Here, Tom Entwistle sets out the principles that he used over his successful 50-year landlording career.
Being a successful landlord is a satisfying endeavour, it can be rewarding both financially and emotionally – after all you are providing a very worthwhile service to your tenants, the community as a whole, and for yourself, providing you go about it the right way.
Success for the DIY landlord demands a certain amount of discipline, a good working knowledge of the rules and regulations and a systematic approach to management.
Following these steps will save you time and trouble – if you do it properly, you’ll wonder why you even considered paying an agent to do it for you! But a word of warning: unless you are prepared to put in the effort to learn all about the regulations that now govern property management, you should consider using a professional letting agent, at least until you have gained enough experience to do it yourself.
1 – Be clear about your Landlording Strategy – have a Business Plan and a Cash Flow Forecast!
2 – Do your Homework first – learn about the rules and regulations, get professional advice!
3 – Develop your own Operating Methods - treat tenants as customers, have clean and safe rentals that comply with the rules, and have a laser-like focus on documentation!
4 – Do your Research thoroughly – know your target market!
5 – Use a Comprehensive Tenancy Application Form!
6 – Screen Tenants VERY carefully!
7 – Always have a Written Agreement and Inventory Reports!
8 – Deal fairly with Holding Deposits and Security Deposits!
9 – Keep the rent near Market levels!
10 – Use Banker’s Standing Orders for rent payments!
11 – Be Safety Conscious, use a risk assessment – you are responsible!
12 – Bear in mind the Discrimination Laws!
13 – Have adequate Insurance Cover – use a good landlord policy!
14 – Keep the property in good repair!
15 – Act quickly if tenant problems are arising!
16 – Watch out for harassment claims – respect tenants’ privacy!
17 – Be security aware – the property, tenant and landlord information, data protection rules!
18 – If you use agents, select them carefully, read the contract and be aware of what you sign up to!
19 – Put everything in writing and create an audit trail – keep a tenant diary, document all communications!
20 – Avoid Expensive Litigation!
Are you in the bottom, middle or upper part of the lettings market?
I categorise rentals into A to D classifications, which broadly align with locations. So, if you deal with D class properties, you’re looking at less desirable areas, the bottom end of the letting market and in the worst cases these locations resemble a war zone. You are definitely asking for a bit of stress when you’re managing these properties. Some HMOs fall into this category, so you’re definitely pushing the limits with these if you are new to the game.
Alternatively, A class properties are in the most desirable areas, where tenants are at the top end of the market. Invariably these tenants are the most demanding, they are paying top notch so they expect the best in everything. Again, expect more stress with these.
My properties have been in the B & C classifications: professional and working tenants, young professionals, couples and families, working people such as teachers, classroom assistants, NHS workers, local authority and emergency service personnel. These are in the main practical people who in the main are understanding about issues, they expect good clean accommodation without the luxury expectations of class A or the anti-social behaviours you can expect in class D, and generally they don’t lose their jobs, so your rent payments are the most secure.
If you are in the DSS, HMOs and student sector of the market, expect more problems, more management time, and you will need a good knowledge of the Housing Benefit, HMO rules and the student market etc. Financial returns though, should be commensurately higher!
If you go for the middle (working and professional) you should have fewer problems, providing you select your tenants carefully, but make sure your property matches your target market in terms of type, location, condition and facilities.
Think of your lettings investments as a business, even if you’re doing it as a sideline to your main job. It requires a certain amount of discipline and commitment.
Have you got the time to manage your lettings or do you need to pay someone to do it for you? Distance is a factor, because travel time added to management time can become excessive and you can manage tenancies effectively from a distance.
However, rental property can be efficiently managed using a surprisingly small amount of time – just follow these steps and the information we give on this site.
Just like any other business, at the start, it’s a good idea to have a Business Plan with a Cash Flow Forecast. Include financial projections, especially if you are using some form of loan or mortgage finance to purchase your investment properties.
