This time last year, a surge of buy-to-let landlords rushed to purchase rental properties ahead of the Stamp Duty changes. However, a recent survey suggests that 55% of these investors are not seasoned property experts, but are first time landlords who are unaware of the legislation they must comply with.
First time landlords should look to this list of common mistakes in order to avoid making them:
Failing to protect tenants’ deposits
It is a legal requirement for landlords to protect their tenants’ deposits in a Government-approved tenancy deposit protection scheme for the length of the tenancy. This applies to all landlords and was introduced by the Government in April 2007. Failure to comply could lead to a fine of up to three times the amount of the deposit and a delay in regaining possession of your property.
Poor tenant referencing
There is no way to guarantee your tenants’ behaviour. However, there are steps you can take as a landlord to protect your property and investment. By running thorough checks on prospective tenants, reviewing their rental history, income and employment references, you will likely uncover any red flags before the tenancy begins.
Not budgeting properly
The most common mistake made by first time landlords is to not budget for all of the hidden costs associated with letting private property and therefore not making as much profit as expected. Aside from the obvious mortgage payments and letting agent fees, seasoned landlords will often have a contingency fund in place for when things break down. Not having funds for such emergencies is a common pitfall among accidental and first time landlords. Although, you should also remember that it is essential to put Landlords Insurance in place. Our award-winning policy offers the widest cover on the market as standard: https://www.justlandlords.co.uk/landlord-insurance
Not serving the correct eviction notices
To regain possession of your property from a tenant, landlords must serve either a Section 21 notice or a Section 8 notice if tenants have broken the terms of the agreement. Failure to serve the correct notices may result in you not regaining possession of the property and, in the very worst case, could lead to prosecution under the Eviction Act 1977.
Not creating an inventory
To avoid disagreements over damages and deposit deductions, landlords must create an inventory before a new tenant checks in. It is the simplest way to settle disputes over damages. If there is a dispute at the end of the tenancy, the inventory can be used as evidence in deciding how much should be deducted from the tenant’s deposit. This guide explains how to create a professional and thorough inventory: https://www.justlandlords.co.uk/news/landlords-guide-inventories-avoiding-disputes/
Michael Cook, the Lettings Director of Romans Group, says: “With more and more legislation being created around the rights and responsibilities of landlords, we strongly advise those who are managing the property themselves to ensure they fully understand the laws and legislation relating to lettings.
“Failure to comply can result in fines, criminal convictions and leave landlords unable to lawfully evict tenants.”
First time landlords, avoid making these mistakes by following the above advice.