furnished tenancy is their responsibility so things like the fridge, cooker and washing machine should be kept in good condition and replaced or repaired as necessary.
Some landlords may decide not to use a letting agent such as Redmove in York and decide to find their tenants which means they will have to pay for advertising in a local newspaper or by using free online services.
Landlords will have to pay for pre-tenancy checks
They will then have to pay for the referencing and credit checks which are quite cheap to do and bring peace of mind.
Like Redmove, many letting agents will offer a variety of services to suit the landlord’s requirements from the basic service which will help find a tenant and deal with their moving in.
Agents will also offer a full property management service for a percentage of the monthly rent. Some potential landlords may feel that this is an unnecessary cost but a good letting agent will ensure the tenancy runs smoothly and that the rent is always collected.
A letting agent also provides an effective day-to-day relationship with the tenant and will be able to deal with the majority of issues and problems without bothering the landlord.
Because the landlord is responsible for the safety and good repair of the building we always recommend that a landlord, or Redmove, undertake regular checks to see if there are any small problems that need fixing.
Small issues in a rental property tend to become big ones
We would recommend this because small problems tend to become big problems and these big problems generally cost a lots of money to fix.
While it’s not law yet, it’s also a good idea to fit smoke alarms and a carbon monoxide alarm too.
Another ‘cost’ to consider is the property will inevitably be vacant for a month at some point between a tenant moving out and a new one moving in. This is unavoidable but by budgeting properly a landlord should be able to withstand this ‘void’ period – for those who would like it, there are also specific insurance policies to cover this.
Another cost is that for professional cleaners to thoroughly clean your property before a new tenant moves in.
Don’t forget too that there are also small costs that quickly add up such as legal fees for preparing the tenancy agreement, costs of setting up a limited company to run the property and registering with a legally-recognised deposit protection scheme.
Finally, another unexpected ‘cost’ is that for your time. Running a rental property is to run a business and there will be demands on your time because there will be occasions, even for those landlords using a letting agent, that you will need to get involved.
Redmove is proud to be a letting in York and offer a range of services that few can compete with – check out our offer for landlords to help ensure their rental property investment runs as smoothly as they expect it to.