Remember, you may need certain permissions for your landlording operation, from:
You also need to master the basic letting rules and regulations, the landlord and tenant’s legal obligations and some of the laws governing lettings, these change often, so keep up-to-date.
Visiting and reading this site should help – it’s designed to take the effort out of learning about landlording by bringing everything you need together in one place.
We’ll direct you to useful books and other information sources.
It’s also a good idea to join your local Landlords’ Association or the National Residential Landlords Association (NRLA). You will learn a lot by attending meetings and speaking to other landlords.
The old saying, honesty is the best policy applies to landlording as much as to any other business, but perhaps more so. For a start landlording has a bad image in some quarters (though it’s improving) and this has to be overcome.
When you are under the scrutiny (not that you will come into every-day contact) of your tenants and so many other agencies: your local authority, The Fire Officer, The Environmental Health Officer, The Health & Safety Executive, Rent Officers, HMRC, the Town Planners and Building Controllers, and the Courts, to name a few, then successful landlords tend to be those that operate within the rules and with some integrity.
Pay your taxes but claim your dues wherever you can: falling foul of HMRC can be a nightmare, so play by the rules. If you are not sure, use a good tax accountant.
Treating tenants with respect while setting out to provide value for money and a professional standard of service is an approach that the authorities will generally support – that’s definitely the best policy I find.
If you can show that you are a good landlord and follow the rules you are likely to get full support from the authorities if things go wrong.
Don’t buy a property just because you like it, you think you could live in it, or you just plain fall in love with it!
“The market rules” every time, and you must make sure that what you buy will let. Get to know the area well, speak to residents and local estate agents, and keep an eye on the local papers to see what’s letting locally.
Location, location, location has always been said to be the three most important three factors when investing in property. Residential lettings are no exception.
Is there a healthy demand for letting in the area? What type of property lets best? Which type is most profitable? Is the property near large employers, a college or a university? Are there good public transport links? Are there shops, fast food outlets and restaurants, laundry facilities, tourism and entertainment venues?
What are the long-term trends? Is the area improving, or declining? Are there any potential problems, trouble spots – flooding, riots, radon gas, subsidence? Are there any future developments in the pipeline like shopping centres, roads or transport links which could improve the area?
If it’s a town or city, is there a trend to more urban living? What will be the long-term effects that these and other factors have on rental demand and property values? Dig out the local plan on your planning office website to see what might happen in the future.
A Tenant’s Application Form (Tenancy Proposal Form) is crucial and the most important document after the letting agreement.
The application form records permanently the tenant’s declaration as to identity, accommodation and employment histories, income status, references, and personal details – Smoker? Pets? Other Occupants, Children etc.
It also confirms the tenant’s understanding of the property to be let, the type and length of tenancy and basic terms, the likely costs and expenses to be paid and the rent and deposit required.
This form is an important legal document along with the agreement which forms the basis of the contract and the tenant screening process. It should provide sufficient information to enable the landlord to contact the tenant, or his or her relatives, even if he-she absconds.
The form also provides valuable evidence for Ground 17 of the Grounds for Possession under the Housing Act 1996: a false statement knowingly having been made by the tenant or someone acting on their behalf.
Ground 17 underlines the importance of a Tenancy Application which seeks factual information from the tenant. See also Tenant Screening below.
Always remember this: no tenant at all is 100 times better than a problem tenant in your property! Landlords are always anxious when they have an empty property, but don’t be too hasty in taking on the first person that comes along.
Always do a credit check. It is not an absolute guarantee but a basic check is quick and quite inexpensive, and it’s a good safeguard against real problem debtors -m CCJs (County Court Judgements) are a red flag.
Be thorough in taking up references etc, but don’t waste too much time about it because you may lose an excellent tenant.
This is one aspect where DIY landlords have the advantage over letting agents – they can generally deal with applications more quickly, often at week-ends and outside normal working hours and also make quick letting decisions.
