IMB Blog

Advice for Professional Landlords

A professional landlord is someone who rents out a property for monetary gain, someone who treats Buy to Let as a business; it is their main job. So, anyone who inherits a property or elects to move in with a new partner and rent their home out is deemed a consumer rather than a landlord. This means they are subject to tough affordability criteria.

Are you a Professional Landlord?

Many small landlords would consider themselves even with just one Buy to Let as ‘professional’ in that they operate a slick and well-run operation. They may only have one property but they are well organized. Is it then appropriate to exclude these types of landlords from the realms of professionalism just on the basis of scale?

In reality, there is an assumption amongst regulators that the larger landlords who derive the majority of their earned income from letting out property fall into the realms of operating a letting business. They would then have the scale and through this, the capacity to operate a more professional service. On this basis, it could be perceived as a profession and therefore, considered as a professional landlord.

Current Situation

Recent research indicates that many landlords were reducing the size of their portfolios over the past few years. This isn’t very unexpected. The amateur landlord who saw the opportunity to pick up a property or two to supplement their pension planning a decade or so ago are not as well placed to expand their portfolios today, and so may be tempted to sell-off. However, the number of rented homes has been increasing, which means that while the small-time landlords may be looking to sell, there are greater numbers of professional landlords who are ever so keen to increase the size of their portfolio.

What Are Some Strengths of the Professional Landlord?

A professional landlord is business-focused, and he is like this out of necessity. Most professional landlords have a portfolio of houses for rent. Therefore, they are committed to their job and they try to minimise any potential problems before they even arise. The professional landlord looks for houses that will present them with the fewest problems. Think about the characteristics of the home, is it low rise? Does it allow easier maintenance? Could you get quicker from property to property?

A professional landlord will take a property that they bought and bring every system in the house up to perfect working conditions before they ever let a tenant step into their house. They are usually able to identify things that will go wrong with the house in the near future and replace the item before it breaks. Most of the time, this will result in a new kitchen and bath along with up-to-date plumbing and electrical system. This way, blocked drains, and leaky pipes can be brought to an absolute minimum, which will inevitably lead to happier tenants.

In addition, the fact that you are renting an up-to-date house means that you may be getting a higher rent from it, and a far greater demand, which translates to more tenants to choose from. This normally also translates to a tendency for long-term tenants, as they will have the feeling of being at home, which in turn, makes it easier to get your rent money.

What Are Some Risks of the Professional Landlord?

This type of renting requires the biggest outlay spend. After financing the property, you will need to have more available capital to arrange all the repairs and updates that are needed to get the house in order. This could be anything from a broken dishwasher to a blocked sink, but no matter how small it may seem it is not the duty of the tenant to spend money on fixing it. This will encroach on both your free time and your bank account!

Taxes are also another aspect to be aware of. The exact nature of taxes is complex and regularly updated in government budgets. Generally speaking, it changes on the basis of how much profit you make and your personal circumstances. Landlords must, therefore, keep their eyes on the final profits after tax for a lucrative and stress-free letting experience.

Do you Need Property Letting Agencies?

Many professional landlords are resistant to the idea of using property letting agencies.Onthe face of it is easy to understand why. Who wants to spend money on a service which is not required or is thought not to benefit them? In addition to that, many business owners tremble at the thought of relinquishing control. The relationship between the landlord and these letting agencies can, however, be a mutually beneficial one. It is really important for you to understand what these agencies do.

It is the job of the letting agent to find suitable tenants for the landlord. It sounds very simple but property rental can be complicated by regulations and statutes, and good tenants can take time and effort to find. Unless you are a commercial landlord with a solid and good understanding of contract law and property law it is advisable to employ the services of a professional letting agent.

When prospective tenants express an interest in renting your property, the agent will show them around the place. They would then feed back to you any counter-offers on the rental price or any other areas of negotiation. Remember, they are acting on your behalf as your agent in the process and you should always be very clear about what you will and will not accept.

Naturally, many letting agents offer additional services and you may have to pay more for these so make sure you understand what you are getting for your money at the beginning of the process. Many of the additional services offered can be beneficial to the professional landlord. Examples of such extras include tenant vetting services, rental collection, and lease renewal, inventory checks, repair, and maintenance and cleaning services. As with many things in business it is important to know what things are likely to cost before you commit.

With a little homework and a clear understanding of what you, as a professional landlord, need and expect from a letting agent the relationship can work well and be mutually beneficial.

In Conclusion

Being a landlord is not for everybody, especially a professional landlord. It requires perseverance and good control over your properties. With the appropriate financial prudence and a solid awareness of all the factors involved, there is no reason why it cannot be a highly profitable journey for those willing to take the leap.

Independent Mortgage Brokers are experts on bad credit remortgage, Buy to Let mortgages, and many more. Contact us if you are looking for a remortgage advisor or simply want valuable online mortgage advice.

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Based on our research, the content contained in this article is accurate as of most recent time of writing. Lender criteria and policies change regularly so speak to one of our Independent Mortgage Brokers to confirm the most accurate up to date information. The information on the site is not tailored advice to each individual reader, and as such does not constitute financial advice. All advisers working for or with Independent Mortgage Brokers are fully qualified to provide mortgage advice and authorised and regulated by the Financial Conduct Authority. All our independent Mortgage Brokers will offer advice specific to you and your needs and circumstances. Some types of buy to let mortgages are not regulated by the FCA. Think carefully before securing other debts against your home. As a mortgage is secured against your home, it may be repossessed if you do not keep up with repayments on your mortgage. Equity released from your home will also be secured against it.

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