We have all probably had to deal with a landlord at one point. We are all familiar with the concept and many have had thoughts about becoming one. With the UK shifting towards a rental property market with rising housing costs, it’s an ideal time to become a private landlord. Private renting is now the norm in the UK and Birmingham. Becoming a private landlord can be a commitment, but one estate agents in Birmingham can help manage in your spare time.
What is a Private Landlord and What Are Estate Agents in Birmingham
This term refers to a property owner, rather than the state, council or housing association. This means it excludes council homes or estates. A private landlord, therefore, is someone who owns a property for and rents it out for monetary reasons rather than living. They often fall into a few distinct categories:
- A company that owns lots of properties
- A person or family who owns one or more properties
- A charity or group who rent to vulnerable demographics
Most of the UK will be dealing with the top two unless they are doing it on someone else’s behalf. Of these landlords, there are professional landlords and accidental landlords. Professional are those who have multiple properties and are often companies or people who treat their properties as a business. Accidental landlords usually only have the one property that they acquired through inheritance or purchased on a one-off and take a much more casual approach.
Visibility of these properties can vary, sometimes a private landlord with just one property may decide to just market it independently. Most, however, choose a letting or estate agency, for example, a Birmingham estate agent. There, the agency will list the properties in-house, online and other more traditional methods such as signs outside the property or adverts in the local papers or shops.
Why Become a Private Landlord Through an Estate Agent in Birmingham
So now you know why being a landlord is good, why should you even let an estate agent in Birmingham help you become one? There a load of perks to being a landlord besides the obvious monetary value. 1 in 5 families now rent a property rather than own one so there is a big market to go for.
Firstly there’s the income that it brings in, it’s undoubtedly the main reason to become a landlord. Every month you’ll be receiving a nice chunk of rent money from the tenants, providing they pay on time. With tenants paying record sums of money for rents, it’s really the time to take advantage. Usually, this rent money is more than enough to cover a mortgage if you haven’t been left the house outright. This allows you to let the property sit and gain value, or even pocket a bit of money from rent. If you own the property outright then this money can almost all be saved for yourself, with a small amount every month to dedicate to any emergency upkeep. With the help of an estate agent managing your property and tenants, you’ll just see that money rolling in with little effort.
Taxation is also set up to encourage people to become landlords through some attractive deductions. This is because prospective landlords may be put off the fact they’re still taxed on rental income alongside higher interest rate son buy-to-let mortgages. The tax deductions can include expenses for:
- Replacing damaged furniture
- Replacing water pipes and disposal duct
- Buildings and contents insurance
- Accounting processes
- Cleaning and gardening
- Professional services
- Depreciation in the form of wear and tear (usually around 10% of the gross rental income)
Lastly one of the benefits is that it provides longterm security and in a way, enjoyment. Once the mortgage payments are gone, all the money can be used to save for things such as a pension or in case of a ‘rainy day.’ The property is also yours, allowing you to use it as a secondary property if it’s unrented or you have an agreement with tenants. Being a landlord is like running your own business, where you are calling the shots as to whether to sell it. This can be very rewarding to manage your very own piece of property.
Becoming a Private Landlord Through Estate Agents in Birmingham
Now that you’ve weighed up the pros and cons of being a landlord, you’ve decided to go ahead with it. You now need to know all the things you need to prepare. Firstly, if your house isn’t owned outright and you’re paying a mortgage, you must know if you have a buy-to-let mortgage. If you don’t and you still rent your property this is mortgage fraud. So if you’re on a different mortgage you’ll need to talk to a provider. Affitto, an estate agent in Birmingham, will be able to provide you with free advice on how to get this rolling.
Next, you’ll need to make sure the property is properly insured. There’s no legal obligation to take out an insurance plan but it never hurts. The thing you need to look out for is the type of plan. Regular insurance policies won’t cover you for rental activities. Many mortgage providers will require you to take out an insurance plan before you take on tenants.
Depending on the age of the property, you may wish to do some renovation work. This can raise the value of the property. There are also some strict codes you must adhere to be allowed to put it on the rental market. These codes include things like fire safety precautions, electrical upgrades and more. Affitto Birmingham estate agents can easily provide you with expert advice on how to get your property up to scratch if you’re unsure.
Now you need to ask yourself a few questions on how you want to rent the property, the target audience and furnished or unfurnished. For example, if you are targeting students for a house share, a furnished property is an absolute must. There are some obvious pros and cons to this, like upkeep of furniture, but if you want to target these kinds of demographics it is something to consider. This is where the tax breaks for expenses come in handy. At the very least, tenants expect and want appliances included such as washing machines.
If you’re going for families, being unfurnished might be a more attractive offer for them as the rent can be cheaper and they can just use their existing things. One other thing when looking at families is whether you will allow pets or not, pets are not a protected characteristic so it is legal to discriminate against tenants who wish to bring pets if you wish. Estate agents in Birmingham can help guide you as to how best to get your property ready for the clients you want and they will handle all the marketing efforts for you.
Finally, you need to work out your budget for management and setting fees. There is no hard and fast rule for budgeting for property upkeep, but a rule of thumb is around 10% of the monthly rent. It is recommended to go above this to keep your property attracting the most reliable tenants. This needs to be taken into account alongside any mortgage payments, insurance, tax and any potential void period. Affitto can help you with the process, providing expert advice on where to focus your money. They will be able to help set a realistic rent fee for tenants due to their expertise as estate agents in Birmingham.