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Landlord is usually described as a property owner who can rent or lease own property in order to make a profit. When obtaining a lease contract with a tenant, all of the specific details of renting are outlined. Normally it is stated there what rules should tenants keep up with and responsibilities of parties like landlord and tenant. 

Landlord explained

As mentioned earlier, a landlord can be anyone who wants to rent property for profit making. Parties of lease contract are usually referred to as a landlord and tenant. Landlords can get themselves a steady source of income as well as property price rise. As noted above, any entity can become a landlord. An entity can be an individual, corporation or government agency. Landlords can lease any type of property — from an apartment to a piece of land.

With help of leases, or a legal binding contract, the landlord and a tenant are enabled to outline conditions under which the property is rented. This contract regulates their rights and responsibilities in front of each other and makes a clear image of when payment for property rent should be received by the landlord and its size.

Things to consider when willing to become a Landlord

Deposit. When buying a residential property (Residential), the minimum deposit is 10%, but when buying a property for rent (Buy To Let), it will be at least 20-25%. Banks consider the purchase of real estate for rent more risky than buying a home for their own living, so the size of the deposit for a landlord is much higher.

Income. The usual requirement of banks - that the minimum income of the borrower who buys a property for rent, was about £20-25 thousand a year, it is enough.

Property valuation. When buying a Buy To Let property, the bank assesses not only the value of the property itself, but also the potential rental value of such a home. The amount of monthly rent should be at least 20-40% higher than the monthly payment on the mortgage, because you will have to pay taxes on the rent received. The percentage depends on your tax rate.

So if you are paying £1,000 a month on a mortgage the property should rent for at least £1,200. Otherwise the bank will ask you to increase the deposit.

The final amount of the loan (and therefore the deposit) will also depend on the amount of rent payments for the property being purchased, maintenance costs, insurance costs, service charge, land tax, etc.

Age. As for the age of the borrower and the term of the mortgage loan, banks are very lenient when buying a property for rent. Some banks don't limit the upper age of the borrower buying investment property at all.

Interest rate. The cost of a mortgage loan, that is, the interest you'll pay on a Buy To Let, also depends on the size of the deposit, but even with the same deposit, the rate will be higher than when buying a home for your own living. The appeal, however, is that you can choose interest-only payments when buying an investment property. This means that you pay only the interest on the loan, which allows you to make a monthly profit on the difference between the mortgage payments and the rent.

Number of properties and total amount of mortgages. Most banks limit both the number of properties registered to one person and the total amount of mortgage debt on such properties.

Non-standard types of rentals. If you plan to rent the property you are buying on a room-by-room basis, that is, to several tenants, you will find it more difficult to get a mortgage loan, as special requirements apply to such properties. The house must be HMO (House of Multiple Occupation) compliant and have a special license. If it is a leasehold, you will need to first obtain the permission of the owner of the building (freeholder).

Short-term rentals through Airbnb can also be a source of income for mortgage properties. Life is changing, and some banks are willing to lend you the money to buy a property for this type of business.

Commercial properties and mixed-use properties: a store downstairs and an apartment upstairs, you can also buy with a mortgage. The most important thing is that the investment property should bring in a stable income with which you can pay off the payments.

Safety of the property. Normally a landlord doesn't live near the property that is leased. This situation is usually referred to as absentee landlords and is quite dangerous for the property. It is better to periodically monitor the property condition in order to avoid misbehavior of tenants.

For having an emergency money in case of breakage of the owned stuff, landlords typically ask for security deposit from tenants that include money used for repairing things after tenants move out. 

Rights and Responsibilities of Landlord

There are some main rules for landlords that are common everywhere even though the rest of them can vary from city to city.

The first and main right of the landlord is to receive rent payment or any prearranged fees from the tenant. Landlords also have a right to make an eviction of a tenant when the tenant refuses to pay for rent.

Landlords have responsibilities as well. They are:

  • maintaining property in tenantable condition;
  • managing security deposits;
  • cleaning and emptying property before letting new tenants in;
  • perform repairs and maintain services like water supply and electricity in working condition.

Ways of becoming Landlord

When a person wants to become a landlord there is no need for getting a special license or a certificate. The most important thing is to study through all of the connected laws and regulations, learn how to manage property and get well-behaved tenants.

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