7 steps to buy-to-let success
Being a successful landlord is more than just owning property and renting it out. It requires a combination of legal knowledge, financial acumen, and strong communication skills to make sure that your business is both profitable and provides a safe and secure home for your tenants. And, with the impending impact of the Renters’ Rights Bill and many landlords and tenants affected by the rising cost of living, you need to be adaptable, continuously learning and adjusting to new regulations and market conditions.
Managing a rental property successfully involves staying on top of a wide range of responsibilities. From legal compliance to tenant relationships, the stakes are high. Mistakes can lead to serious financial or legal consequences and financial penalties. Yet, being a great landlord goes beyond meeting the minimum requirements. It’s about providing a high standard of service, maintaining your property in excellent condition, and creating a healthy and positive environment for your tenants.
In this article, NRLA insurance partner, Total Landlord, explores the seven essential steps that will guide you towards becoming a better landlord and running a successful rental business.
1. Choose the right investment property
The foundation of becoming a successful landlord begins with selecting the right property. A buy to let investment is a business decision, so before purchasing a property, develop a clear business plan. Determine your financial goals, how much rental income you need, and the type of tenants you want to attract.
Seek advice from a range of professionals to help inform your decision. This could include a financial advisor, mortgage broker, property tax expert, and local letting agents. Each expert will help make sure that your investment aligns with your financial objectives.
Once your team is in place, choose a property in a location that will generate a strong rental return and is likely to appreciate in value. It’s important to understand market trends, future developments in the area, and local demand for rental housing. Be sure to research thoroughly before making your investment. Our ‘Ultimate guide to buy to let property investment’ outlines some of the key factors to consider. The guide covers whether buy to let is still a good investment, how to create a buy to let investment strategy, and who to secure help from to start investing in property.
2. Manage your finances and plan for the future
Owning a rental property is not a passive investment. It requires continual financial management and future planning. A successful landlord stays on top of cash flow, maintenance costs, and long-term investment returns. Budgeting for unexpected expenses, such as emergency repairs, is essential to prevent financial strain.
Regularly analyse your rental property’s financial performance. Key performance indicators (KPIs) like net yield and return on investment will help you track whether your property is profitable. Also, keep up with any potential tax liabilities, such as income tax and capital gains tax, so you can plan accordingly. See our tax guide for UK landlords for more information.
Manage rent increases
Being proactive with rent increases is also important. Incremental rent hikes each year help protect your profit margins against inflation and prevent tenants from facing sudden, large increases after many years. Transparent communication with tenants about rent increases will also help you maintain good relationships. Our article explains how to legally increase the rent to align with the market level.
Landlords should be aware that under proposals in the Renters’ Rights Bill rent increases will be limited to once a year in line with market rates, and landlords will need to give two months’ notice of any change. The Bill will also end the practice of rental bidding by prohibiting landlords and agents from asking for or accepting offers above the advertised rent. Landlords and agents will be required to publish an asking rent for their property, and it will be illegal to accept offers made above this rate.
It's also important to have a plan for dealing with late rent payments. If the rent is late, take action straight away and find out why your tenant has not paid on time. That way you can decide whether it’s a short-term blip, in which case you might be able to agree a payment plan, or a longer-term issue which may mean they are unable to afford to stay in the property. If this is the case and you are unable to come a reasonable agreement to end the tenancy, mediation, which is offered by NRLA partner, the Property Redress Scheme’s mediation service, is a good first step. For more information and guidance, see our article, ‘What to do if your tenant can’t pay the rent and falls into arrears’.
3. Keep up to date with regulatory changes
As a landlord, you need to navigate a complex legal landscape, with over 400 different regulations governing rental properties in the UK alone. This will be particularly important over the coming months as the provisions in the Renters’ Rights Bill start to come into force, for example with the abolition of Section 21 anticipated to potentially be as early as summer 2025.
There are also likely to be changes to energy efficiency requirements for landlords. The Labour Government unveiled at its September 2024 conference plans for all rented properties to meet a minimum energy performance certificate (EPC) rating of a least C by 2030. The plan reverses previous government decisions that scrapped stricter EPC regulations. Under proposed regulations, which will be subject to a consultation, all rental properties, both private and social, will be required to achieve decent energy efficiency standards. Currently, many homes are rated below the minimum E standard.
