4 proven tips to re-let your BTL Property at virtually NIL cost and minimum risk
I was a little distraught when the tenants of one of my rental properties emailed me six weeks before the end of their tenancy to let me know that they would be leaving.
They had been really great tenants, always paying the rent on time and keeping the property in pristine condition. But, of course, a good thing never lasts forever.
So I had to find new tenants as soon as possible to avoid the dreaded “void period”, which is neither good for the soul nor the bank balance.
When I became a buy-to-let landlord a few years ago, I employed a managing agent to handle everything for me. But because I’m a bit of a control freak, this didn’t really work out well for me.
The letting agent always seemed to choose short-term tenants, so I ended up paying the re-letting fee far too regularly. The bills I got for repairs always seemed too high as well.
More importantly, I much prefer to meet with prospective tenants to find out whether we are likely to get along. An agent will often have less of a vested interest in finding the perfect tenant than I do!
So after a couple of years I parted company with the letting agent and started doing everything myself. By developing my own system, I was certain that I would achieve that much sought-after ‘continuous let’. Besides, if I didn’t, I’d only have myself to blame.
I actually did succeed, so I thought I’d share the four main planks of my system to let you give it a go yourself – and hopefully do as well as I did.
1. Find a cheap way to get your property online
Firstly, it’s important to find a really cheap way to get your property on to all the main property portals such as Rightmove, Zoopla and so on. After a lot of researching I found www.housesimple.co.uk, which gives you the first 7 days free and then charges you the princely sum of £9 a week until your property is let – or you tell them to take the advert down.
So to achieve my ‘Nil Cost’ objective, all I had to do was to find a suitable tenant within a week of submitting my property.
2. Don’t overprice the monthly rent
If you try to charge above the market rent, you will get fewer applicants and substantially decrease your chances of quickly finding a great tenant.
I have been amazed at how much difference it makes when you add just £25 per month onto the asking rent. If you get it even slightly wrong, you’ll end up with viewers who are looking for more than you are offering. That’s both frustrating and time consuming.
When I tried this with a previous let it took me a month to find a tenant and it not only cost me a month’s rent (£875), but also a month’s Council Tax and all the utility bills. This is cost, hassle and risk you can do without. Bear in mind that an extra £25 monthly rent will only give you another £300 a year. That’s a lot less than a void month will cost you.
If you set the rent more fairly you’ll get inundated with eager viewers, and this time I received over 20 applicants in about five days.
3. Vet applicants thoroughly BEFORE agreeing to show them round.
It’s a complete waste of time showing your property to every applicant, and your existing tenants won’t thank you if you show an endless stream of people around.
So how do you select the best potential tenants without the process becoming too long and too personal?
What I did was to register for a free landlords’ account with www.landlordreferencing.co.uk/join/. This gives you free access to a DIY pre-application form system. So, whenever you get a new applicant, you go into the system and enter their name, date of birth and email address into the online form. The applicant then gets sent a link to a brief pre-application form, which they have to complete.
Once they have filled in all the details and submitted the form, you get an email notification, allowing you to log in and take a look at their detailed financial and personal circumstances.
This system is great at filtering out people with an attitude as well. Out of 21 applicants I had one refuse to complete the form on principle and a small number of others went very quiet. Needless to say, they didn’t get to view my property.
After about three days I had accumulated a small number of very cooperative potential tenants, including a professional couple of two partners who were employed full time on good incomes.
In the end this application was all that I needed and I only had to do one viewing. If the pictures and description that you place on Housesimple are good, comprehensive and accurate then serious applicants will probably love the property when you show then round.
4. Reference thoroughly and only take tenants who qualify for Rent Guarantee Insurance (RGI)
RGI costs about £100 a year and ensures that if a tenant stops paying their rent for any reason then you get paid an equivalent sum by the insurance company. It’s a complete no brainer and removes most of the risk. RGI not only pays out for any unpaid rent, it usually pays all the costs needed to evict tenants who fail to leave or keep to the terms of your tenancy agreement. It may even pay for repairs if your tenants decide to wage a vendetta and trash your lovely property before they leave.
If you follow my system, your applicants’ details will already be on the landlordreferencing site, so all you do is call the company and ask them to complete a full serviced reference with rent guarantee. The referencing company will already know from the initial application whether the chosen applicant’s salary is likely to qualify them for the rent guarantee; so if the referencing checks out well, you are pretty much home and dry.
One thing that I must point out, however, is that when it comes to the legal side you must get all your paperwork in order, register the deposit, do a full written inventory, hand the tenants all the information they are entitled to AND GET THEM TO SIGN TO SAY THEY HAVE RECEIVED IT. If you don’t do this properly, the RGI Company will just use it as an excuse to reject any claim.
A good source that will help you get all the paperwork done correctly is the Residential Landlords Association (RLA) www.rla.org.uk, which not only explains in great detail what you need to do, but for a small fee also provides all the properly-worded templates you need, such as up-to-date Tenancy Agreements.
Anyway, on the assumption that you charge an administration fee of about £75 per tenant for the work involved in carrying out the referencing process (that’s probably under the marked-up rate charged by most agents), this will cover the cost of both the referencing and the rent guarantee.
So, with the benefit of my system and with a little time spent applying it, you should hopefully be able to achieve a continuous let at almost zero cost – and put in place a rent guarantee for the whole 12 months of the tenancy to minimise your risk.
As the A-Team’s Hannibal Smith used to say, “I love it when a plan comes together!”
Photo credit: geograph.ie