top tips when viewing potential properties

[Christopher Cox]

Hi Guys,

 

I think I'm almost ready to start shopping around for a buy to let property.

 

Looking for any tips? does anyone have anything like a check list that they use with questions etc.

 

I have found a property which has tenants in situ, does anyone have any specifics to watch out for in this example? any tips on the questions I should be asking when this type of arrangement occurs?

 

Kind regards

 

Chris

 

p.s. Hopefully soon I can start helping the property hub members with my acquired and hands on knowledge soon

[Silvio Orlando]

Hi Chris,

 

I emailed a list of questions for a vendor months ago - I think he thought I was way too fussy and i scared him off!  Here's a cut'n'paste, pick and choose what you like here and also hopefully they'll make you think of other questions for your specific case.

 

- Have the present tenants ever been or are currently in rent arrears?
- Can the vendor disclose whether he expects any deductions are to be made from the current tenants?
- Do the current tenants have guarantors?
- How old is the boiler and when was it last serviced?
- When does the current deal end and what is the term for the new deal?
- Have there ever been any insurance claims on the property?
- Has the property ever suffered from it been treated for damp, if so do they have warranties for the works?
- Has there been or are there any disputes with neighbours?

 

Misc

- Has an asbestos report ever been done
- Has there ever been a history of pests at the house
- Out of the curiosity, why is the vendor selling a house!

 

Documentation
We will need to see copies if they exist of:
- Inventory 
- Inventory of keys
- tenancy agreements in full
- Deposits in TDS
- Landlord insurance
- Gas safety certificate
- EPC certificate
- Fire maintenance agreement
- 5 year electrical inspection
- HMO license
- PAT testing

 

Good luck!

[Christopher Cox]

That's great! Thanks Silv. I have added these to my list, would you ask all these question even before offering or after?

 

Also you mention keys, a thought just come to my mined regarding changing locks.... would this be a normal thing to do?

[Silvio Orlando]

Hey Chris,

 

I asked these questions after an offer was accepted.  I might be wrong, but at the time I thought that if any of the answers were unsatisfactory maybe I had extra negotiating power post-survey!

 

Regarding locks... personally I  would always change the front door locks to a security lock, that way my tenants can't duplicate keys.  Avoid Banham like the plague, so expensive and bureaucratic!  I've found Multi-T-Lock to be reasonably prices and secure, and only you can duplicate them.

[Tim Wragby]

Chris Hi,

 

Good question and Silv has done a great job - as always from such comprehensive responses pick and choose the bits that fit your needs.

 

From your original post the viewing and purchase of a tenanted property v an empty property have some very different pespectives to work to when weighing up the value:

 

Empty Property:

You have the chance to look in all the spaces, view the structure without furniture and belongings in situ.  A lot can be hidden by clutter.

It is easier to see where there may be problems and decide on what you want to replace/refurbish before tenants are put in place.

Make your offer with the general state of the property in mind - take into account essential maintenance that is outstanding

You get to:

Choose who the tenants are, 

Ensure a proper reference check is carried out

Set up a tenancy agreement etc to your requirements

Ensure the legals are properly carried out - Gas checks, Prescribed Information for the deposit is done legally

Make sure the proeprty is to the standard that you want to let it at and to give you the best chance of attracting a good tenant

 

Tenanted Property 

Guaranteed to start earning income from the outset

Make sure your solicitor works out the pro-rata daily rent the vendor needs to pass on to you for the sale if you do not buy it on rent day.

You don't need to find tenants or pay for a tenant finding service to an agent as they are already in situ

 

Things to check on a tenanted property:

 

Tenants:

How long have the tenants be at the property?

What are their future plans?

What reference checking was done on them? - Did they need a guarantor - if so what checks were done on them too?

Have there been any rental gaps? - is there a good reason & how quickly was it caught up?

Where is the deposit held?

Has there been proper prescribed information served on the tenants? - ask for copies of what was served

What AST was signed - is it from a recognised organisation or is it cobbled together

What timescale was put on the contract?

 

Meet with the tenants - find out a bit about them and show some interest in their situation - what are their plans

Ask them if the landlord has been a good landlord- it will give you an idea of the landlord's attitude to tenants and the property

Ask the tenants what maintenance issues they think are unresolved - this will give you an insiders view + their attitude to being tenants - if they go off on one you might not want them as tenants + there may be issues with the house that ring alarm bells

Ask to see a copy of the inventory and see how the property has survived the tenancy - are there likely to be deposit issues that are carried forward into new ownership

 

Property:

It is hard to see a property with a tenants belongings in the way.  It is awkward rootling around in cupboards etc or under beds

Look for tell-tales signs of wear and tear

Condensation and mildew build up in corners & behind fittings

State of electrics - when was the last electrical survey?

What state is the general decor?  - will it need a repaint in the near future

What state are the floor coverings?  - will carpets or vinyl floors etc need replacing in near future

Are the doors in good order?  - Lock changes depend on the area the property is - where I am there is not a culture of lock changes each tenancy but in large cities I can see that this would be advisable.  I would get 2 sets of locks and rotate them - it is very unlikely that this would be compromised

Boiler and CH - how old is the boiler and when was it last serviced? If it is older than 10 years it will be in the end of expected life cycle but if well maintained could last another 10 but this is not the norm!

