Are You A Landlord?
Why Renting Your Ayr Property to Family Could Be Problematic
If you are a Landlord, here are some questions you should ask yourself before you rent your property to family or friends.
Do they need to sign a tenancy agreement?
Yes, yes, and yes again! They might be family, but they’re also your tenants and both parties need to know what is expected of them. For example, a financial transaction will take place each month, and you need to make the rules clear from the start. Otherwise, you may be putting your income at risk.
Should I take a deposit?
This is a personal decision that you need to make, as there’s no legal requirement for a landlord to take a deposit. However, it is a good way to protect your property and any contents from damage.
Similarly, by having a professional inventory carried out before they move in, both parties know the exact condition of the property and how it should be left.
Should I do a tenant reference check?
Asking family for personal finance details? It might make you feel awkward just thinking about it, but it’s an essential step of the rental process.
While you may think you know your family/friends’ financial background, it’s still worth making extra checks. Referencing will ensure that your potential tenant can pay the rent and highlight any issues with previous landlords.
Are there any legal issues I should be aware of if I rent to family/friends?
Not exactly, but renting to family/friends could cause problems if you have a mortgage. In fact, a lot of lenders are quite strict about this issue, and you may need to ask their permission before you move family in.
This is because the lender could be concerned that you’d charge family members less rent, or be more lenient if they didn’t pay – both of which could impact loan repayments.
Renting to friends or family can often be a great option, but it’s one you need to consider carefully and go into with your eyes wide open.
Good relationships with family and friends is priceless! My advice would be to avoid renting to them. Unless you use the services of a good letting agent, we can act as a ‘go-between’ if things get awkward.
For more advice on anything and everything related to rental property in Ayr, call our lettings team today.
Rental Guarantors and Ayrshire Landlords
This three-minute read explains the role of rent guarantors.
When a landlord has a niggle of anxiety over whether a prospective tenant will pay their rent, there is a way they can help protect their investment.
A landlord can ask a tenant to provide a guarantor to ‘guarantee the tenancy’.
Guarantors are often family members or close friends – and a little bit like a human safety net.
If the tenant can’t (or won’t) pay what they owe the landlord, the guarantor has to stump up the cash – or face the landlord at a Tribunal.
Extent of liability
As with so much in the lettings game, it all depends on the terms of the contract.
While some agreements only cover unpaid rent, others will also cover things like damage to the property.
An agreement should clearly state what is covered and outline the circumstances under which the contract will end.
This is important. If the guarantor has a change of heart mid-tenancy, they can’t simply walk away from their commitment. The agreement is legally binding.
When to use a guarantor
It comes down to the landlord’s discretion, but often a guarantor is used when a tenant:
- Is new to renting.
- Has gaps in their employment history or has recently started a new job.
- Is a student.
- Has a credit rating that is lacking in some way. That doesn’t necessarily mean the tenant has had financial problems; they may be young and have never had a credit card or other loans.
Important points
- A landlord must check a guarantor’s credit and employment records closely (just as you would with a tenant). Guarantors are often required to own a property and have a gross annual income three times the rent of the rental property they are acting as a guarantor for.
- Most landlords prefer the guarantor to be UK-based as it’s easier to run credit checks on them and take legal action if required.
- Issues can occur when people agree to be the sole guarantor on a rent agreement without realising this makes them liable for all outstanding rent and damage costs. For example, a mother agrees to be a guarantor when her daughter moves in with her boyfriend. However, the couple split, the ex-boyfriend disappears, and Mum is livid that she has to cover his payments.
- Landlords must ensure that a guarantor understands what they’re signing, or they could claim that they were misled or pressured into an agreement.
For more information on any aspect of renting out a property, contact me, Janice Molloy, Tel: 01292 442888
Rent Increases: What Ayrshire Landlords Need to Know
In this three-minute read, we look at the issues Ayrshire landlords should consider before raising rents.
