Avoid common mistakes inexperienced landlords make
Being a Landlord especially with the recent legislation and tax changes that have come into force in the last 3 years have made being a landlord difficult and unattractive.
1. Getting a good tenant
You may want to find a tenant quickly so rent starts to roll in, however, don’t act in haste and ensure you carry out credit & referencing before letting your property.
Get the tenant to complete a “tenants application form” that will provide you with adequate information to enable you to obtain a credit & referencing report. The credit and referencing check may show a history of late payments, delinquent accounts, etc. In addition ensure you take the time to verify references, including employers and former landlord references.
Even if the tenant wants to move in quickly still ensure you carry out the checks above. Do not feel rushed or pressured into making any decision until you have all the information so you can make an informed decision.
2. Allow 10% margin for voids.
Do not calculate your figures based on anticipation the property will always be let. Allow 10% voids, the market rent, less 10%.
3. Do not underestimate repairs and maintenance costs.
You have a legal obligation to maintain the property in good order. You need to ensure you factor the cost of repairs and replacement in your calculations. Be prepared to use money from your business from your personal funds in the event that you don’t have the cash needed for major works. Consider allowing 15% for repairs and replacement costs out of the rent.
4. Being a landlord is not a hobby.
Owning rental properties is a business and in order to turn a profit you’ll need to operate it as such. You will need separate bank accounts for deposits and expenses, using a bookkeeping system and consulting a tax professional to ensure you are correctly handling taxes on the rental income.
5. Good tenancy agreement
To avoid potential problems, it’s essential that your tenants sign a good comprehensive tenancy agreement. Should you have problems with your tenant then you will need a written, binding tenancy agreement in order to make obtaining a possession order easier.
6. Property Check.
The property you are renting out is your responsibility. If you do not regularly check the property you will not be aware of any damage to the property or any repairs or maintenance that is required. Sadly, some tenants do not report problems and as consequences further damage is caused due to unreported problems. However, make sure you do not breach tenant privacy by attending the property unannounced.
7. Keep up to speed with new legislation.
Make sure you are aware of new legislation that has come into force. Sign up for our free newsletter. As a landlord, you are required to make sure the property meets health and safety standards.
8. Delaying an eviction.
If your tenant has rent arrears do not delay take legal action as soon as possible. Not beginning eviction proceedings in a timely fashion may prove to be a costly mistake. If you run into problems with a tenant and are unsure about your rights or how to proceed, contact an eviction company as soon as possible. Landlord Advice UK is a leading national tenant eviction company a service provider to the BLA.
9. Ensure you enforce breaches of the terms of the tenancy Agreement.
If you outlined that late rent payments would incur a penalty, charge it. If you noted that no pets are allowed and your new tenant buys a Great Dane, enforce the penalty. If your tenants realise that you are lax about the terms of the lease they will likely follow suit. Set – and enforce – the standard you want upheld.
10. Take written notes. It is important that you keep written account of all interactions with your tenants in the event that you need to take your tenant to court. Note phone conversations and keep copies of emails, voicemails or text messages, etc. to be able to support your claim. Where ever possible try communicating by emails so a record of communication is logged.
Source; Tracy Hemming