What smoke detectors are in place - how old are they and have they been maintained and are they working now? - this again gives a sense of the general maintenance of the property.

Look at the full EPC - this can tell you a lot - It will give an indication of the boiler's age and efficiency, What insulation is in place etc - remember that in 18 months or so it will be illegal to rent F & G rated properties so energy efficiency work will be a legal requirement

 

Property Management

Has the property been self-managed by the landlord

Has it been managed by an agent?  Have they done their job well & what are they offering you to continue their services

Remember they have no right to carry on - the agreement was with the current landlord not you

Do you want to use them?  Are they good agents and come well recommended?

Mystery shop the agents and see what you think of the way they treat tenants and landlords while you are at the office

 

Whoever has been managing the property you will need to see copies of:

EPC

Prescribed Information

Gas Safety Cert (if on gas)

Electrical Safety Cert (if done)

AST

Inventory

 

For your first property my personal opinion is that you are taking an increased risk by taking on a tenanted property as you are taking on a lot of uncertainty regarding the management of the tenants and a lot can be hidden from easy view.  Recent changes to consumer protection should improve things a bit but it is still easy for all sorts of maintenance issues to come to light when too late to argue over.  Not having control over the tenants selection is also another potential can of worms and it can be very costly if misled or the paperwork you inherit does not stack up or is not enforceable.  I would rather start from scratch with a blank canvas and take responsibility from the outset.  For most places the letting market is pretty buoyant and a good property rarely stays empty for long

That said - it can and does work successfully - so I am possibly a bit pessimistic.

This is not a comprehensive list but hopefully some food for thought

[Christopher Cox]

This is fantastic information Tim/Silv, I really do appreciate your time providing your feedback, from the above advice I think I will take on my first property without tenants, get some experience then open that door to taking on other peoples tenants later if need be.

 

Your replies show that there is still much for me to read and learn! like what on earth a Prescribed Information is

[Tim Wragby]

Chris

 

You are very welcome - happy to assist.

 

As you say there is a whole raft of stuff that ought to be considered when letting and it is far from the unregulated wild west that is so often portrayed by some parts of the media and certain campaigning organisations with a significant political agenda.  You will often hear phrases like there are over 100 pieces of legislation that need to be adhered to for renting in the private sector - one day I will look it up when I am laid up in bed with some nasty flu bug or similar!

 

I have attached a brief guide to letting I give to my newbie landlords which is work in progress but covers a reasonable range of a "starter for 10" stuff that you may find helpful - if not discard with no hard feelings.

 

With regards to your specific question about what is "Prescribed Information" it is the detailed information that a landlord is to give to a tenant if they select to take a deposit/ bond off a tenant.  It is so labelled because it is a requirement  laid out in statute under:

The Housing (Tenancy Deposits)(Prescribed Information) Order 2007 found at http://www.legislation.gov.uk/uksi/2007/797/made and lists precisely the information you are expected to supply to a tenant regarding the location and governance of their deposit. It is a follow on to the legislation laid down in the 2004 Housing Act sections 213(5) and (10) and 250(2)(   

As landlords and agents are increasingly discovering to their cos,t failure to comply can be costly and also invalidate any Section 21 certificates that most landlords use if they are trying to terminate the tenancy of some unsatisfactory tenants.  If the Court find you guilty of not complying their stock response is to order the return of deposit + a 3x deposit fine!!

I use the custodial scheme run by the DPS (Deposit Protection Service) and they provide a proforma and guidance - you do need to follow this to the letter inc seeming pedantry like - the Terms and Conditions of the scheme must be affixed to the tenants copy and that the PI must be signed by the landlord and not the tenant.  Depending on the court and the skill of the prosecuting QC  these could be critical issues.  Fortunately this is still a very rare event and most tenancies end without issue or problem but for the sake of a bit of admin it could be costly.  I wouldn't mind betting that well over 50% of self operating landlords and possibly similar numbers of agents get this wrong - but ultimately it is the landlord who would carry the wrap as the agent only acts on behalf of the landlord. You would have to go to the ombudsman or similar to have it out with the agent that did not do it right!!  I  have also attached what we give our tenants + we also get them to sign for having received it so that our rear ends are covered

This area could be fertile grounds for an ambulance chasing solicitor to get tenants to contest their deposits for a fixed fee - and is probably only a matter of time.

 

My advice to the ab initio landlord is to find a good & knowledgable agent who can guide and steer you through your first tenancy or two before going it alone.  Many do try and save money by going it alone but this does have costly consequences and may not be an option in the near furture.  It will be law in Wales very shortly to be properly licensed as a landlord or use a licensed letting agent or face stringent penalties- Scotland already has an interim version of this and is likely to follow Wales' example and if Labour get into power next year - watch this space!!!

When/if you do go it alone join an organisation like the National Landlords Assoc (NLA) or Residential Landlords Assoc (RLA) who can provide excellent guidance to members.  Or use good forums like this to air your issues - some are better than others as is the advice metered out.  Not everyone is properly monitored so advice can be mixed at best.

Landlord Letting Guide v7.doc

2 - DPS PRESCRIBED INFORMATION.doc

3 - DPS Tenant Guide-custodial.pdf

4 - DPS Ts & Cs-custodial.pdf