The uptick in inflation, along with pressure on interest rates, means that many landlords will be considering rent increases right now.
Before deciding on a course of action, here are some points to consider.
Why would a landlord raise rents?
- Rising mortgage and maintenance costs.
- Tax and legislative changes that impact profitability.
- Changes in the supply of and demand for rental properties in the local market.
When can a landlord raise rents?
It depends on the terms of the contract. Your tenancy agreement should clearly state how and when rents can be reviewed, and the notice period required for an increase.
It’s vital that you understand the terms of your contract and – unless you enjoy messing with lawyers and tribunals – abide by them.
If you’re unsure where you stand, contact us here at Parkview Property for independent advice.
How much should you raise rents?
It’s a balancing act as an OTT rent hike could cost you more in the long run.
To hold on to top tenants and enjoy good returns, do your research and play fair.
Look at what other landlords are charging for comparable properties in Ayrshire. Be honest about the condition of your property and determine your price accordingly.
Telling your tenant
Be upfront and start the conversation sooner rather than later. That way, your tenant will have time to adjust to the idea and budget accordingly. Always serve written notice within the required notice period.
What if my tenant is unhappy?
Explain that you’re facing rising costs and talk about any improvements you’ve recently made to the property.
If a tenant is happy and settled, they’re unlikely to bother with the expense of moving if a rise is reasonable.
If your proposed rise causes a stir, make a judgement call. Weigh up the costs of finding a new tenant and the risk of having the property sitting empty against the extra income you stand to make.
Look at the big picture. If your tenant is a keeper, consider negotiating. If you’ve had issues with them in the past, maybe it’s time to part ways.
Where problems occur
Issues arise when:
- A landlord is missing in action for a couple of years and then springs a massive hike on a tenant to make up for lost time.
- The rent is set too low initially, and the landlord tries to play catch-up by introducing a big hike when they can.
- Tenant/landlord relations are so poor that rational conversation isn’t possible.
- A landlord doesn’t understand their contract and tries to bulldoze through a hike at the wrong time.
To avoid these issues:
- Get professional advice from an experienced letting agent so that you set the rent at the right level the first time.
- Have a long-term rental strategy. Some landlords, as a rule, increase rents incrementally every year or two to cover rising costs.
- Ensure your contract is watertight and that you understand it.
- Communicate regularly with your tenant. If you’re time-poor, a letting agent can do it for you.
For advice on formulating a long-term rental strategy, get in touch with us here at Parkview Property.
How Ayrshire Landlords Are Finding and Keeping Dream Tenants
‘Finders keepers, losers weepers.’ It’s a timeless rhyme used every day in school playgrounds in Ayrshire and all over the UK.
It often applies to someone finding something that’s unowned or abandoned. But it also resonates with local landlords when it comes to having the second most important piece of the rental puzzle – great tenants.
Finding these excellent tenants is one thing. Keeping them is another. And some landlords lose these precious people because of basic, unnecessary errors. It’s enough to make a good landlord weep.
But put the tissues away because here are seven ways you can win at Rental Finders Keepers.
- Use a good letting agent. Earlier in this article, we mentioned that tenants were the second most crucial piece of completing a rental puzzle. The first? Well, in our opinion, it’s an excellent letting agent. That’s not because we are one, by the way. It’s because, over the years, we’ve seen countless landlords go down the DIY route to managing their properties and getting themselves in a stressful and expensive muddle. Look for agents with experience, testimonials, industry qualifications, and a clear plan on how they’ll market, manage, and maintain your tenancies.
- Know your target tenants. An experienced letting agent will be able to advise you on who your property will most appeal to. Is it a growing family, young professionals, or a retired couple? Knowing this will help with the next ultra-important step.
- Marketing matters. Perhaps the biggest error DIY landlords make is not taking the marketing of the property seriously enough. You are ‘selling’ an expensive product after all. This is why photography, property descriptions, and online advertising should be handled by professionals who do it day in, day out. The better your property’s marketing, the better calibre of tenants it will attract – giving you more choice when it comes to the next step.
