Thursday, 23 August 2018
If you’ve got a property that you’re unsure what to do with but don’t want to sell, especially if you’ve inherited it, a great way of using it as a source of extra income can be to rent it out. If the property is located in a highly-desired area, you should be able to demand a fairly high amount of rent.
However, there are a lot of different aspects to renting out a property as a private landlord and there are a lot of traps that you might fall into, which could end up costing you a lot of money.
We’ve collated some of the most common mistakes that landlords tend to make when renting out their properties - they’re by no means limited to new landlords; experienced landlords are just as likely to make some of these mistakes. It’s not an exhaustive list but, if you can remember not to make the ones below, you should ensure that you’re in a fairly good position for the duration of each tenancy you set up.
Alternatively, you might also consider using a letting or property management agency to handle your property on your behalf. If you opt for a fully managed service (which can be extremely reasonably priced and would be ideal if you don’t live particularly near the property), you wouldn’t have to deal with your property at all.
One of the most important parts of any landlord’s job is asking for and following up on the references provided by the tenant, which should ideally be their previous landlord and current employer. This way you will be able to build up a picture of what they are like as tenants and people in general, in addition to gauging whether they’re likely to be able to pay the rent. If there are any red flags you need to be aware of, this is where you’ll uncover them. If you don’t follow up the references, you could be letting someone into your property without really knowing what they’re like.
It’s worth noting that you don’t necessarily have to do this yourself - there are professional referencing services you can take advantage of, many of whom have partnerships with local lettings agencies.
There are a whole host of legal requirements associated with renting out a property and, understandably, a lot of them revolve around ensuring the safety of the tenant during their time in the property. If your property is supplied with gas, you must be able to supply tenants with a gas safety record confirming that all pipework, appliances and flues are maintained in a safe condition. The record must be supplied within 28 days of the check having been completed, or to any new tenant before they move in. Checks must also be carried out on an annual basis so the property is always covered - if not, there could be severe legal penalties to pay.
There is a lot of nuance when it comes to arranging gas safety checks and maintaining records, and there’s a lot to be aware of in terms of timings and ensuring that an engineer is legally registered and qualified to carry out an inspection. A letting agency which handles gas safety checks on a daily basis will be well-versed in the detail and requirements involved and will be able to handle the checks correctly every time.
Energy Performance Certificates are required whenever a property is rented out - it contains information about a property’s energy use (rating its energy efficiency from A to G) and typical energy costs, and recommendations about how to reduce energy use and save money. It is valid for ten years, and is therefore easy to forget about - however, you can be fined if you don’t have a valid EPC when you need one.
You must find an accredited energy assessor to issue the Energy Performance Certificate - as with the gas safety check, this may be more easily handled and arranged by a letting agency.
Tenants have the right to quiet enjoyment of the property, but you are entitled to visit the property at a reasonable time of day with 24 hours’ notice. This is a right you should exercise every three months or so, otherwise you could find that tenants are abusing the property. For instance, they could be subletting it to somebody else without your knowledge, or using the property as a base from which to break the law.
There are a lot of moving parts when it comes to letting out a property, and all of them are governed by some form of legislation. However, this legislation is constantly being updated, tweaked and changed, and something you knew to be the case last month might not be the same next month. With this in mind, you need to always ensure that you’re up to date with changes in legislation and the creation of new legislation, otherwise you could find yourself in risky territory. Although it’s extremely time-consuming to learn about the various legislation and maintain your understanding of your legal responsibilities, it’s certainly going to be the most valuable use of that time.
There are a whole host of legal ramifications when you forget to protect the tenancy deposit - even if you do protect the deposit, you must ensure you’ve protected it in accordance of the rules of your chosen deposit scheme provider, and in the correct timeframe. A letting agent will be able to ensure that this is always done correctly.
Things inevitably go wrong in properties of all kinds - sometimes it might be an indirect problem (for instance, there may be a water leak in an upstairs flat which comes through the ceiling of your property), but it’s important that you ensure anything that goes wrong is resolved as quickly as possible.
The exact areas you are responsible for repairing and the areas the tenant is responsible for repairing should be clearly defined in a tenancy agreement, but the government states that in private rented accommodation, the landlord will always be responsible for:
If you don’t resolve the issues you’re responsible for, the tenant can complain to the local authority and will probably leave the property at the earliest opportunity, meaning you then have to go through the process of finding someone else to fill it again. Letting agents will have clearly defined processes and a pool of capable contractors they trust, and may also be ably equipped with systems such as Fixflo to resolve any repairs or maintenance issues in an efficient and effective way.
As a landlord, for the sake of maintaining a good relationship with a tenant, you may wish to try and be accommodating if they run into difficulties with paying rent. However, if months without rent payments start to pile up, you might find yourself in a situation where you’re out of pocket but are unable to find a way of resolving the problem without resorting to eviction procedures. In these cases, it can be preferable to have an experienced letting agent handle the situation for you. Though they may not be able to recover the rent, they will be well-versed in eviction procedures (so should be able to remove the tenant swiftly), and the stress involved will sit with them, not you.
If you would like any more information about how we can help you rent out your property, please get in touch with a member of our team.