The Ten Mistakes That Some New Landlords Make
18 Jun, 2019
Becoming a landlord for the first time can be quite complex with many different points to remember and new responsibilities to assume. Needless to say, mistakes do happen, but it is a good idea to make sure that you are well prepared for your new role and research what obligations you will have.
Your aim should be to establish a good landlord & tenant relationship which will bring bonuses, especially if they have been a good tenant and they want to renew their rental agreement. The main point to remember is that you should view the rental of your property as a business and be business like in your approach, dealing with everything swiftly and well – especially when there is a problem or maintenance issue. Discuss things with your tenant and get their view as they will probably know the property probably better than you!
These are the ten most common mistakes that new landlords make.
1 - New Landlords Often Overprice
You may well think that your property is the best one ever, but the rental market is very price sensitive so it is crucial that you get the rental price right. The easiest way to do this is ask letting agents in your area and do some thorough research online.
Prior to checking out prices, you need to decide whether you are going to let your property furnished or unfurnished. Ensure that it looks good and that inside and out are clean and tidy. It is a good idea to provide all the things your tenant will need to keep the property in good shape and this includes lawn mowers, hedge cutters and a good pair of step ladders. At this stage, it is essential to check that your property will meet all safety requirements. Make sure you provide a good list of emergency telephone numbers by the telephone – including yours! Having prepared your property ready for rental you can rest assured that you will get a good rent for it.
2 - New Landlords Do Not Choose a Good Letting Agent
Well it is true that some landlords don't even appoint a letting agent as they feel that they can fulfil the role themselves and begrudge paying the agent. This truly is a false economy especially if you as the landlord will be living a long distance away – and even more so you are abroad. A good letting agent will really take the pressure off you and will handle all aspects of the let from finding suitable tenants, making regular inspection visits to serving their notice at the end of the tenancy agreement.
The letting company should belong to a registered body such as ARLA (Association of Residential Letting Agents) or UKALA (UK Association of Letting Agents) or the relatively newly re-branded Propertymark which is a voluntary association with members working hard to raise standards within the property industry.
3 - They Don't Always Draw up a Good Lease Contract
Unfortunately, this is often a stumbling block for new landlords – particularly those who have decided not to use a letting company. It is essential for both parties that the lease contract is detailed, accurate and easy to read. There are generic lease contracts available online, but these need to be carefully read and then adjusted accordingly.
It is essential to have a really comprehensive lease contract as this will prevent disagreements in the future. The following points should all be mentioned in the contract:-
- Can the tenant smoke in the property?
- Can they have guests to stay long term such as relatives?
- Is your tenant allowed to have any pets?
- Are they allowed to paint any of the interior walls, etc?
- Have you clarified your tenant's responsibilities regarding parking, gardening and cleaning common areas if your property is a flat?
- Have you stated clearly the rent, what date each month it is due and what other costs the tenant must pay?
- Have you clearly stated the financial penalty for being late in the payment of the rent?
4 - New Landlords Often Don't Provide Proper Furniture
It is essential to understand that the rental market in the UK has changed considerably in recent years. Whilst thousands of students do still rent, many other people do too, either as a lifestyle choice or because getting on the first rung of the property ladder can be really difficult. All tenants want their rented accommodation to feel comfortable and appreciate good quality furniture in the property. It is a well-known fact that tenants are more likely to care for the furniture if it is good quality and in good condition.
When you are organising your property for rent, don't furnish it in your favourite style, take a step back and furnish it with quality pieces and decorate each room in neutral tones for floors, walls and curtains. This ensures that it will be like a 'blank canvas' for your tenants who will be able to add splashes of their chosen colour and styles without finding themselves drowned by your colourful choices!
An important step once you have finished furnishing each room is to compile an inventory & Schedule of Condition for your property as this is your protection against incurring bills for damage caused by your tenants. This document could well be 20 pages long as it must be carefully and comprehensively compiled to cover every piece of furniture in each room plus the walls, floors and ceilings, plus fixtures and fittings. Since the introduction of the deposit scheme for tenants in 2007, having a professionally compiled inventory & Schedule of Condition has become advisable for landlords in case they need to seek compensation at the end of the tenancy.