- Setting the rent. By knowing your target tenant, marketing correctly, and listening to expert advice, you’ll be able to set your rent at the right amount. A correctly priced rental (not too cheap or expensive) will attract more interest and ultimately, more offers from quality tenants.
- Be prepared for questions. Good tenants tend not to just turn up at a property and say: ‘It’s great, where do I sign?’. It’s a big decision for them, and they’ll have questions such as ‘What council tax band is the home in?’, ‘What are the parking arrangements?’, ‘Are utilities included in the monthly rent?’. Remember, when it comes to the best tenants, this is a two-way selection process as they are savvy enough to research the rental market, so you’ll also need to make a good impression on them.
- Check them out. A tenant worth having will have no issue going through a referencing process. Here’s another area where a good letting agency reduces your risk of problems further down the line. Please don’t be shy about asking your letting agent for proof of the referencing process they’ve carried out, which should involve financial, employment, and past landlord checks. Skip this part at your peril.
- Keeping them. So, once you’ve found a great tenant, how do you go about keeping them? Well, this is an entire article in itself, but it would be along these lines: Be a good landlord by maintaining the property properly, dealing with issues quickly, charging rent fairly, and acting professionally.
At Parkview Property, our job is to help landlords find and keep great tenants. To ask us anything about the Ayrshire rental market, contact us today.
How To Switch Letting Agent
If your letting agent is delivering sloppy service or hitting you up for extra fees, then it’s time to think about switching.
Many Ayrshire landlords mistakenly think changing agents is a messy and complicated process, but it’s relatively simple.
Why change?
Most landlords switch because they’re unhappy with the level of service they’re getting from their agent.
It’s time to consider switching if:
- You find yourself doing more and more of the legwork when it comes to maintenance, repairs, and safety checks because the agent is disorganised or lazy – or both.
- The tenant is calling you because the agent’s not returning their messages.
- The agent adds a commission to contractors’ fees.
- Regular inspections are not taking place.
Finding the right agent
Before you switch, do your research and look for an agent who is:
- Local. Many corporate chains outsource their property management services to out-of-town contractors (although they don’t tell you this when pitching for your custom). Choose a local, independent letting agent instead – they’re best placed to keep a close eye on your property and, if there’s an issue, can be on-site in a jiffy.
- Accessible. Go with an agent who is hands-on and easy to get in touch with – they’ll be far more accountable than a third-party contractor who you’ve never met face to face.
- Committed to using local tradespeople. Local plumbers, electricians, and gas engineers will be more likely to work to a high standard as they have a reputation in the area to protect. Avoid agents who use contractors from further afield and charge commission on contractors’ fees.
What does switching involve?
- Read through the contract you have with your agent and understand your notice period and any other restrictions you need to be aware of. Many landlords find it easiest to switch when a tenancy is ending or up for renewal.
- Serve notice in writing to your letting agent. Instruct your agent to release all tenancy documents – such as electrical and gas safety certificates – to your new agent.
- Instruct your existing letting agent to release the deposit to the new agent.
- Notify your tenant about the change and give them the details of the new agent.
And that’s it! A few simple emails and you can be on the road to a less stressful, more successful landlord/letting agent relationship. Your new letting agent will keep a check to ensure all the right documentation arrives, and you can rest easy.
For more information about our property management services, get in touch with me Janice Molloy, at Parkview Property.
How to Winter-Proof Your Rental Property
We look at how landlords in Ayrshire can make sure their rental investments stand up to the challenges of winter weather.
With winter officially only a few weeks away, the time is now ideal for landlords to take steps to ensure their properties are prepared for whatever December to February serves up.
By putting a winter property maintenance plan in place, you’re setting yourself and your tenants up for a trouble-free winter period.
