We’ve seen many new Buy to Let landlords entering the Edinburgh property market this year, making their first foray into the world of residential property investment. Rather surprisingly we’ve seen a jump in enquiries from new buy to let landlords since the rather unexpected Brexit Vote as people look to place their money into bricks and mortar and international investors look to take advantage of a weaker pound alongside increasing rents.
As such, I thought it would be useful to provide some advice as to what you need to do to make sure your buy to let property is ready and your experience of investing in property is a good one!
In the run up to completion date
So, the frustration of scouring the internet for suitable properties is over (spending numerous Sunday afternoons and Thursday evenings viewing properties only to miss out at closing date when someone puts in a ‘silly’ offer). You’ve had an offer accepted on your first buy to let and you’re on your way to officially being a ‘property investor’! You’ll likely be an eager beaver wanting to get everything in line before the property becomes yours (normally in 6-10 weeks to give solicitors a chance to send umpteen letters between each other and have a game of ‘my legal knowledge is better than your legal knowledge’ as they iron out the finer details of the purchase).
- Safety Certificates – If you know the property has been rented out previously it can save you a bit of money if you can get ahold of any previous safety certificates that the property might have (see ‘Making the property safe for tenants’ before for what safety certificates you’ll need) so ask your solicitor to check with the sellers for these. Likewise, if the property has an HMO license (House of Multiple Occupants….. …for any properties let to more than 2 unrelated people… or ‘student flats’) your solicitor should ask for this too.
- Furnishings – If you’re buying a property that was previously rented out there may be furniture available as part of the purchase or ‘by separate negotiation’. This always saves a bit of hassle and avoids the pain of having to wait in for delivery men or the dreaded IKEA run and subsequent marathon furniture building session. Remember that a lot of furniture has a long lead time (often over 3 months for a sofa!) so make sure you buy furniture that is available for immediate delivery. We have attractive furniture packages available for buy to let properties which can be delivered and set up in properties at short notice so let us know if you need help with this! Trust me it saves A LOT of bother and prices are very good once you factor in delivery and building costs (and the time this sort of thing takes up) associated with other options.
- Landlord Registration – If you’re very organised you can also start the landlord registration process online at this stage albeit you won’t be able to add the property itself until you official own the property (you can set up most of your registration at this stage).
- Energy Performance Certificate – It’s also worth holding onto the Home Report for the property as this contains an EPC (Energy Performance Certificate) for the property which you’ll need during the marketing phase (this will save you a bit of money as surveyors charge anything from £80-£130 for an EPC).
- Refurbishments – If you’re planning any major refurbishments within the property its always worth trying to get round the property again with a contractor prior to the completion date so you are ready to ‘hit the ground running’ when you take ownership. Most sellers will not let you back into a property until ‘Missives conclude’ which often happens 1-2 weeks before the completion date, but most are happy to give you brief access after this date as you are contractually bound to purchase the property.
- Money, money, money – Finally, your solicitor will keep you right but remember to pay money to cover the purchase price (or your deposit if you’re taking out a mortgage) into their client account in plenty time before the completion date as large amounts can take several days to clear and you don’t want to delay the purchase and risk upsetting the seller / incurring unnecessary fees.
On completion date
So the day has come…you’re now a buy to let investor! You’ll no doubt be so excited and want to rush round and see what you’ve just bought…..then you’ll stand there not really sure what to do with yourself……It’s a surreal experience! Keys for properties tend to be available around lunchtime so you’ll have to occupy yourself till then. Once you get in you should check a couple of things;
- Keys – Check all the keys work. You’ll need 1 set of keys per bedroom and 2 sets of keys for emergencies/maintenance/inspections when you rent the property so get some cut if you’re not given many sets.
- Meter Readings – Take gas and electricity meter readings so that you have a record of these if you need to do any ‘clearing up’ of bills in the future. The seller should have done the same and you’ll normally find a ‘Welcome to your new home’ letter from the previous supplier encouraging you to sign up with them. Once your tenant moves into the property they will set up their own account, using meter readings from the date they move in (we take more meter readings at the inventory we do, normally the day before the tenant moves in) so you’ll normally get a bill for usage for the ‘void period’ between you getting the keys to the property and the tenant moving in.