Right to Rent Checks: You must check that a tenant or lodger can legally rent your residential property in England. Check with the Home Office if the tenant is a Commonwealth citizen but does not have the right documents - they might still have the right to rent in the UK.
Before the start of a new tenancy, you must check all tenants aged 18 and over, even if they’re not named on the tenancy agreement, there’s no tenancy agreement and the tenancy agreement is not in writing. Check all new tenants - It’s against the law to only check people you think are not British citizens. You must not discriminate against anyone because of where they’re from.
All new tenancies, since 28 February 1997, are automatically Assured Shorthold Tenancies (ASTs), unless specified otherwise, so landlords are now on much safer ground than pre ’97.
It is possible to create such a tenancy legally by oral agreement and the conduct of both parties (must be confirmed in writing if the tenant requests it).
But any landlord doing this is asking for trouble, and most tenants would prefer to know where they stand by having their tenancy agreement in writing.
Never, ever, under any circumstances allow a tenant into premises (handing over keys) without the signing of an agreement and paying the first month’s rent and security deposit. If you accept a cheque, you should allow time for clearance, so bank transfer is much better.
The agreement forms the basis of the landlord-tenant relationship specific to your property, as opposed to the implied statutory legislation rules. For example, you may want to certain bar pets within reason (you can’t have a total ban), to insist on payment by banker’s standing order (though I’ve never had a problem with this) and insist on notice if the property is to be left empty more than a certain number of days – refer to your insurance policy on this.
There are lots of other clauses that should be included so refer to a standard comprehensive letting agreement – you might want to download the Government’s Model Tenancy Agreement
Without the agreement you will find it difficult to prove even the obvious points – when the tenancy actually started, how long it lasts and what the rent should be. No written agreement may also cause real problems if court action is required later for eviction etc.
Good agreements are easy to understand (plain English), up-to-date with current legislation and have taken into account almost all eventualities.
Use a good quality “off the shelf” agreement or have one prepared by an experienced solicitor – not all solicitors though have expert knowledge of landlord-tenant matters.
Always insist on a security deposit, which is usually equivalent to one month’s rent (now capped at 5 weeks’ rent by law), and handle this with integrity.
To discourage tenants from using the security deposit as their last month’s rent payment you may decide to use a different amount – perhaps 5 weeks, for example.
The tenant may need the deposit back for his or her next tenancy so always repay it promptly if everything is in order.
Your Tenancy Application Form and the Tenancy Agreement should deal with and fully explain the procedures with deposits.
You must lodge your deposit with one of the Government-approved schemes within 30 days of receiving it and issue your tenant with some statutory information about the scheme. These are the schemes available in England:
Deposits are often a source of disagreement between landlord & tenant at the end of a tenancy. One option, which has advantages for both parties, is to use an independent inventory clerk which means, along with your other documentation, you will have a better chance at successfully claiming against the deposit - for damages or rent arrears - should you need to.
Always try to keep the rent at or near market levels – you owe it to yourself, your financiers and your potential heirs. Your research of the local market (section 4 above) should give you this.
Ultimately, the rent received determines the value of your investment so if you had to sell the property with a sitting tenant, too far below market rent, the property value could be adversely affected.
Short-term lets don’t usually warrant the hassle of rent reviews and increases, but longer term residential lets, say over 1/2 years, should have their rents reviewed and the agreement should provide for this.
Rent Reviews are particularly important when letting commercial properties which tend to have much longer leases.
Some landlords feel that good long-term tenants should have the reward of staying on the same rent - unless rents are rising at a rapid rate due to inflation - but keeping rents low becomes a dangerous strategy as time goes by.
The rent is no longer a fair return on the investment, the property value is affected, and may not cover repair costs. Eventually the tenant is faced with a big rise, which they will object to strongly, and it usually then triggers a move – tenants don’t connect that they had the benefit of low rents for so long, so small regular rises are the answer.