Begin with boilers – The best time to service a boiler is in September, ahead of it being plunged into constant action in the months that follow. The second-best time to service a boiler is right NOW. By keeping on top of boiler and heating maintenance, you’ll save a lot of money and avoid hassle in the long run.
Remember your radiators – Bleeding your radiators is a simple, yet effective way of ensuring they are working as well as they should be.
Look at lagging – Frozen pipes that burst are the stuff of nightmares for any serious landlord. So, take the time to ensure pipes are wrapped in lagging to reduce the risks of freezing and potentially bursting.
Go to guttering – Don’t wait until the weather turns before you clean out your gutters. Blockages can build up over time and slowly cause unseen damage.
Insulate everywhere – Insulating a loft is an excellent way of keeping the warmth in and the heating bills lower. But don’t forget that even insulating against draughts can be a small way of making a big difference to how warm a property feels.
Fix that fence – The stronger seasonal winds love claiming a poorly maintained fence as one of its victims. So, act now to ensure any weak spots in your fencing are ready to stand up to whatever the winter winds throw at it.
Check it out – If your property is vacant for any sustained period over the winter months, diarise weekly or fortnightly visits to it to keep an eye on things. If you can’t do this, then it’s the kind of thing a good, local letting agent can do for you.
Your rental property is an asset, and having happy tenants is a key part of making the most of it, so take the time and spend the money on creating a safe, comfortable home for them this winter.
And don’t worry if you’re not a Handy Andy or a DIY Diana. At Parkview Property, we have good working relationships with maintenance people who can do all the work for you.
The Pros and Cons of Investing in Property with a Friend
In this two-minute read, we ask if it’s wise to buy a rental property in Ayrshire with a mate.
Purchasing a buy-to-let property with a friend is an appealing prospect – on paper, at least.
But it’s important to carefully weigh up the risks and rewards before taking the plunge.
Here’s a list of the pros and cons of becoming a landlord with a friend.
The pros
- The role of landlord comes with a plethora of responsibilities. Sharing these duties with a trusted friend will lighten the load.
- Your co-investor may have a different skill set to you, meaning you can play to your strengths while they play to theirs.
- Most lenders require larger deposits for buy-to-let mortgages. Splitting your investment means you don’t have to pay as much cash up front.
The cons
- You never really know someone until you’ve gone into business with them. If the two of you disagree on how to manage the property, the friendship could suffer.
- If your tenant falls into arrears, as landlords, you’ll have to stump up the cash. However, if your investor buddy can’t pay their share for whatever reason, you’re liable for the shortfall.
- You might be on the same page as your friend right now, but people’s circumstances change. Further down the line, your friend may decide that they want to sell up when you don’t, or vice versa.
Tips
If you’re still keen to invest with a friend, here’s how to mitigate some of the risks.
Get a good lawyer
You need a legally binding agreement that states:
- How much each party is investing
- The ownership split
- Responsibilities regarding bills and maintenance
- What happens if one or both parties want to sell
- A dispute resolution mechanism should you disagree on an issue
Get a will
In some cases of co-ownership, if one party dies, the property automatically goes to the other person unless otherwise stated in a will.
Don’t feel pressured
If your friend thinks a formal agreement is unnecessary – they may see it as a sign that you don’t trust them – politely, but firmly, pull out of the deal.
Without the right paperwork in place, you risk getting caught up in a protracted and messy dispute later on.
Going ahead based on a wink and a handshake could cost you the friendship and much more if things don’t turn out according to plan.
For more advice on investing in the buy-to-let market, contact me, Janice Molloy at Parkview Property 01292 442888
Why Ayrshire Landlords Could Be Taking Expensive Shortcuts
In this two-minute read, we look at the false economies many landlords in Ayrshire are making regarding their rental properties.
Many of us realise doing a bit of DIY can save you money. But it comes with a caveat that you must know what you’re doing first.
For every successful bit of hallway decorating, there are dozens of tales of lopsided shelves, incorrectly fitted taps, and a whole host of other DIY disasters and fails.