5 - New Landlords Don't Always Get References for Prospective Tenants
Surprising though it may seem, some new landlords are in such a hurry to get their tenant installed so that they can start receiving their rent that they do not take the time to secure references from their prospective tenant's employers and bank. This is surprising because these references will clearly indicate whether the tenant is in a position to rent the property or whether after a short time they will be struggling to pay the rent on time.
Experienced landlords look at the person's monthly income closely because they feel that their rent should equate to 50% or less of the monthly salary of their prospective tenant otherwise they could easily start struggling and making late payments.
6 - New Landlords Don't Always Buy the Most Suitable Properties
Whilst they are keen to have an attractive property that rents well, many first time landlords invest their money in totally the wrong type of property. To quote that well known phrase 'location, location, location' because that is what most renters are after. A property that is close to amenities and with good public transport links to the local towns will prove attractive to many tenants.
When buying a property to rent, it is also essential to buy a property that is easy to maintain, fuel efficient and one that will appeal to different types of renters – young professionals, young families, commuters, retirees etc. Best not to opt for a property that will only appeal to a limited number of people.
7 - And When They Do, They Often Overstretch Themselves
New landlords often find that they are 'sailing close to the wind' because they have stretched themselves to buy a certain property without fully understanding the continuing costs they will face with the property. The first sizeable cost could be incurred if the property isn't rented as quickly as hoped - especially if the rental money is being used to offset the mortgage repayments. After that, there could often be unexpected expenses for the landlord when a pipe bursts, the boiler packs up, etc!
If you are planning to buy-for-rent it is best to ask advice on which mortgage will be best and also to bear in mind that interest rates can – and do – rise.
8 - Many New Landlords Don't Get Adequately Covered
It is crucial that all landlords take out adequate insurance before they start renting their property. It is very important that as a landlord, you make sure that your insurance company knows that the property is being rented as there are 'buy to let' property insurance policies and rental property contents policies. It is very important, that as a landlord you also have public liability insurance.
Other insurance policies that are well worth considering are the ones that act as a rent guarantee – if you have a tenant living in your property and they don't pay their rent on time, the insurance company will pay up. This is useful if you are using the rent money towards the mortgage payment.
When you begin your first tenancy, it is vital that you protect your tenant's deposit payment using one of the three government approved schemes.
9 - New Landlords Don't Always Take a Close Enough Interest
It is very difficult as a new landlord to know how to treat your new tenant and many landlords get it wrong by treating them as their new buddy! Whilst you should always be approachable and easy to contact, renting your property is a business transaction and should be treated as such.
As soon as your tenant agrees to rent your property, decide how and when you will communicate with each other – most seasoned landlords stick to office hours except in a case of emergency. Provide your tenant with a business card or clearly written postcard with your full name, telephone number(s) and importantly – your email address.
Respect the privacy of your tenant, but even if you have a letting agent, request to visit your property regularly. Out of courtesy you should give your tenant at least 24 hours’ notice that you would like to visit the property and make sure you do as this is the best way to check that your tenant is keeping the place as you want and that the letting agent is doing their job too. It is a good opportunity to check that there is no evidence of the common problem of sub-letting. Make sure that your letting agent makes the regular inspection checks and notifies you of any maintenance problems.
10 - New Landlords Don't Always Heed Maintenance Requests
In a recent survey of tenants, the most common cause of disappointment with landlords was the length of time it took them to respond to requests for maintenance to be carried out.
It is essential that as a responsible new landlord that you respond promptly to any requests especially if it is something crucial like the central heating/ boiler packing up in the winter months. If you are unsure how quickly to respond, consider how you would feel in your tenant's place – hopefully this will prompt you to pick up the telephone and get it organised. The other golden rule where maintenance is concerned is never to skimp on quality as this will prove to be a false economy in the long run. Seasoned landlords keep 10% of the monthly rent on one side to cover maintenance costs – which is smart thinking!
And a free 11th point?
Some landlords don’t use Robert Luff & Co to let and manage their rental. With a range of options from introduction only, through to rent collection and full management, we have a level of service to suit whichever type of landlord you may be – hands on or wanting very little involvement – we can help!