Big mistakes made by Accidental Landlords

I am covering tricky topics as they come along and so let’s consider now the pros and cons of being an accidental landlord. These are landlords who find themselves in the rental marketplace not necessarily through choice – for example someone inheriting a property following the death of a relative.

Sometimes rather than selling, or selling up their current home and moving into the property, the beneficiary decides to rent it out and bank the income (whilst at the same time hopefully watching the capital value increase over time). 

However, in the real world there are a good number of things to think about first along with avoiding some serious mistakes.

The main thing to bear in mind at all times is that renting out property must be treated as a proper business – not a fascinating hobby like stamp collecting.

Tenants are not paying guests – they are buying a clearly defined service – i.e., accommodation – as part of a two way legally binding contract.

In brief I’ve listed the big mistakes its best to avoid but before we start, I would say this to any anyone thinking of becoming an accidental landlord on a DIY basis – don’t do it – it’s pretty much the same as engaging in DIY dentistry.

Not properly protecting a tenant’s deposit.

If the tenant doesn’t pay the rent or trashes the place you have a certain amount of money to defray the costs. The tenant’s deposit, however, must be held in a government approved/certified account.  

Not carrying out regular inspections.

Circumstances change – some tenants unlawfully sublet – others adopt a dog without permission. On the back of a careful check in and inventory complete with photos, you need to do a landlord inspection once a quarter.

Not doing “Right to Rent” checks.

It doesn’t matter if the tenant is your milkman or a complete stranger you must satisfy yourself that the tenant complies with “R2R” legislation in respect to lawful residence. Credit checks and taking up references is not discretionary – it’s vital.  

Not having a secure signed AST (Assured Shorthold Tenancy).

The consequences of not having a watertight tenancy agreement are too numerous to list. Suffice it to say that evicting the tenant and regaining possession of your own property is incredibly time-consuming and expensive. 

Not planning for the unexpected.

Couples split up, folk get made redundant and then fall behind with their rent.

Not taking out low-cost rent guarantee insurance makes no sense.  

Not presenting the property well.

Well-presented properties – clean and tidy – attract better qualified tenants and higher rents – the reverse is true. 

Not doing the research.

Letting a property costs money and every pound spent/invested must be made to produce real value. Carrying costs/repair and maintenance costs etc. need to be recorded to be set against income. Find out the average rent received for comparable properties in the area – don’t undercharge and it always pays to get yourself a good accountant and manage your tax position.

Not choosing the best-letting agent.

Sadly, the PRS (Private Rental Sector) is not well regarded in Whitehall and there is a steady stream of new laws/regulations for both professional and accidental landlords. Non-compliance to ever more legislation can have serious/costly consequences. 

Non-compliance to say – GSC’s / EPC’s / EICR’s etc. – is very bad news.

Just another of many reasons why accidental landlords need to choose a very good letting agent (I recommend Myrings) to help you manage a huge asset and do everything to optimise income/yield (reduce voids etc.), collect your rent and help you sleep soundly at night.

If you are a Harrogate homeowner or involved in the local property market in any way then please contact us for a free no obligation chat about the above and the property services we provide in residential sales and lettings.

Charles.

 

Charles

About Charles

This blog follows the residential Sales and Lettings market in Harrogate, Knaresborough and surrounding villages.You will find information, analysis and guidance here along with news about Harrogate. I’m Charles Myring working in the Myrings Estate Agents Ltd business alongside my son Simon , daughter Gemma and dedicated sales teams. If you're thinking of Selling / Buying / Letting / Renting property locally Myrings would be happy to assist.