Effective potential tenant referencing

Selecting the right tenant can make or break your experience as a new landlord. While it may be tempting to rent to the first person who shows interest, it is important to be patient and follow a thorough referencing process. We recommend investigating: 

• Credit checks: non-payment is a top concern among landlords. Performing a credit check can offer assurance regarding tenant financial reliability, or reveal any red flags related to past behaviour. 
• Landlord references: speaking with previous landlords can provide insight into the applicant’s historic behaviour as a tenant. Asking questions such as was the tenant was ever late paying rent, or whether the landlord would rent to them again, will provide a reliable indication to the kind of tenant they will be. 
• Income/affordability checks: Ensuring that a potential tenant can comfortably afford the rent is a crucial step in the referencing process.  Generally, tenants should have a cross income that is at least 3 times the monthly rent to meet affordability standards.

Understanding a landlord’s legal obligations

Landlords are required to fulfil several legal responsibilities to ensure the safety of tenants, and staying informed on local landlord-tenant laws is crucial to sustaining compliance and avoiding legal disputes. Key legal obligations may include: 

• Health and safety standards: as a landlord, you are required to maintain safe living conditions. This includes regular gas, electric, and fire safety checks. 

• Tenant deposit protection: for assured short hold tenancies (AST), you must protect tenancy deposits with a UK government-approved protection scheme.  

• Right-to-Rent: it is legally required landlords of private rental accommodation in England carry out Right to Rent checks for new tenancy agreements. A Right to Rent check determines whether tenants aged 18+ have the right to live in the UK legally. 

Setting expectations with a tenancy agreement 

An Assured Shorthold Tenancy Agreement (AST) exists to protect both you, as the landlord, and tenant, setting out the rights and responsibilities of your rental relationship. A well-drafted agreement reduces misunderstandings and can be invaluable in case of a dispute. Your tenancy agreement should include: 

• Rent payment: specify the amount, due date, and accepted payment methods. 

• Maintenance responsibilities: clarify what you, as the landlord, will handle and what the tenant is responsible for, like basic upkeep and repair work. 

• Property rules: outline any restrictions, such as pet policies or subletting. 

Schedule regular property inspections 

Performing regular inspections will help ensure your property is well-maintained and can allow you to catch minor issues before they turn into costly repairs, whilst showing tenants that you are proactive and available to address their concerns. We recommend the following schedule, providing adequate notice to tenants as legally required: 

• After move-in: an initial inspection a few months (e.g. month 2) after your tenant has moved in.  

• Routine checks: bi-annual check-ins (e.g., months 6 and 12) to encourage ongoing maintenance. 

• Move-out inspection: a final walk-through after the tenant moves out to assess any potential damage and inform decisions on the security deposit. 

Budgeting for maintenance and expenses 

As a landlord, your income will come from two potential income streams: rent and capital growth of your property’s value going up. The property market is fluid, so it is possible to lose money if your outgoings exceed rental yield, your property is vacant, or the value goes down.  

Budgeting for initial fees, daily running and regular maintenance costs helps reduce stress. Additionally, performing routine maintenance helps keep your property in good condition, making it more appealing to prospective tenants. Common expenses to prepare for will include: 

• Property purchase costs: stamp duty, valuation and surveys, legal costs, mortgage arrangement fees, and more.  

• Day-to-day costs: letting agent’s fees, mortgage interest, annual safety checks, redecorating, emergency repairs, appliance replacements.  

Conclusion 

Renting a property for the first time comes with responsibilities, but it can be a rewarding experience when approached with expertise and effective preparation. By following these five tips—referencing tenants, understanding legal obligations, drafting a clear agreement, regular property inspections, and budgeting for maintenance and expenses—you will be well on your way to a smooth start as a first-time landlord.  

At Watsons, we provide a complete service encompassing all aspects of residential lettings and property management, from rental valuations to property inspections and legislation change updates. For further advice and tailored expertise, do not hesitate to contact our Lettings Team today.