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Top 8 Mistakes Landlords Make

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Tue 30 Apr 2019

Top 8 Mistakes Landlords Make

1) “Forgetting” to secure deposits


You would be surprised how many independent landlords fail to secure their tenants deposit into a tenancy deposit scheme. At Seths we still find new landlords walking through our doors who want us to manage their properties and who do not have their tenant's deposit secured.

It’s very shocking for us, as we find that many novice and sometimes experienced landlords don’t realise that this is a requirement by law ! What they didn’t realise, is that if the deposit isn’t secured within 30 days from the moment the deposit is taken, the tenant gains the upper hand.  They can prosecute the landlord for 3 x the deposit amount, they also become immune to Section 21 notices, which means that the landlord can’t regain possession of the property easily and it could potentially be very costly. 

At Seths we ensure that every deposit is secured in a tenancy deposit scheme on behalf of the landlord to meet legal requirements.

For the tenants, this gives them peace of mind that their deposit is secured in a tenancy deposit scheme. As a landlord, you must remember that this is not your money, it’s still the tenant's money.

The deposit should only be used if a tenant returns the property in a worse state than the condition they received. (Minus day-to-day wear and tear).

Who decides if any money from the tenancy deposit scheme should be used?

This will be decided by an independent adjudicator, who is appointed by the tenancy deposit scheme itself.  They will act as an independent intermediately from the tenant, landlord and an estate agent like us. 

At Seths we run a property inspection with every new tenant and carry out further property inspections every 6 month, which are all thoroughly documented.

This is to protect both the tenant and the landlord, whist ensuring that both parties know how the property was initially LET, and how it has been looked after by both the occupying tenant and landlord. 

 

2) Failing to use regulated letting agent

 

There are many agents that operate without being a member of The Property Ombudsman. At Seths we are regulated by The Property Ombudsman, as every reputable agent should be.  We adhere to a strict code of conduct, which effectively increases consumer protection.  If you are using an agent that is not regulated by The Property Ombudsman, you should ask yourself, am I using the right agent?

 

3) Providing new tenants with long-term contracts


Long-term tenancy contracts (12 months +) sound great, they can give you peace of mind that your property is being LET for a long term. It also gives you the peace of mind that you don’t have to find a tenant anytime soon. 

However, at Seths, we don’t believe that long-term tenancy contracts should be given, unless its for a commercial property. For residential LETS, we recommend a 12 month tenancy contact and at times even 6 months. We feel that this is a better option for you as a landlord and for your tenant.

Circumstances can change for both parties. We’ve seen many reasons and some examples are:
 

.  Moving to a new city or country

.  Upgrading or Downsizing property

.  Moving closer to a preferred school for a child

.  Divorce


As a landlord you may want to sell your property or even move back in.  

The above are only some examples of what we have seen. Circumstances change, which is why we recommend short tenancy contracts. 

 

4) Skipping property inventories


Since the introduction of the tenancy deposit scheme, property inventories have been crucial for landlords, yet it still doesn’t seem to be high up on the pecking order.

Why is it crucial? 

It’s crucial because no longer is the tenant’s deposit in the fate of the landlord, it’s now in the fate of an impartial adjudicator, who will assess the situation by the evidence that he or she is provided with.

God forbid if a tenant causes destruction to the property and refuses to take responsibility, the landlord will have to prove to the adjudicator, appointed by the deposit scheme, that the property was never given to the tenant in the condition he/she has left it in. 

Without an inventory, it’s extremely difficult to do that. At Seths we take this very seriously and thoroughly document this during our initial property inspection and recurring  6 month property inspection.

 

 

5) Skipping Property inspections


The point of an inspection is to find out how well or poorly a tenant is treating your property. If you, as a  landlord are investing on average well over £150,000.00 into a property, why wouldn’t you want to inspect your property?

We find landlords who have 1 or more properties that don’t carry out these key inspections before coming to us. This could be because they didn’t think about it, they’re busy with work and their day-to-day lives, but mostly because they have invested in property for the long term return and are self managing without any advice. 

At Seths we carry out regular inspections, which could identity problems earlier, rather than later.

We send out a detailed inspection report to our landlords of each property we manage. This not only shows how their tenant is looking after their property, but it also allows us to intervene should the need arise, before any problems spiral out of control. 
 

6) Purely relying on short-term market growth

 

We can sometimes be drawn into programmes such as Homes Under the Hammer, where we see experienced and sometimes novice landlords do very well in a short space of time. However, novice landlords have to remember that although this can happen, investing in property should be seen as a longer term investment. 

Being able to buy a property at a good value, renovating and selling it in a short space of time for a tidy sum is still possible, but novice landlords have to remember that this is not as easy as it seems.

There are many reasons for this and these can include:

 

.  There are a lot of landlords and small developers looking for these types of projects and being able to secure one is difficult event at an auction.

.  You may find some unexpected expenses when work starts, which may eat into your profit and sometimes causing a short term loss if the property is sold sooner rather than later. Later could mean holding the property for many years. 

.  Planning permission may be refused if the initial plan was to expand and make the most of the property's potential. 

.  Many development properties are sold way before they reach the market. We certainly see a lot of these investment properties and with waiting buyers, these properties are often not advertised for sale on the open market. 
 

You also have to keep in mind that Buy-To-Let investments are very good and they offer a longer return on your investment.

We help landlords grow their property portfolios and work with them to achieve this in the long run with a strategy in place. There are many factors that dictate this, from market conditions, to available properties, to tax implications, to name a few. 

So we definitely recommend seeing property investment, as a long term investment.

 

7) Allowing rent arrears to escalate


You would be surprised with the number of novice tenants who try to manage their own properties and are in rent arrears. We see this almost every month when we have novice tenants come to us, because they are struggling to collect rent, liaise with their tenant and at times not knowing if the tenant is looking after their property.

At Seths we manage many properties for our landlords and we always ensure that rents are collected on time. We do this by ensuring that we select good quality tenants. However, this doesn't guarantee rent being paid and there are a few rare cases where tenants fail to pay due to a change in their circumstances. 

As a landlord, you still need to collect your rent to pay your mortgage, maintenance expenses etc… should the unforeseen arise, there are legal steps to take, for which we will guide you when the need arises.

 

8) Allowing tenants to develop bad habits

 

As a landlord, you have in your mind a certain way that a tenant should behave and look after your property. At times tenants will behave the way they normally do and this can cause damage to the property and in essence your investment.

We are not saying that there is never going to be any wear and tear from the day-to-day usage of your property, but we have seen on a very few rare occasions some interesting tenants habits that are probably best not to be mentioned. 

From our initial property inspection to the 6 monthly property inspections, we carry out these to ensure your property is being looked after and also to ensure that your tenant is happy with the condition of the property. However, if we do see any bad habits being developed, this is something that we will inform you and liaise with the tenant.

These are only some tips and suggestions that we have. We work closely with many landlords, both novice and experienced ones.



If you are considering to invest in property or are a landlord with 1 property or more, or a serial property investor with over 100 properties, we would love to talk to you and give you some examples of the many success stories we’ve had with our landlords, regardless of their property portfolio size. 


For an informal chat, email me directly at ravi@seths.co.uk or call 0116 266 9977 for honest, expert and friendly advice.
 

Thanks for reading !

Ravi Seth

Managing Director

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