Here Owen offers Business Matters his ten tops tips for landlords to keep them free from tenant trouble, legislative landmines and extravagant agent fees…
1. Check your tenants ability to pay
This might sound simple but it’s surprising how many landlords just accept proof of employment as an adequate measure to expect on-time payments from their tenants. However, seeing bank statements for the last three to six months from your prospective tenants shows affordability. Regular payments from the prospective tenant’s employer and their current liabilities will give you a good picture of who you are dealing with.
2. Get to know your buy to let neighbours
Neighbours can be your eyes and ears so next time you are in the area knock next door and introduce yourself. Let your neighbours know that you care about the impact that your business investment is having on their lives.
Make sure you get to the bottom of any concerns or queries that they may have about the property next door and leave your phone number and ask them to call with any issues, however small. Perhaps even leave a small incentive like a bottle of wine or box of chocolates.
If the neighbours feel you care about their feelings and the impact of your property and its tenants on their lives, then they are far more likely to let you know about any early signs of problem tenants. They also might be open to supporting any future planning applications you may have, if you have built up a good relationship with them!
3. Insurance: Don’t get tripped up!
Lots of landlords get caught out and find that when they come to claim for burst pipes or other damages that their buildings insurance isn’t for a buy to let property – and these are the lucky ones!
To protect your investment you need to make sure your insurance policy is fit for purpose, covers your property for buy to let and that does mean it may be empty for more than 30 consecutive days – a clause that is common in policies. Many landlord insurance policies do not cover DSS tenants, so take the time to check any policy’s restrictions.
It’s also essential to remember that as it’s your house, you could also be held liable for accidents to people residing in or visiting your property so check you are insured against this eventuality.
4. Swap a deposit for a guarantor
Deposits now have to be held in an accredited deposit protection scheme so if there is a dispute at the end of the tenancy you can find yourself tied up in red tape but with a guarantor – a credit worthy householder who knows the tenant well enough to vouch for them – puts you in a much stronger position. It’s also someone to pursue to recover your losses if the tenant does default, cause damage or worse.
5. Use an agent… in moderation
Agents offer a good tenant finders service and will be able to provide you with standard legal documents that you’ll need, so it can make sense to utilise their services. Many agents now offer free tenant finders services to the landlord and they charge the prospective tenant fees instead of you. But beware! Agents will want to up sell you management and other services that can be costly so be sure to shop around and consider all your options before you you sign up.
6. Source CP12 Gas certificate and EPC yourself
It’s tempting to ask an agent to deal with this for you but if you do, they will charge a premium for tasks that are simple to arrange. It’s worth considering if you could do it yourself, or look at other options. For example, a membership with us (First Assist) includes a CP12, other legal requirements and much more. Energy Performance Certificate’s (EPC’s) through First Assist are cheaper too.
7. An inventory is a must
It might be a pain to arrange but it’ll cost more than your time if you don’t get a thorough inventory. Many landlords dismiss an inventory’s importance as they’ve already written off the contents of their buy to let investment in their mind, however, when faced with the reality of an unruly tenant, the ‘little things’ can really add up.
Landlords often forget to consider the costs of touching up paintwork, holes made in walls, garden clearances and much more. When you consider you’ll have to pay mulitple contractors to clean up the mess – or take the time to do it yourself – an inventory doesn’t seem as onerous!
It’s also important to remember that if there’s no inventory, there’s no proof and no way you can claim compensation from your tenant or their guarantor.
8. Don’t compromise on annual property checks
Many landlords never visit their properties simply because of the distance or feeling awkward, but it’s an essential part of managing your property effectively. Agents sell a property check as part of their management package, however, is it a thorough check?
You need to complete a comprehensive property check which has excellent attention to detail – it’s surprising how much the small things can cost you in both time and money so don’t settle for a sub-standard check list completed in minutes during a quick walk round. Don’t be afraid to open and shut cupboards, check under furniture and behind curtains – not all tenants are upfront about damage they’ve caused!
Remember, it’s your investment and you need to protect it.
9. Talk to your tenants
Happy tenants usually means happy landlords. A little communication goes a long way and if a tenant feels they have a good landlord and safe and sound property, most will go that extra mile to help you when you need them to – like being available at short notice for inspections.
If you have a good relationship with your tenant they are also likely to raise any concerns they have early, which means that you’ll know about any issues before they metaphorically (or literally) blow up in your face!
10. Remember being a landlord is a business
Keeping good records and making sure you are fulfilling your legal obligations are things you do automatically in your work life and the same should be true for your buy to let. You’ve invested a lot in your property portfolio so being professional is vital.
It’s important to remember that your buy to let is a business, it’s not your home. Think practically, professionally and objectively and being a landlord will be a breeze.