How to effectively self manage as a landlord
The first and most important step is to decide if self management is right for you. This is a fundamental decision that will shape your experience as a landlord and the success of your rental property, so is worth spending some time considering this before you start. Our article should I self manage or pay a letting agent explores this dilemma in detail, highlighting the pro’s and con’s of both approaches to help you make an informed decision.
Understand your role and responsibilities
Being a landlord comes with responsibility for the health and safety of your tenants. Before letting your property you should always familiarise yourself with your role & responsibilities as a landlord.
Your duties as a landlord are a legal requirement and include:
- Keeping the property in a habitable and safe condition.
- Protecting the Tenancy Deposit in a government approved scheme.
- Properly installing and obtaining certification for gas and electrical equipment.
- Upholding any other explicit provisions in the tenancy agreement.
- Ensuring any tenants legally have the ‘Right to Rent’ (if the property is in England).
Property compliance and regulation
By law landlords must ensure that all properties they let have appropriate certification and adhere with government regulation. The obligations differ depending on the type of tenancy so it is important to understand the differences between HMO’s and Standard Lets if you have a multi-tenant property.
The most common items you will need for your property include:
- Permission from your lender to rent the property.
- Gas Safety Certificate
- Electrical Installation Report (EIRC)
- Energy Performance Certificate (EPC)
- Appropriate Landlord Insurance
PAT Testing of electrical appliances while not a legal obligation is also highly recommended to avoid safety issues and damage to your property.
Getting the relevant documentation has become a relatively simple process for the modern landlord with online providers such as OpenRent now offering affordable certification for a one-off fixed fee.
Advertising and finding prospective tenants
A common misconception is that advertising properties is where letting agents have the edge over DIY landlords but this is no longer the case with the rise of landlord advertising partners levelling the playing field in recent times. A deep dive into the options for promoting your property can be found in our article on advertising and finding tenants.
Popular listing options include:
- Commercial platforms (Rightmove, Zoopla or PrimeLocation)
- Listing sites such as Gumtree
- Social Media
- Local advertising
At first glance the free options (listing sites and social media) may appear most tempting to keep costs down, however it is worth considering that they often also require more time to administer and can sometimes result in lower quality tenants.
The premium platforms are a surprisingly affordable option even on a low budget with advertising on Rightmove Zoopla & PrimeLocation from £29.
Credit Vetting and Referencing
Quality tenants are key to a successful rental so when self-managing practicing due diligence is highly recommended to understand who you are letting your property to. Referencing providers are easy to find online and will give you valuable insight into your prospective tenants including their credit rating, fraud history, CCJ’s and Right to Rent (a legal obligation in England).
OpenRent offer speedy and comprehensive referencing options starting from £20 per tenant.
A tenancy agreement is a must for any let and provides protection for both landlord and tenant in the event of a dispute. Correctly implemented a tenancy agreement is a legally binding document detailing the conditions of the rental and how certain eventualities will be handled. Depending on your circumstances there are various options for implementing which are explored in this article on creating a tenancy agreement.
This step can be daunting as a DIY landlord so if you are looking for a cost effective and hassle free option for onboarding tenants then there are also some great all-in-one products available that include referencing, digital contracts and deposit handling from £49.
Tenant Deposit Scheme
A deposit is an excellent way for a landlord to ensure that they get their property back in a good condition and provides protection in certain scenarios, such as damage, unpaid utilities or if a tenant leaves owing rent. Whenever a deposit is used the landlord has a legal obligation to store the Tenancy Deposit in a government approved scheme.
There are 3 different schemes you can use as a UK landlord:
For more information see our article on understanding the Tenant Deposit Scheme.
Creating a Property Inventory
At the start of every tenancy you should carry out a comprehensive inventory to document the condition of the property and it’s contents. It is also important to ensure that your tenants review and have the opportunity to raise any queries before they sign the inventory to confirm their acceptance.
The inventory is a record of the starting state of the property and can then be reviewed during the move out inspection to identify any changes or damage that have occurred during the tenancy.