And this risky approach doesn’t just apply to home DIY – we often see it when a landlord tries to do everything themselves.
Here are five of the most common mistakes landlords make when they think about the pennies but take their eyes off the pounds.
- Marketing matters – There’s much more to marketing a rental than simply slapping it on Facebook or Gumtree and hoping for the best. It’s nigh on impossible to achieve a property’s optimum rent by using this approach.
- Poorly referenced tenants – An excellent letting agent will carry out all the proper referencing needed to ensure you get a good, reliable tenant. Skipping this process and ‘going with your gut instinct’ can be hugely expensive further down the line if the tenancy turns troublesome.
- Maintenance mistakes – The most significant error landlords make when it comes to maintenance is not having money set aside in their budget to keep their property in good condition. A general rule of thumb is to put away £100-150 per month towards maintenance and general upkeep.
- Cheap is not cheerful – Many landlords make false economies by scrimping on things like flooring, windows, and taps and fittings, only to have to replace them more quickly than they would have if they invested a little more in the first place.
- Temperamental tradespeople – The nightmare scenario for many landlords. A call comes in on a Sunday evening (usually when you’re on holiday) from a tenant telling you the boiler has packed up. DIY landlords often rely on their own trade contacts in this situation, which can be great but is often not. However, a good letting agency has access to a pool of tried and trusted tradespeople who fix things fast and professionally.
Of course, we understand that you want to get the best possible returns from your rental investment. But experience has taught us that using a letting agent to find tenants and manage your property is money well spent.
We’d be delighted to offer a free review of your rental property/properties and highlight where you can save money but also protect your assets.
Call us on 01292 442888 or email info@parkview-property.co.uk
Beginners Guide to Building A Buy To Let Portfolio
Beginner’s Guide to Building a Buy To Let Property Portfolio in Ayrshire
In this two-minute read, we look at the basics of building your portfolio and how to try and make your investment a sound one.
Building a property portfolio might sound like a great way to build an additional income, but it can be a tricky area to navigate with lots of pros and cons.
Getting started
First things first, where is the cash coming from? Have you already got a property and looking to buy a second? Or maybe you’re tentatively dipping your toes into the rental property market for the first time.
Whether you’re refinancing an existing property, or you’ve won the lottery (fingers crossed!), your initial pot needs to be big enough to cover the deposit (minimum of 25%) and legal costs. This is the minimal starting point when looking to buy additional properties.
Create a property profile
Have a clear idea of the kind of properties you’re looking for. Do you want to renovate and add value, or do you want something that tenants can move into straight away? Sticking to a checklist of requirements will help you stay focused and find a deal that really works for your budget.
Always know your numbers
Money money money… no this isn’t an ABBA song, it’s the core of building your property portfolio. A savvy landlord or property owner needs to know exactly where the money is coming from (or going to) for every step of the process. There’s your deposit, legal costs, stamp duty, renovation costs, rental yield, agency fees etc. It’s basically a never-ending spreadsheet that you need to keep on top of.
Knowing your numbers and carefully planning a budget is the key to successfully growing your portfolio.
Get chatting
Building a property portfolio requires you to build relationships. Call me for a chat or arrange a meeting to tell me what you’re looking for, and your budget. I will keep you in mind when anything suitable comes up. Similarly, my Lettings experience and knowledge regarding the types of tenants attracted to Ayrshire and their property requirements will help shape your initial property searches and buying decisions.
Create a network
Trust is so important when you’re buying property. Make sure you’re working with people you can rely on and that have the relevant experience. This applies to your solicitor, mortgage broker, and your builder (if your purchase needs some TLC).
Once you’ve established these working relationships, next time, hopefully the process will be easier. Personal recommendations from a friend or family member are a great place to start, but never feel like you have to settle for the first professional you meet.
To get started with your buy-to-let property search in Ayrshire, give me a call on 01292 442888.