It’s vital to keep up, and to make sure your property complies with the latest requirements. Some key areas of compliance include fire safety regulations, energy efficiency standards, and tenant rights.
Failure to meet legal obligations, such as landlord safety certifications, can lead to fines or other penalties. Our comprehensive guide to landlord legislation contains lots of useful information.
In addition to national regulations, local councils may impose additional licensing or safety rules. Always check with your local authority to make sure you meet any specific requirements for your rental area.
We recommend that you subscribe to LandlordZONE, our news partner, to receive the latest news, blogs and podcasts from across the property industry direct to your inbox. You can also visit Total Landlord’s Knowledge Centre for a comprehensive library of guides and articles. And, of course, join a landlord association such as the NRLA.
4. Find and retain good tenants
A great tenant is one who pays rent on time, takes care of the property, and remains for an extended period. To attract these types of tenants, market your property effectively and make sure it appeals to your target audience.
When tenants express interest, make yourself available for viewings and answer any questions they may have. It’s essential to assess potential tenants during the viewing process. Good communication from the outset sets the tone for a positive landlord-tenant relationship.
Conduct thorough reference checks to make sure tenants have a history of reliability. We recommend a four-point check, which includes:
- Tenant identification: Obtain valid identification from the tenant, such as a passport or driver’s licence with a clear photo.
- Proof of residency: Request a recent utility bill or bank statement to verify their current address.
- Credit check: Run a credit check to make sure the tenant has no County Court Judgments (CCJs) or bankruptcies and to confirm their residency.
- Employment verification: Secure a reference from their employer on company letterhead, confirming the tenant’s permanent employment and that their salary is at least 2.5 times the rent amount.
While Total Landlord insurance does cover malicious damage as well as accidental damage, you will need to provide evidence that you carried out a robust tenant referencing check.
Our Premier policy includes cover for malicious damage caused by tenants or their guests, along with compensation for lost rent during repairs. However, for any claim to be approved, you must demonstrate that you took all necessary steps to prevent the damage. This includes proving that your tenant underwent a thorough reference check and that you conducted regular property inspections.
Our NRLA guide to tenant referencing includes more detailed information on how to carry out a thorough tenant referencing check.
5. Start the tenancy on the right foot
A smooth start to the tenancy helps set a positive tone for the landlord-tenant relationship.
Provide a welcome pack
Providing a welcome pack with essential documents such as the tenancy agreement, a copy of the inventory, and appliance manuals helps tenants feel comfortable in their new home. You may also want to include local information like bus timetables and restaurant recommendations to make them feel at home. Our article on what to include in a tenant welcome pack contains a useful downloadable template.
Make sure that tenants are aware of how to contact you for repairs or queries. Let them know how quickly you can respond and set expectations for property inspections. This level of communication shows tenants that you are a responsible landlord who cares about their wellbeing.
Protect your tenant’s deposit
Make sure your tenant’s deposit is protected in a government-approved scheme, such as mydeposits. This is a legal requirement and provides peace of mind for both parties in case of any disputes at the end of the tenancy.
A thorough and well-documented check-in inventory is essential to safeguard the interests of both the tenant and landlord from the outset. It’s important to be able to compare high-quality check-in and check-out reports to make sure there is clarity at the end of the tenancy over the extent to which any deterioration is the tenant’s responsibility. By taking a deposit and protecting it correctly, the landlord is safeguarded against damage and the tenant can feel confident that only fair claims will be made if the property isn’t returned in the same condition and cleanliness as when they moved in.
Read our NRLA guide to inventories for landlords for more detailed information on best practice when it comes to inventories.
Get the tenancy agreement right
While having a written tenancy agreement isn’t currently legally required in England, it's highly advisable for landlords. A written contract clarifies the terms of the tenancy, protecting both parties in case of disputes and often also satisfying the requirements of landlord insurance providers and mortgage lenders. A professional agreement also enhances your reputation as a landlord.
Creating a tenancy agreement from scratch can be daunting, so consider using the Government’s model tenancy agreement. Key elements to include are:
- Contact details for both parties
- Monthly rent, due date, and payment account
- Deposit amount and protection details
- Bills covered by the landlord versus those paid by the tenant
- Conditions for early termination of the tenancy
- Frequency of inspections and notice required
You should also include anything specific to your tenancy, such as how often you expect the tenant to mow the lawn, and any rules regarding pets or smoking in the property, for example. The NRLA has produced a number of tenancy agreements for members to either use or use as guidance for creating your own.