Don’t try for too high a rent though. This usually results in longer void periods when it comes to finding new tenants, and you lose out more in the end.
Banker’s standing orders are the best thing ever invented for landlords!
Without the standing order most DIY landlords just would not have the time to manage their properties as a side-line to a normal day-job.
Standing order payments have several advantages besides saving time – they are regular, there’s no anxious waiting for cheques coming through the post and you know right away if there’s a problem.
No landlord should spend time travelling to collect rents, only do it in emergencies. Some tenants will delight in giving you the run-around in this situation!
If a payment fails to materialise it means only one of two things: the tenant has ordered the bank to stop the payment, or there are no funds. You can then act immediately – see standing order mandate.
Landlords have a serious obligation to provide safe premises, installations and appliances for their tenants. They must also ensure safe use of equipment by providing clear operating instructions.
Safety is potentially one of the greatest risks a landlord faces, but it need not be a problem if it’s managed properly.
There are severe penalties for non-compliance – both criminal sanctions and civil law damages apply.
Due diligence (taking all reasonable steps) is essential – use a risk assessment process when you inspect the property.
Regular inspections are a must and your insurers will usually insist on it.
Remember the discrimination laws. You are not allowed to discriminate (and nor would any reasonable landlord want to) on the basis of race, religion, gender or disability and things like tenants on Housing Benefit etc. However, you are allowed to discriminate on the merits of the individual/s as qualifying tenants.
For example, the results of your credit checks and references will usually give a good indication of the tenant’s ability to afford the rent and you need to match tenants to the type of accommodation to avoid overcrowding.
Your selection process should follow a standard procedure where every potential tenant is taken through exactly the same process: have a questionnaire / interview check-list that asks everyone the same questions and judge everyone on the same basis. Keep all the documentation for future reference should you ever be accused of discrimination.
Landlords have many potential liabilities and it is vital that they carry sufficient insurance cover. The landlord is responsible for insuring the building itself (unless this is a leasehold block) and they should insure their own contents.
Landlords are also advised to make sure their landlord policy covers specific cover for tenant and third-party risks (public liability).
Other types of insurance are available including loss of rent and rent guarantees.
Tenants should be advised to insure their own contents. Tenants’ policies also cover a range of other basic risks. There are specific policies available for landlords with student lets and HMOs, and for the tenant.
The old saying, a stitch in time saves nine, was never truer than with property. A small thing like a leaking gutter, downpipe or a blocked drain, if left unattended, can result in horrendous damage.
Landlords with the inclination and good DIY skills have an advantage as the cost of repairs is high, and good tradesmen are hard to come by, especially at short notice.
If you use tradesmen on a regular basis, you are more likely to get them to come when you need them in an emergency, but it pays to look after good people when you find them.
The starting point is buying in good condition. Have the property surveyed and don’t forget the wood survey – a nasty case of rot can be very expensive to eradicate.
You may be able to buy property cheaper if you are willing to renovate or develop it yourself, but this requires a fair amount of experience and skill and usually, quite a lot of money.
Good well-maintained property will attract good tenants and will enable you to set a certain standard. Aim to keep the property maintained and always respond to problems promptly.
Mid-tenancy inspections (normally 6 monthly, and perhaps done by an independent person) are a good idea to monitor the way the tenant/s is keeping the property. A risk assessment report should be completed using the original inventory/schedule of condition as a basis.
If you spot repair and maintenance issues that need attention, deal with them without delay. Pay particular attention to damp and condensation problems.
If problems are arising the tenant can then be alerted in writing, warning that additional costs may be incurred for damage or cleaning beyond normal wear and tear.
If problems are arising, act quickly and always carry out what you have said you will do. Take action immediately so that tenants know you mean business and that you are concerned about their welfare.
