Common mistakes to avoid as a landlord
A fifth of households in the UK are privately rented. As a landlord, it is good practice to put yourself in the renter’s position and think: if you were renting a property, would you like a landlord like you?
We all make mistakes; they are a part of who we are! Mistakes help us grow and give us the opportunity to learn as individuals, however, as a landlord making a mistake can sometimes cost you thousands of pounds. At Rettie & Co., we assist our landlords in avoiding common pitfalls and, when issues do arise for our landlords, we are here to handle the issues on their behalf to ensure that our landlords and tenants have peace of mind.
There are many considerations when renting out your property, including a steady income stream and long-term capital growth, but that doesn’t mean it’s all plain sailing after those decisions. Being a landlord involves fulfilling several responsibilities to both your property and your potential tenants. As a portfolio manager for over a decade, I’ve compiled some of the most common mistakes that landlords should avoid.
1. Price Point
Be realistic with the price. You may have an optimal figure in mind, but that may not be in line with the current market conditions. Seeking an inflated rent will mean the property remains vacant while costs continue to grow, so it is always important to do your research. Rettie & Co. provides this current market information and comparative rental prices for our landlords—both new and existing—but if your agent does not, you can do some investigation yourself. I would recommend looking at the different properties being let in your area and the rent they are asking, while keeping in mind the condition and furnishings within the property and how these compare with others on the market.
A good local agent can assist with a potential figure based on the current market and advise on the furnishings and decorating required to secure a lease and maximise your rental income.
2. Poor presentation and poor furniture
Tenants want a property that feels like a home, not a temporary stopgap. If the property is full of old, unwanted furniture and has not seen a paintbrush in years, they may not treat it well or they may stay a short time before finding a better one. To obtain and retain good tenants always ensure your property is well presented, furnished to suit your target tenants, clean, and promptly attend to any outstanding maintenance. Void periods are always a great time to repaint a property, take care of any necessary projects, and change any furniture. Regular inspections will prepare you and help you plan for future works.
3. Tenant Referencing
Referencing tenants is one of the most important things you do as a landlord. Ensure your referencing process includes affordability checks, credit history checks, and personal references to include past landlord references and employers. If the references cannot be obtained and confirmed, walk away.
At Rettie & Co., each property is managed by a portfolio manager, like me. Your dedicated portfolio manager will personally assess all prospective tenants and use a specialist referencing agency to carry out all background checks to a very high standard.
4. Not employing a good managing agent
A good managing agent will deal with any issue that may arise throughout the duration of the manarement term, whether the property is tenanted or not. They will also carry out regular inspections and ensure the landlord is compliant with all legal obligations. A good agent will alway go above and beyond to tailor their service to meet your requirements. This is an area where paying a management fee really pays you dividends.
5. Not completing a full and detailed inventory
The most common issues within a tenancy always arise at the end. The most common discrepancies post-tenancy are cleaning issues and the condition of the property. You can avoid this by completing a full and detailed inventory when the tenant moves in and when they leave. This means taking detailed photographs, listing of furniture and other fittings, detailing the condition of decoration, and noting anything else significant. An inventory cannot be too detailed!
Do not treat it as a tick box exercise! This is one of the most important things you can do to ensure that any discrepancies are resolved easily and without penalty.
6. Not being prepared financially
Landlords must be realistic about continuing costs. Whilst renting out your property can bring a steady income stream, there can also be unexpected costs along the way. The boiler can break down at great expense or you could have a leak that needs urgent attention, therefore always have a contingency plan. I advise my landlords to be realistic and to always set aside an amount each month from the rental received to aid with repairs. The scheduled inventory inspections that I carry out on the properties I manage also give me an accurate understanding of what might need repairing, so I can plan ahead with my landlords, allowing them to budget.
With a contingency plan in place you can be prepared for those unexpected costs.
7. Failing to carry out regular checks on the property
A frequent error that landlords, or their managing agents, make is to not check the property frequently enough. A good managing agent will check the property at least every six months and provide a detailed report on the internal and external condition of your property. They can also advise on any maintenance required or improvements that will help maintain the property to the standard expected. I find this to be extraordinarily important to ensure proper care of the property, keep void periods low, and help landlords plan ahead.
8. Not having the right insurance
Standard home insurance is not designed for rental properties. Landlords will need to take out a specialist buy-to-let buildings and contents policy that includes public liability cover, in case a tenant makes a claim against them for an accident they have in the property. Rettie and Co. has a long-standing partnership with Bruce Stevenson, who can provide a specialist landlord insurance policy. For further information on specialist landlord insurance, read our dedicated guest blog from Bruce Stevenson.
Landlords may also choose to take out rent guarantee insurance to cover unpaid rent if the tenant is still in the property.
Landlords should also ensure their letting agent is registered with the Association of Residential Letting Agents (ARLA) so that both the landlord and tenant’s money is protected. Tenant deposits are registered in a government backed deposit scheme. All Scottish Agents should also be approved members of the Scottish Letting Agent Register.
Always contact your mortgage provider prior to letting out your property.