5 Common Mistakes To Avoid As a First-Time Landlord in the UK
Often termed as ‘Generation Rent’, Millennials have famously faced more hurdles to homeownership than any generation before them.
However, there seems to be a rising trend in the pursuit of rental incomes across this age ground. The latest surveys into the matter found that almost half of 18-24-year-old landlords now treat rentals as their prime sources of income.
If you’re a first-time landlord, you’ll have a lot to think about when you’re preparing to let out your property.
Financial considerations, and understanding the law on lettings, are just two of the subjects you need to get to grips with first.
As a landlord, you’ll have to cope with ever-rising costs and expanding regulations, and it can be overwhelming.
To help make the process as stress-free as possible, we’ve come up with 5 points that will help you to avoid common beginner’s errors. Following them should earn you the gratitude and respect of your tenant, show that you have the expertise to choose reliable renters, and protect yourself financially in case of problems.
1. Don’t skip background checks
A reference check is essential because you must be sure that your tenant can be trusted, both to respect your property, and to meet payment obligations.
If you use rent guarantee insurance and need to claim, you may in any case be required to provide evidence that you carried out initial searches.
2. Don’t ignore lettings law
You could soon come up against problems if you don’t familiarise yourself with the rules and regulations that detail the rights of both landlords and tenants, so do this before you start.
Know your legal rights (including fire protection, electrical safety, etc.). Get familiar with the Rent Control Act, and read additional resources like this comprehensive guide to electrical installation condition reports.
For example, the Housing Act 2004 lists legislation that applies to England and Wales, requiring landlords to recognise legal standards for the private rental sector (known as PRS), as regards conditions.
You should also look at the UK Government’s compilation of possible hazards, the Housing Health and Safety Rating System.
More regulations concern the number of occupants in a house or flat, called Houses in Multiple Occupation, or HMOs. This could apply if your property houses three or more tenants in more than one household, sharing a kitchen, bathroom, and toilet.
Your options regarding evictions can vary, so you must know what they are. Circumstances will dictate whether you need a Section 8 or Section 21 notice for England and Wales. For a re-possession case to succeed, certain legal criteria must be met. For instance, to issue a Section 21 notice, occupants with an assured shorthold tenancy (or AST) must have been given:
➡ The leaflet “How to rent – the checklist for renting in England
➡ An energy performance certificate, known as an EPC
➡ A gas safety certificate
In addition, their initial deposit must be in a government-approved protection account – this is the law.
3. Don’t forget to update contact details
Exchange email addresses and phone numbers at the start of the tenancy. Check regularly to ensure that these are still correct – smooth communications can make so much difference on both sides. Your tenant may need to contact you about repairs, and on your side, you need to be able to arrange inspections, giving them advance warning.
4. Don’t neglect your property
Carrying out the regular inspections mentioned above is important, to ensure that the premises are being kept in good condition, and for early identification of any issues. Remember that you have to give at least twenty-four hours notice in writing, and offer a time that is acceptable (see the Landlord and Tenant Act 1985).
5. Don’t be confused by insurance options
Insurance cover for a rental property won’t be the same as the building and contents policy on your own home, because different problems could arise.
So if you’re considering cover in case things go wrong, do take out a specialist Landlord Insurance policy. If you have a mortgage agreement for the property, it may stipulate this as a condition for claims, so if you ignore it, you may breach your contract.
A good policy will cover malicious or accidental damage and theft by a tenant, so it is well worth buying one.
As Managing Director James Collins of Just Landlords, who specialises in insuring landlords, points out that letting includes many responsibilities, with one of the most important being to offer safe and comfortable housing. It’s not enough to pursue your own business requirements – you also need to consider the effect on the lives of your tenants.
He backs up our advice by stressing that it’s imperative that you have a responsible attitude to your lettings and take heed of legislation. It will be to your advantage to build up a good reputation.