A good inventory should:
- Be grouped by room or area
- List all items present & their condition
- Contain photos of all rooms and items
- Include utility meter readings
- Cover external property features (including garden)
- Include any keys given to tenants
For more detailed information see our article on creating an effective inventory.
Collecting rent is a fundamental and unavoidable task of being a DIY landlord and with a variety of different methods available (each with their own pro’s and con’s) choosing the right one of your situation and your tenants is paramount.
The most common method are:
- Standing Order
- Direct Debit
- BACS / Bank Transfer
- Cash / Cheque
- Payment Portals or Apps
Cash used to be the standard but has understandably been replaced by scheduled bank payments such as Standing Order (set up by the tenant) and Direct Debit (set up by the landlord). More recently the rise of payment portals and apps have made provided a more flexible alternative for modern landlords.
The benefits of each approach are reviewed in this article on choosing the best rent collection method.
Effective management during the tenancy
The keys to a smooth self-managed tenancy are good communication and fulfilling your responsibilities in timely manner. You have an advantage over a letting agent here with more opportunity to build a good professional relationship with your tenants, which can be key in resolving any issues that arise amicably.
During the tenancy your main responsibilities are:
- Conducting an Inspection every 6 months
- Resolving maintenance issues in timely manner
- Ensuring utilities (gas, electricity, water) remain available
Resolving issues with the utilities is a key aspect of your landlord duties, and one of the most impactful to your tenants so should always be treated as a priority. In the event of a breakdown it can be expensive and problematic to find qualified contractors on short notice so many landlords opt to take out monthly cover for the utilities instead so they have a port of call in an emergency.
Budget options for boiler only cover start from £8.99/pm with 24/7 Rescue while more comprehensive options including central heating, electricals and plumbing are available from Hometree starting from £24.45/pm.
Ending a tenancy and next steps
The move out is the most common time for friction to occur so handling the end of tenancy professionally can play a major role in avoiding potential disputes. First agree the date for the tenant to vacate and clearly communicate what is expected in advance in advance of move out (this should also be in your tenancy agreement). Recent changes to regulation mean that you cannot demand that the property is cleaned by a professional company, however you can expect that it is cleaned to an equivalent standard - normal practice is that the property is returned in the same level of cleanliness as it was let.
After the tenant moves out you should carry out an end of tenancy inspection to compare the property and contents to the inventory from the start of tenancy. This will allow you to determine any wear and tear, damage or missing items that have occurred during the tenancy. It is a good idea to give tenants the opportunity to be present at the final inspection and you are required to provide them with a copy of the move out report.
Based on your move out report you then have a decision to make around whether any deductions are required from the tenancy deposit. You can only deduct where you have legitimately suffered a financial loss, reasonable deductions could include
- Missing items
- Rent arrears
- Unpaid utilities
All deductions must be made by application to the deposit scheme you have chosen to use and tenants should always be given the opportunity to rectify the issue before requesting a deduction where possible. It is general required that deposit should be returned within 10 days of the end of tenancy. More details can be found in this article on understanding the Tenancy Deposit Scheme.
If a disagreement does occurs then this artcile on handling tenancy disputes lays out the best options for achieving an amicable resolution.
Landlord costs and accounting
The financials of running your property will vary based on factors such as your lending situation, the location, rental type to name just a few, but the good news is if you have decided to self-manage then you will already be saving the cost of a letting agent (which can be as high as 10 - 15% of rent + VAT). This article breaks down the common costs of being a landlord which can help you to build your individual budget.
Tax is also an important factor to consider and will again vary based on individual circumstance. Running a property as a side hustle whilst employed will have very different tax implications to a larger property portfolio owned through an LLC for example. This article on understanding landlord taxes is a good starting point for learning about tax obligations.
How Sharehouse can help with self-management
We were created to specifically support DIY landlords by making self-management simple. Our free online library of landlord resources contains everything you need to know and our network of service providers brings together industry leading companies in one place top help with all stages of the rental journey.