March 30, 2021
Revealed – the most common landlord mistakes and how to avoid them
It’s still a good time to be a landlord, despite the pandemic, Brexit and a number of tax and regulatory challenges. As a matter of fact, the rental demand is robust. Plus, the opportunities provided by the stamp duty holiday and the borrowing conditions are still favourable.
Putting your money into bricks and mortar can still be highly profitable. Especially in times of crisis. Excellent returns and strong capital growth over time are very possible in most parts of the UK.
It’s not an easy thing to do, however. Even more so if you decide to manage your property portfolio yourself.
As such, it’s vital that you have the correct strategy, planning and processes in place to avoid making basic errors or mistakes.
Here, we analyse some of the things landlords need to get right to avoid stress and wasted money over the coming months.
1/ Keep on top of the admin
It might be boring and time-consuming, but it’s also vital that you keep on top of record keeping as a landlord.
Keeping an eye on the admin helps you monitor income and outgoings. It’s also important for staying on top of administrative tasks such as insurance renewals. An evidence trail is also vital if you are unlucky enough to be involved in a dispute with a tenant.
2/ Plan for void periods
With the best will in the world, you are as a landlord likely to experience void periods at some point. This is when your property empty but still costing you money.
Typically, this will occur after one tenancy has ended and before a new one begins. While you advertise for new tenants, your property is vacant, generating no rental income but still a financial burden.
Ideally, a new set of tenants would be in place immediately to replace the ones who have moved on. But it doesn’t always happen quite so easily. On average, a rental property will be empty for up to four weeks a year.
You should budget for this by holding back a contingency sum in your bank account. Or by retaining the surplus rent, after mortgage and other costs, in the account to cover you when your property is unoccupied. You may never need to use this, but it’s a good safety blanket.
3/ Carry out regular inspections
This, of course, is more difficult during Covid times. But conducting regular inspections allows you to keep tabs on the condition of your property. Whether it’s being looked after by the tenant in the right way. Doing this means you can prevent potentially very costly maintenance issues such as damp and clogged gutters early on.
It can also help you to build a good relationship with your tenants, an all-important factor in any successful tenancy.
In the current climate, it’s important that any inspection is carried out in a fully Covid-secure way. You should check the government guidance to ensure you are sticking to the rules at all times.
4/ Choose the right location
Picking the wrong location is often one of the biggest mistakes landlords make. This includes areas with low tenant demand or really bad issues with anti-social behaviour.
Location, location, location has never been more important, in light of Covid. When investing in a rental home, you should get to know the area and its reputation before investing there.
If an area is lovely but also has very high rents it may not be right. Occupying the home with tenants could prove difficult.
You should ask yourself whether tenants would want to live there. Is it in a WiFi hotspot? Are good local amenities and green spaces nearby? Are you close to a university or cultural venues?
In London, there are a number of established rental hotspots. Covid did cause an exodus to the countryside with students returning to their family homes. But with society opening back up and the vaccine rollout going well, London is expected to boom once more.
Universities are expected to be more normal next year. There is likely to be a shift back towards the office with a hybrid model being used by many employers. This should help to keep demand high.
What’s more, areas like Brixton, Balham, Clapham, Hackney and Dalston have become so loved among renters that their popularity has continued despite the recent challenges posed.
5/ Get the right cover
Not having the correct insurance in place is another easy mistake landlords can make. Insurers view buy-to-let property differently to owner-occupied homes due to the higher risks they pose. Consequently, you’ll need specialist landlord cover to be considered for a mortgage. Standard household insurance is unlikely to cover your rental property.
As well as buildings cover (and contents if you’re letting a furnished property), there are other types of insurance to consider covering periods when your home is empty or when serious damage is caused by your tenants.
A good agent can point you in the right direction for the right kind of cover, providing you with peace of mind.
6/ Manage tenant deposits correctly
If you don’t deal with tenant deposits correctly, significant fines can be levied. Legislation on this topic is especially strict, given the sums involved.
As such, it’s important to familiarise yourself with the procedures and paperwork concerning deposit protection, deposit taking and deposit return.
To ensure there are no disputes at the end of a tenancy, inventories are vital (including both video and photographic evidence). This allows you to compare the condition of the property at the start and end of the tenancy.
You must provide a copy of the inventory – with a written list of the contents – to tenants before they move in as part of their rental agreement.
To make sure all of the above things are kept on top of, you should partner with an experienced, knowledgeable letting agent.
If you have any questions about letting or selling a home in the London area, Atkinson McLeod is here to help in a fully Covid-compliant way.
To find out more about our services and current operations, please get in touch with our expert team today. You can find out how much your home could be worth on the current market by requesting a free and instant online valuation here.