Letting out your property can be a great way to earn some extra money. However, there are some common mistakes that landlords should avoid, which could prove costly if ignored. Fortunately, as an experienced estate agents in Birmingham, we will address some of these common mistakes in the hope that our readers won’t make these mistakes themselves.
1. Not considering the needs of the tenant
Firstly, before buying a property with the intention of letting it out, an important consideration is location. The needs of a potential tenant should be on the forfront of your mind and therefore, the ideal property should:
be within a reasonable distance to local amenities such as shops
have good transport links for those that need to commute
be close to schools that are ranked outstanding by OFSTED in case your tenant has children
By having a property that appeals to a range of tenants in a sought after area, you can minimise any void periods and benefit from the value of your property appreciating over time.
2. Not having the correct insurance
If you already own the property you want to let out, before looking for potential tenants, an important step is to ensure that you have the correct insurance as standard home insurance isn’t designed for rental properties. This includes:
Landlord liability insurance
Landlord buildings insurance
Landlord contents insurance
Loss of rent insurance
Tenant default insurance
Accidental damage insurance
Alternative accommodation insurance
Unoccupied property insurance
Landlord home emergency insurance
Legal expenses insurance
For a more detailed breakdown on these different types of landlord insurance, you can read our article here.
3. Not having a realistic price point
Before marketing your property to potential tenants, it’s crucial that you get the price point correct. By inflating the cost of the rent, you risk your property remaining vacant for an extended period of time. Just like when selling your home, you must remember that your rental property is in competition with other properties on the market.
As a result, we would recommend hiring an estate agents in Birmingham to complete a rental valuation of your property, which Matthews do for free with no obligation to use our paid services. Alternatively, if you don’t want to hire an estate agent, at the bare minimum you should research the prices that properties similar to yours are being marketed for. Keep in mind the location of your property, it’s condition, and the level of furnishing you’re willing to provide.
4. Not performing the correct checks on tenants
On 1st February 2016, Right to Rent legislation was introduced which means both landlords and letting agents must by law perform the correct checks to ensure that a potential tenant has the right to rent in the UK.
This is true even in cases where:
the tenant’s name isn’t written on the tenancy agreement
there is no tenancy agreement
the tenancy agreement is not in writing
For more information on Right to Rent checks and how to perform them, you can read a government guide here.
As well as Right to Rent checks, it is important to perform credit history checks, obtain references from previous landlords and current employers, and conduct affordability checks. As a general rule of thumb, the rent shouldn’t be more than half of the tenant’s income.
All of the above checks can be performed by an estate agents in Birmingham, especially at Matthews, where we hire an independent referencing company to carry out these checks at no extra charge to you, if you instruct us to find you a tenant.
5. Not securing the deposit in a deposit protection scheme
A standard requirement in residential lettings is for the tenant to provide one month’s rent in advance as well as a deposit, which usually equates to one month’s rent. Upon receiving this deposit, the landlord must by law, even if they are using a letting agency, ensure that the deposit is protected by one of the three government-backed schemes below:
Deposit Protection Service
My Deposits
Tenancy Deposit Scheme
The deposit must be protected within thirty days of it being received and the tenant must be informed of certain Prescribed Information. Failure to do so will result in the landlord being unable to serve a Section 21 notice and they could face prosecution by the tenant for up to three times the deposit.
The Prescribed Information that a landlord must provide to the tenant includes but is not limited to:
the name, address, telephone number and email address of the tenancy deposit scheme.
any information contained in a leaflet supplied by the scheme to the landlord.
the procedures applied by the scheme at the end of the tenancy that involve the repayment of the deposit as well as any disputes
6. Not completing a full and detailed inventory
At the end of the tenancy, your property should be given back to you in the same state it was in before the tenancy began. In order to hold a tenant accountable for any discrepancies, a landlord or letting agent should complete a full and detailed inventory. This includes:
detailed photographs
listing of furniture and fittings along with their condition and quantity
details of the condition of the decoration
the gas, electricity, and water meter readings
A detailed inventory will prove useful during any deposit disputes as the landlord will have to provide evidence to the deposit protection scheme that any damage to the property was caused during the tenancy.
7. Not performing regular inspections on the property
Buying a rental property is a huge financial investment and as such it is crucial to perform regular inspections on the internal and external condition of the property during a tenancy. By performing these inspections regularly, any maintenance or improvements can be made before they become a bigger and more costly issue. In some cases, a property may become inhabitable due to health and safety concerns, resulting in a significant void period.
Additionally, inspections are necessary to ensure that tenants aren’t using the property for any nefarious purposes or subletting to another tenant. If a property is found to be sublet to a tenant that doesn’t have a right to rent in the UK, the landlord could face very serious criminal charges.
8. Not hiring a property management company
During a tenancy, it is important for a landlord to have certain experts in their corner. Matthews, for example, is an estate agents in Birmingham that also offer property management services.
These services ensure that during the tenancy, the landlord doesn’t have to deal with stressful and time-consuming tasks such as:
collecting rent
dealing with complaints
arranging maintenance and repairs
carrying out inspections
serving legal notices
By hiring a property management company, the landlord also gains access to reliable professionals from many different trades that can offer competitive prices for any maintenance or repairs. What’s more, a property management company will be up-to-date with the latest legislation that a landlord must abide by during a tenancy in order to prevent any legal hassles.
Hiring a property management company will allow you to relax and have peace of mind knowing that your investment is in safe hands.
Are there any more common mistakes that landlords make that we've missed out? Please let us know in the comments.
And if you are a landlord and think you would benefit from hiring an estate agents in Birmingham to manage your property, contact Matthews Estate Agents using the contact details below or visit our website here to find out more about us and what we can offer you.
Tel: 0121 358 0008 (Lines open Mon - Fri 09:00 - 17:30)
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