Many people think that investing in property and becoming a landlord is sure fire easy way to make a profit and retain a valuable investment ready for when you hit retirement. It sounds so simple and sometimes is but as always there are pitfalls to be faced and landlords need to be aware of them all in order to keep those rental yields high and inconvenience levels low. As an online estate agents we all too often hear of landlords getting in all sorts of tricky situations because of commonly made mistakes, normally corner cutting mistakes. So beware, and use the following steps to make sure you avoid the same easy to make errors.
Take something as basic as a tenancy agreement for instance; they can be a potential minefield for landlords so make sure you know exactly what your tenants are signing and what that means for you as the landlord. All limitations to the tenant must be clearly listed within the tenancy agreement. On a residential lease certain clauses are fairly standard, these include specifying that the property is to be used as a residential let only and that the property is not be used for business purposes or other commercial uses. The tenancy agreement may also state certain obligations over the tenant, the lease should outline the obligations of the tenant e.g. keeping the property in a clean condition and it may also outline the maximum period in which the property may be left vacant for during the tenancy.
If you, as the landlord, agreed the tenancy after the 6th April 2007, you are legally required to place the deposit into a government approved scheme. When a tenancy agreement is signed, the monies must be transferred into a scheme within 30 days, the deposit is then protected until the tenancy ends. When coming out of an agreement, combining that you and the tenant agree on the amount of returnable deposit, the monies should be returned within 10 days of the tenancy ending. Contact your chosen scheme and ensure you know exactly what information you are expected to provide your tenants with to avoid potential hefty fines.
The most common mistake made by landlords is shabby tenant referencing checks and sometimes shockingly no checks at all! It is unbelievable that some landlords are prepared to let strangers whom they barely know live in their property without undertaking any form of tenant referencing what so ever. Basic credit referencing can cost next to nothing, there are also more extensive checks that can be carried out for minimal fees. We have all heard horror stories when it comes to tenants, so consider referencing seriously for the sake of a £40 reference check, can you really afford to take the risk?
Property inventories are another area where lots of landlords compromise at their own risk. It can be tempting not to want to pay out for a professional inventory service on top of the other essential letting expenses but as with referencing avoiding the step altogether can end up costing far more in the long run. When it comes to your tenancy deposit an inventory will be especially valuable should a dispute arise, as sadly us landlords don’t have a crystal ball at our disposal a good quality inventory should be considered a must have for every letting.
If you take the time to consider the main points of your tenancy agreement, deposit, referencing and inventory you will have taken all the essential steps to safeguard yourself against the most common mistakes landlords make on an all too regular basis.
Written by Sarah Male, Urban Sales and Lettings