- Reporting defects – Normally in Scotland you have 5 days following the completion date to report any major defects with the central heating system/appliances to your solicitor so that the seller is liable for the cost of rectifying these defects (most solicitors in Scotland use a standard template or ‘style’ for property transactions and this tends to be included). This includes things like the boiler / washing machines; otherwise properties are purchased ‘as seen’. So, make sure you check everything when you first go in to make sure it’s working and report back to your solicitor if there are any issues.
Getting the property ready for marketing and for tenants moving in
Now that you own your buy to let property in Edinburgh you’ll no doubt want to get it on the market ASAP to generate some rent. A few things you need to consider at this point;
- Applying for an HMO license – If the property has a current HMO license (see above) you have 28 days to apply for a license in your name (HMO guidelines were revised in 2013 with new standards in relation to things like minimum room sizes/widths. If you buy a property that does not satisfy the new standards in terms of, say, minimum room width, but that property already holds an HMO license, provided you apply for the HMO license within 28 days of the completion date, the HMO license will stand, based on the property complying with the ‘old’ standards). If the property does not already hold an HMO license you will have to apply for a new license and this can take anything from 12-16 weeks to gain (you are not allowed to rent the property to more than 2 unrelated people until your license has been granted).
- Complete the Landlord Registration process – now that you own the property you’ll need to log back into your landlord registration account and add the property to your registration. You need to include your landlord registration number in any adverts for the property.
- Refurbishments – even if you don’t intend to do a large scale renovation of the property, there are always a number of small jobs outstanding in the property prior to marketing. We have a team of handymen who can knock off a number of small jobs in one visit to keep costs to a minimum. If you’re thinking of spending money on the property over the first couple of years it’s usually best just to get everything done at this stage before the first tenant moves in. This way you’re passing a nice blank, clean canvas over to the first tenant and you set the standard high as to how the property should be maintained going forward. A well-presented property will attract good tenants who will take good care of it. A tired looking property may attract less-desirable tenants who may not treat it as well as you would like and standards can deteriorate quickly which can prove to be more expensive in the long run.
- Dressing the property – ‘A picture tells a thousand words’ so it’s worth dressing the property well prior to photos in terms of using bed linen and perhaps some nice (fake) flowers on the dining table so that the property looks its best for photographs. These items can be removed prior to a tenant moving in (we don’t recommend giving tenants bed linen/towels and its best to remove any clutter prior to them moving in) but always look great in photos.
- Professional Clean – We always recommend getting a professional clean prior to marketing a property. This ensures that the property is sparking for viewings and also means that you hand the property over to the tenant in a nice, clean state, so they are expected to hand it back to you in the same state when they vacate a year…or 2…or 3 years…down the line (it also means that if you have to apply to the Tenancy Deposit Scheme to deduct money from the tenant’s deposit to cover cleaning when they vacate, you have an invoice as proof that it was professionally cleaned before they moved in).
- Making sure the property is safe for tenants – You will, of course, want to make sure the property is as safe as possible for tenants moving in. You are required to the do a number of safety checks and installations within the property prior to tenants moving in and safety certificates must be presented to tenants when they move into the property. The following are required (I don’t want to clutter this blog with too much detail on these but if you’d like more information on any of these please get in touch);
- Gas safety certificate
- Electrical Installation Condition Report
- Portable Appliance Testing
- Hard wired, interlinked smoke and heat alarms
- CO detectors (where gas appliances are present)
- Wall mounted fire blanket
- Legionella Risk Assessment
I hope this guide is helpful and I wish you the best of luck in your search for a great buy to let property in Edinburgh. If you’re looking for assistance sourcing and purchasing a buy to let property, Umega Lettings has an ‘Investment Sourcing’ service where we will source you an excellent buy to let investment in Edinburgh for a fee of 1%+VAT of the purchase price. For more information on this just email me by clicking here or call me on 0131 221 8281.