Create fair contracts, faster with Legislate, sign up today.
Finding tenants for your rental property is an essential element of lettings. However, there are several steps you need to consider before and after finding the prospective tenant. This article will guide you through the process from start to end for finding great tenants.
Can you let out the property?
You first need to establish if you can let out the property. You will need to check you have the permission if you have a superior lease. You will also need to check if you require a licence based on the nature of the property, the number of bedrooms and the number of tenants from different households who will be living there. For example, if your property will be let as a HMO, you will need to enquire about a HMO licence from your local council. You also have additional obligations such as ensuring the property is safe and fit for human occupation. These obligations will vary depending on the nature of the tenancy. Most importantly, you must ensure that electrical safety standards are met and that you can produce the relevant performance and safety certificates.
Finding the tenant
The nature and location of your property will determine the type of tenants you should look for. For example, a house with multiple rooms in a University city is ideal for students. This will also impact your letting strategy as student tenancies tend to be for 12 month terms and the payments are optimised for student loans. Letting to working professionals means the term of the tenancy will probably be 6 or 12 months and the contract may automatically convert to a periodic tenancy after the initial term. Once you have decided on your strategy, you can choose to post an advert for your property via a letting agent, in a local newspaper, on a property portal like rightmove, zoopla or on social media in property groups. You will need to sign a letting agent terms of business agreement if you decide to work with an agent and choose between a let only or full management service. Whilst most letting agents operate locally, online letting agents operate virtually and sometimes offer cost effective packages. After you have found potential tenants, you might need to carry out viewings with them before they can make a decisions. Viewings can be done remotely or in person and sometimes even by your current tenants if you are looking for replacement tenants.
Right to rent and background checks
Once you have found a suitable tenant, it is a legal requirement to check that the tenant has the right to rent in the UK. A ‘right to rent’ check requires landlords to check the immigration status of their tenants, denying lodgings to people who can’t prove they are permitted to live in a rented home in the UK. During this process, you might also wish to do some reference checks on new tenants to verify that they have made rent payments with their previous landlords. The goal of tenant referencing is to determine if they can afford to rent your property and if they are likely to be a good tenant. These checks can also be complemented with credit checks. You can also ask the potential tenant to provide a guarantor if you are concerned about the tenant's ability to pay rent because of their professional or financial situation.
Creating a tenancy agreement
After establishing that your tenant has the right to rent in the UK, you will need to tailor your tenancy agreement to the terms you have agreed with the tenant. For example, you need to specify if there are permitted occupiers or if the tenant is entitled to special terms such as a parking space. The model assured shorthold tenancy agreement provided by the British government isn’t always suitable and downloading an online template can be risky. Working with solicitors can be a hassle and expensive. Many landlords prefer using end-to-end solutions like Legislate for creating and managing their tenancy agreements and related documents on no legal budget. This reduces the time and number of errors in the contract creation process whilst guaranteeing that the templates are always up-to-date.
Curious about automated data extraction from documents?
Onboarding the tenant
Onboarding the tenant is one of the most important steps of the tenancy. First of all, you can ask the tenant to pay a holding deposit upfront which is capped to one week of rent and reserves the property until all the checks are complete. You will then need to collect and protect the tenant’s security deposit. The amount you can collect is capped by the Tenant Fees Act 2019 to the equivalent of 5 weeks of rent. It is a legal requirement that the deposit is registered in a protected deposit scheme. You should also make sure that straight after the move in, the tenant signs an inventory which clearly describes the standards to which the property should be cleaned and returned. The additional steps you need to do are providing the tenant with the Energy performance and gas certificates (if applicable) as well as a copy of the governments how to rent letter. You might also want to provide a separate how to rent letter to the tenant which summarises the key documents as well as additional information about yourself and when and how you can be contacted during the tenancy. This generally leads to a smoother landlord tenant relationship. Finally, since you will be collecting lots of personal information about the tenant during this process, you should familiarise yourself with your data protection obligations.
Managing the tenancy
As a landlord you will generally be responsible for repairs unless the damages have been caused by the tenants. If the property is a flat, you will also be responsible for maintenance of common areas, such as stairways, and if letting a house in multiple occupation (HMO) a landlord takes on extra obligations which you can read about here. After the initial term, you might be entitled to increase the rent and if required make changes to the terms of the tenancy. You can do this respectively via rent increase and tenancy amendment letters.
End of the Tenancy
If you would like to initiate the end of a periodic tenancy agreement you will need to serve a notice. If the tenant has breached the terms of the agreement then you can serve a section 8 notice to evict the tenant. Make sure that you are using the latest forms as they are regularly updated by the government. The notice periods vary based on the nature of the tenancy, the date they are served and the circumstances of the tenant. The tenant can equally serve notice to the landlord to leave the property. Before the move out of the tenant, it is important to go through a final inspection with them to make sure that the property is in the same condition as when the let began, minus general wear and tear. Cleaning fees are banned but the deposit can be used to cover the cleaning costs If the property is not to this standard on post-tenancy inspection.
Finding the right tenant requires a lot of time and effort which is vital for a smooth and compliant tenancy. Whilst it might be tempting to save time on the contracting stage, it is important to ensure the agreement is complete and up-to-date and that you have satisfied your legal obligations. A failure to do so will compromise your rights and protection as a landlord. Using a platform like Legislate ensures that you save time and money on tenancy agreements you can tailor by yourself without exposing legal risk. Moreover, tenants prefer Legislate as it gives them greater visibility and access into their agreement which in turn improves compliance during the tenancy. Read a tutorial, watch a demo or join hundreds of members today who contract the way it was meant to be.
The opinions on this page are for general information purposes only and do not constitute legal advice on which you should rely.