As a landlord, it is imperative that you take your responsibilities seriously. Ignoring potential pitfalls can lead to big problems. Even if you are aware of your responsibilities, as a busy landlord, it is still easy to run into issues along the way. Read on for some of the key aspects you need to consider as a property landlord and how you can stay on top of them for less stress and more success.
Get the correct insurance
Some landlords try and save money by cutting down on the insurance they hold for their property.
Most of the insurance policies held by landlords are only basic buildings insurance products which safeguard the structure of a property so whilst vast majority of landlords have invested in insurance, many are not holding the correct cover.
Where, for example, landlords experience problems with late or missed rental payments, these policies would offer little or no support; leaving them under-insured. In this instance, rent arrears, which are often considered to be one of the biggest problems faced by landlords, is one aspect that specific rent guarantee insurance policies can protect against.
To be covered for most scenarios, Landlords should consider taking a buildings and contents insurance, landlords insurance and rent guarantee insurance.
Another aspect to consider is whether your property is rented as a whole on a single Assured Shorthold Tenancy (AST), or if you house multiple tenants living as separate households under multiple AST’s, as these will require differing types of insurances. Always be very clear to the insurer on the type of lettings activity that is taking place in your property and be sure to fill out forms correctly prior to submission.
If you have a buy-to-let mortgage, it is likely that having the correct insurance features within the terms and conditions of your loan. Some lenders request a copy of your landlord insurance on an annual basis, so it is highly important that you are accurately covered.
Maintain your property
As a landlord, you have a legal obligation to ensure your property is well-maintained. This is also likely to a be a stipulation of any buy-to-let mortgage lender that you borrow from.
Furthermore, if the property’s condition starts to deteriorate, and you do not act, the tenant may vacate the property and cause you significant void periods. Not only, could you experience void periods but the capital value of your property may well start to decrease.
Money spent on maintenance, repairs, and improvements is tax deductible, so you should budget and be prepared to pay for these expenses.
If your property develops damp, mould, or condensation problems, this is dangerous to your tenant’s health and must be dealt with as a matter of urgency. This may mean educating the tenant to open trickle vents and windows to air the house, or providing de-humidifiers, or in-built solutions as positive input ventilation systems & heat recovery units.
We advise all of our landlords to budget for a small refurbishment after every 8-10 years of ownership, or sooner if necessary. Undertaking re-decoration, replacing worn or stained carpets, and generally giving the property small re-fresh every so often will ensure your property stays at its best for your tenants and helps you to achieve market rent.
Every property also benefits from a deep clean every few years, which can be undertaken between tenancies. This is especially important if your previous tenant kept a pet at the property. If the tenant does not maintenance issues, you can ask the cleaner to make a note of anything that needs repairing, and then arrange to get the work done at the tenant’s convenience or in-between tenancies.
Get an Inventory
It is highly recommended that a comprehensive inventory is taken at the beginning and check-out report at end of every tenancy. The inventory sets out the condition of the landlord’s property and contents at the start of the tenancy, containing photographs and comments regarding the condition and cleanliness of the property. It is becoming more popular to undertake take video inventories and check-out reports.
When the tenancy ends, the inventory is used to check the condition and cleanliness of the property and contents against the starting condition; therefore, it is easier to evidence if there has been any excessive wear and tear or damage caused during the tenancy, making it easier to make necessary deductions from the tenancy deposit.
If you do not have an inventory created prior to the tenant moving into the property, and the tenant damages or removes any of your property or any contents during the tenancy, the onus is on you as the landlord to prove the damage; not on the tenant to prove that they are not responsible for the damage or missing items.
Compared to what it could cost in time and money for proving damages and missing items following an end of tenancy, the small fee for getting an inventory completed is certainly worth it. Some landlords are more concerned about having an accurate and detailed inventory than some of the terms in their tenancy agreement.
Ensure you have "consent to let" from a lender or freeholder
Many landlords who live in their property before moving out and renting it to a tenant do so whilst there is a residential mortgage on the property. Where this is the case it is imperative to contact the lender and seek permission to let the property to a tenant prior to doing so. This is known as getting “consent to let”.
Some lenders will ask for a small fee or require a change in the payable interest rate. If you let your property whilst on a residential mortgage, you will be in breach of the terms of your mortgage and the lender is entitled to take action, which may involve recalling your loan.
When you have received Consent to let, you are able to tenant the property but this cannot be relied upon indefinitely. Most lenders will check with you periodically, and may request that you replace the residential loan with an appropriate buy-to-let mortgage. At that point, your lender may have suitable buy-to-let mortgage products which you can arrange directly with them. Alternatively, you may prefer to speak to a specialist buy-to-let mortgage broker who can find you a more competitive deal by searching the whole of the lending market.
Buy-to-let mortgages are typically offered at 75% loan to value (LTV), so if your residential mortgage exceeds this, you will need to pay into the loan to bring the LTV down.
It is also important to note that some leasehold properties have clauses in the head-lease that state you are not allowed to sub-let, or that you have to apply to get a "consent to let" from the freeholder. Charges may be applied for the consent to let from the freeholder.
Remember, this is a business.
As a landlord, you have to treat your buy-to-let properties as a business, you are, after all, responsible for the safety of your property and therefore tenant. There are currently over 160 statutes and laws and you need to comply with all relevant legislation and regulation.
Furthermore, you have to be aware of changes to these laws and make sure you are using the correct documents and procedures for dealing with your properties and tenants. You must invest time in understanding your responsibilities as a landlord.
There is a desperate need to make the private rented sector more professional; government actions to improve standards for tenants across the Private Rented Sector, such as increasing legislation, restrictions, landlord licensing, and other measures are a clear sign that the housing market is high on their priority list.
Local councils have powers to penalise landlords who do not supply compliant and safe homes for their tenants; individual fines can run into tens of thousands of pounds.
Working with a reputable and experienced letting agent can make sure that your property and tenancy is set up in compliance with all current regulations.
Using our fully managed service, we ensure that you avoid all the common landlord pitfalls and that your tenant remains 100% safe and satisfied in your property.
Using our services ensures that:
- You achieve market rent.
- Your tenants stay safe and happy.
- Your property is well-maintained and looks it’s best.
- The value of your property keeps up with the market.
- You can sit back and enjoy the benefits of being a hands-off landlord.
Speak to our team to list your property with MOVR.
Call +44 1226 885070