Being a landlord looks like it should be easy. Hand over the keys, collect the rent and everyone’s happy. However, the reality is that there are many bumps in the road, particularly if you’re renting out your first property. These are just a few of the most common mistakes that many first time landlords make.
1. Failing to Protect Deposits
Ensure that you protect the tenant’s deposit in a government-approved tenancy deposit scheme. If this isn’t done within 30 days of the deposit being paid then tenants can make a claim against a landlord for three times the amount of the deposit not protected.
2. Incomplete Paperwork
The internet is awash with different tenancy agreements but they are rarely a) up to date, or b) robust enough, yet some landlords still use them in the hope of saving a few pounds.
A robust and current tenancy agreement is a ‘must have’ along with ensuring that you understand which documents must be served with it to ensure you have protection later in the process if you need to take action against a tenant.
The tenancy agreement is the cornerstone of the agreement between landlord and tenant; incorrect or incomplete paperwork can make it very difficult to enforce in the future.
3. Avoiding the Inventory
Completing an inventory prior to tenants checking-in and after they have checked out is a time-consuming and sometimes tedious process, but it is not something you want to skip.
The purpose of the inventory is to definitively establish the state of the property when the tenant arrives and leaves. It’s this that will help to prove if a tenant is responsible for any damage and will minimise disputes over retaining some or all of a deposit.
4. Not Understanding Tenant Rights
Many landlords forget that when a property is rented out it is no longer theirs to use as they choose. For example, tenants have a right of quiet enjoyment that means landlords can’t just come and go — notice should always be given.
Landlords who flout a tenants rights, even unknowingly, can face substantial penalties which can include the return of all rent paid in some circumstances.
5. A Badly Managed Eviction
There are all sort of issues that can arise when landlords are trying to remove tenants who are unwilling to go.
Attempting to remove your tenants from the property in any way, other than the tenants leaving voluntarily or getting a court order is an illegal eviction.
You cannot change the locks on the property or remove the tenants’ belongings from the property, regardless of how poorly you believe they have behaved. An illegal eviction could result in a fine up to £5000 and/or six months imprisonment — and that’s just for a first offence.
6. Not Researching Tenants
Sometimes the thrill of your first interested tenant can disguise potential problems they may have. Many first time landlords don’t get references, or carry out credit checks, especially if someone “looks fine.”
If you have any concerns then it’s important to dig a bit further, and if their finances aren’t ideal don’t be afraid to ask for a guarantor.
7. Failing the Legal Obligations
In Northern Ireland the obligations on landlords aren’t that onerous, but there are enough of them to require some commitment. First time landlords often fail to fulfill them simply as a result of a lack of awareness.
For example, by law, the gas installation must be checked by a Gas Safe registered engineer. Tenants are increasingly well informed and willing to cause problems where landlords fall short, so mistakes like this can be costly.
If you’re thinking about starting out in property investing or maybe you already self-manage your property portfolio and need some advice, just drop me a line to firstname.lastname@example.org I’d love to hear from you!