The Top 5 Most Costly Mistakes made by Landlords:
1. Failing to reference and check tenants
This is SO crucial. Once a tenant has been given the keys and starts renting you are stuck with them. They only way you can get them out, if they fail to leave voluntarily, is after court proceedings which could take months.
However if you fail to check your tenant you may find:
- that everything they told you was a lie
- that they have no job or other income from which to pay your rent
- that they have a string of County Court Judgements registered against them
- that they are illegal immigrants and/or
- that they are criminals who turn your property into a cannabis farm!
Make sure you take references, follow them up, check EVERYTHING they say and pay for credit referencing. It will be less expensive in the long term.
For further information on this, there is a special checking and referencing section on my Landlord Law service.
2. Failing to protect the tenancy deposit
The tenancy deposit rules say that if you take a deposit, it must be protected with 30 days of the money being paid to you AND that you must serve the ‘prescribed information’ on your tenant, again within the 30 day period.
If you have forgotten to protect the deposit this can have very serious consequences:
- You cannot serve a valid section 21 notice
- Your tenant has the right to bring a court claim against you claiming up to 3x the deposit sum.
If you are still within the 30 days period after receipt of YOUR tenant’s deposit – protect it immediately! If the tenant has only paid part of the deposit – protect what you have, and protect the rest when it is paid to you. DO NOT WAIT!
In most cases you should protect the deposit ASAP, even if you are out of time. However this may not be the best thing if you want to evict your tenant using section 21. This is because you may need to refund the money to the tenant first.
If you have not protected the deposit on time, particularly if you now find you need to eviction your tenant, take a look at my Deposit Error Repair Kit.
3. Choosing a letting agent who turns out to be unsatisfactory
You need to realise that the letting agent industry is largely unregulated. Any Tom, Dick or Harry can set up as a letting agent – with no qualifications or experience. And without client money protection or professional indemnity insurance.
If you are entrusting your valuable property to someone to manage, you need to be sure that there are able to do this properly – particularly as, under agency law, YOU are responsible to the tenants for everything that they do!
If you are a new landlord wondering whether you should use an agent or not – you will find a lot of help in my New Landlords Guide here
Note also that Landlord Law members have access to our letting agents questionnaire (on the Landlords Forms page), which has a list of questions you should ask agents you are considering using to manage your property.
We also have a guide for landlords on dealing with unsatisfactory agents here.
4. Not dealing with rent arrears promptly
Most landlords rely on the income from their rented properties – to supplement their income and to cover their own expenses (for example you may have repayments to make on your buy to let mortgage).
So it can be catastrophic if your tenant fails to pay.
It is absolutely essential that you deal with this promptly and do not allow things to drift. I have known landlords loose thousands of pounds by allowing tenants more time, when it is clear that the tenant simply cannot afford to pay the rent any more.
Although you may feel compassionate towards your tenants, often the worst thing you can do is allow them to run up a debt that they cannot ever pay. There are things you can do to help them – if you take action quickly.
I have a special section on Landlord Law which gives step by step instruction on what you need to do in this situation. It is called the Rent Arrears Action Plan and gives advice on what you should do from the day the tenants first fall into arrears. It has draft letters and checklists you can use, as well as notices and preliminary advice on eviction (should this prove necessary).
You will find information about this here
5. Not knowing anything about landlords legal duties and obligations
The letting industry is heavily regulated and if you rent out property, you really need to know what you are doing. Many landlords regard their property ‘just as an investment’. It IS an investment, but it is important to realise that it is also someone’s home – and that you are a supplier in a consumer service industry.
Even if you use a letting agent, it is important that you understand the industry that you are in and how it operates. And what your legal obligations are as a landlord. Otherwise you could get into serious problems.
To help landlords, I have written a free 12 part ‘e course’ which you can sign up to here free of charge.
I also post relevant items most days on my Landlord Law Blog. You may want to sign up to get these by email – as by doing this you will keep up to date with any new developments.
Finally, if you are managing your property yourself, I suggest you get some training. My Easy Law Training Company runs regular face to face workshops and we also have annual an Conference, all of which are very popular.
If you cannot attend any of the live events, you may want to investigate our online training.
If you follow the guidance set out above you are far less likely to experience problems and more likely to have a successful and profitable landlord experience.