If rent payments are missed, find out why and set out a course of action. Put it in writing, with regular rent schedules showing the arrears amount, to show you are on top of this. There may be good reasons, in which case allowances can be made, but don’t let the situation last long – you may have to go for possession.
If the tenants are damaging your property your regular inspects will pick this up, so you may need to issue formal warnings.
If the tenant reports repair work – not responding to tenants’ maintenance problems will not only affect your property, it could bring on problems with rent payment and your ability to use a Section 21 eviction. Never give tenants an excuse not to pay rent! Having access for maintenance is also a good opportunity to inspect the premises.
If your tenants are causing problems with the neighbours – anti-social behaviour - again, act quickly so that they can see you are doing something about it. You may have to take it up with the local authority and again, possession proceedings may be in order.
Legally, tenants have an “estate in land”, a legal interest in the property and a right to quiet enjoyment; they have the right to treat the property as their own (within the terms of their agreement) free from interference from the landlord.
Landlords turning up and making demands, without warning, could be deemed to be acting unreasonably. Making threats, withdrawing services or making life otherwise difficult for tenants and their guests is definitely illegal and a criminal offence – the courts take this very seriously.
Always give tenants a minimum of 24 hours’ notice for access to the property for whatever reason.
If you do have an unreasonable tenant, where relations have become strained, carefully document your contacts with them, or your attempts to carry out your statutory duties, such as Gas Checks and Electrical Checks, inspections etc., and if in dispute take a witness with you when you see them.
When in dispute it’s sometimes worth having an arm’s length where you get an independent agent to come between you, dealing with the tenants directly. Otherwise, simply deal through correspondence.
The property needs to be secure for the benefit of your tenants. If tenants’ possessions are lost due to lack of a reasonable level of security, then they may bring a claim against your landlord.
Your insurance company and your local Police Crime Prevention Officer will specify and advise on door and window locks etc.
For personal security, dark allies and walk-ways should be well lit and doors and gates fitted with secure locks.
If you are meeting strangers to show them around your properties:
Be aware of and follow the Data Protection (GDPR) rules. The General Data Protection Regulation (Regulation (EU) 2016/679) is a regulation issued by the European Parliament, the Council of the European Union and the European Commission which we still follow. It is intended to strengthen and unify data protection for all individuals within the European Union (EU) and the UK.
If you use an agent to let and/or manage your property, be careful. Not all agents have the necessary skills and experience, and some have excessive charges and unreasonable terms in their contracts.
Agents who are members of RICS, NAEA, ARLA or NALS are the most likely to do a professional job.
Have a file for every property & every tenant. It’s important to have this information on file, particularly for HMRC purposes when you sell – you need to record the capital expenses on the property as well as purchase and selling costs for Capital Gains tax purposes.
All tenant files should be kept for several years after the property is sold or the tenants have left, but according to GDPR, no longer than is necessary. Personal information must be disposed of securely.
The property file should include everything to do with that property:
Tenants’ files should include everything to do with that tenancy:
Write on the outside of the file for easy reference:
Use a good accounting system, preferably one of the computerised ones. If you manage large numbers of properties you may need to consider one of the specialised Property Management Packages.
Litigation (going to court) can be horrendously expensive and should be avoided if at all possible. Following the rules and guidelines listed here should keep you out of trouble.
If disputes do arise with tenants or other parties, try very hard to discuss, negotiate and settle in an amicable way.
If you have cause to repossess a property, this should be a reasonably straightforward process if you have prepared and followed these guidelines and you carefully follow the possession procedures. If you have problems think about using a specialist eviction firm
If you have money owing, and you want to avoid the costs of going to a solicitor, you can use the Small Claims Court to make a claim online, which again should be reasonably straightforward.
In both these cases it is possible for a private landlord to process these, but if you don’t feel confident, and some cases can be complex and beyond the competence of the amateur, see a good property solicitor.
The LandlordZONE Forums are an excellent source of help and information for those involved with letting property.
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