Making sure you have a legally sound tenancy agreement is essential for a successful tenancy. It should clearly define the rights and responsibilities of both parties, including any clauses specific to your property. At Landlord Action we have a team of legal professionals who can personalise your tenancy agreement and make sure that every part of the contract is legally enforceable and doesn’t violate your tenant’s rights. Making this relatively small investment at the start should go a long way to helping avoid disputes, both during and at the end of the tenancy.
6. Maintain the property to a high standard
Maintaining and keeping your rental property in a good state of repair is not only your legal obligation but also good business practice. Well-maintained properties tend to retain their value and attract long-term tenants who appreciate a well-kept home. Create a long-term maintenance plan that includes budgeting for repairs and upgrades over the next five to ten years. See our guide to landlords’ and tenants’ maintenance responsibilities for more information.
Carry out periodic inspections
Regular inspections are crucial for identifying minor issues before they become major problems. We recommend carrying out an inspection within a month of the tenant moving in and then every six months. Remember that you need to give your tenants at least 24 hours’ written notice of any visit and obtain their permission to enter the property. By staying proactive, you can make sure that the property remains in good condition and avoid costly repairs later. Read mydeposits NRLA guide to periodic property inspections for more detailed guidance.
Respond to tenant requests and repairs
It’s important to always be responsive to tenant requests and repairs. Fast, effective communication with tenants regarding maintenance issues will help build trust and create a positive rental experience.
Landlords should also be aware that the Government is planning to introduce Awaab’s Law and the Decent Homes Standard to the private rented sector. This will mean that landlords must fix serious health hazards like dampness or mould within a set timeframe or face penalties.
Make sure the property is secure
Securing a rental property is a shared responsibility between landlords and tenants. While tenants must lock doors and windows, it’s your duty to implement adequate security measures to protect both your tenants and your investment.
At Total Landlord, we have observed that break-in insurance claims tend to rise in summer and winter, emphasising the need for year-round deterrence. Effective security measures include:
- Installing outdoor motion sensor lights
- Trimming shrubs near entry points to eliminate hiding spots
- Maintaining fences and walls in good condition
- Using gravel driveways and paths to make sure intruders can be heard
Winter poses heightened burglary risks due to fewer daylight hours and holiday valuables, so it’s wise to remind tenants to be particularly vigilant during this season.
Read our guide to securing your rental property for more information.
7. Protect your investment with landlord insurance
Even though landlord insurance is not legally required unless specified by your mortgage lender, it is essential to protect your investment. Standard homeowner insurance does not cover rental properties, so it’s important to have specialised landlord insurance. This can protect you from various risks, including property damage, theft, or liability if a tenant is injured on your property.
Make sure that your insurance policy provides adequate coverage for both the property and potential rental income loss in case of damage. Remind your tenants that your insurance does not cover their personal belongings, and that they should consider purchasing contents insurance for added protection.
Check out our guide for more information on selecting the right landlord insurance for your needs. If you want to discuss suitable coverage, feel free to contact the Total Landlord team for a free, no-obligation quote.
Landlord insurance provides valuable protection for both landlords and their properties. To avoid jeopardising any claims on your policy, it’s essential to conduct thorough reference checks on tenants, address repairs swiftly, and perform regular inspections and maintenance to maximise the safety of your tenants and your peace of mind.
Becoming a successful landlord takes time, effort, and a willingness to continually improve. By selecting the right property, staying on top of your finances, keeping informed about legal obligations, and cultivating positive relationships with tenants, you can create a rental business that is not only profitable but also satisfying to manage. Prioritise maintenance, provide excellent service, and protect your investment with appropriate insurance to maximise long-term success.
If managing your rental property becomes overwhelming or too time-consuming, consider outsourcing tasks to a letting agent. Check out our ‘Ultimate guide to choosing a letting agent’ for helpful tips. It’s important to carry out your due diligence when selecting an agent to make sure they are compliant with legal requirements such as belonging to an approved property redress scheme (like the Property Redress Scheme), and are part of a client money protection scheme, such as Client Money Protect. This will help safeguard both you and your tenants in case of any issues with the letting process or misappropriation of funds.
Ultimately, being a successful landlord involves more than just compliance; it’s about growing your business and creating a positive environment that benefits both landlords and tenants, reducing legal costs and enhancing investment returns.
