Our friends at Belvoir Lettings asked if they could post on our blog.
We said we would be delighted and proprietor of Belvoir Bolton, Mike Stuttard, identifies the top five things that can go wrong for landlords, plus explains what they can do when the worst happens…
What can landlords do when things go wrong?
Even the most straight-forward of lettings agreements aren’t without their potential problems. Plan early for pitfalls to minimise financial risk and maximise long-term gain.
1. Evicting bad tenants
When a good tenant turns bad, what are a landlord’s options and how can they evict them?
It is important not to let matters drag on once rent becomes late. Obviously legal action cannot be taken until the rent becomes two months in arrears, however, all necessary steps should be taken beforehand to contact the tenant and find out what the situation is.
Make sure that all the correct notices are issued if the landlord wishes the tenant to leave. It is recommended that Rent and Legal insurance protection is taken out at the outset and this will cover the rent and legal costs should an eviction become necessary.
2. Avoiding the ‘void’
How can landlords minimise the potential for long ‘void’ periods on their properties?
Nobody has a crystal ball but there are ways to reduce the possibility of void periods. It is important to make sure that the property is in a good condition. First impressions are extremely important in the lettings market and a property that looks good on entering will get the tenant interested. Avoid poor decor and damp, keeping the interior neutral wherever possible. Also, make sure that the property is competitively priced. The price may change depending upon market conditions - be prepared to be flexible.
Consider offering incentives, too - for instance 50% off the first month rent. And, always consider offers from prospective tenants. Don't just stick to the advertised price - the market can be a buyer’s market for tenants who have many properties to choose from.
3. Dealing with rent arrears
How can landlords deal with rent arrears and what systems can they put in place to minimise the risk?
There are several things a landlord can do to help avoid rent arrears. Make sure that steps are taken sooner rather than later if a tenant is late with rental payment and make telephone calls if the rent is more than five days late – never let the matter drag on until the rent is more than one month late.
Ensuring that rent is collected by standing order, rather than waiting for the tenant to pay by cash or cheque, is also a good way to help guarantee regular payment - and remember to take out good Rent and Legal protection insurance before your tenant moves in too.
4. Money management
What can landlords do to help manage their outgoings and deal with fluctuating interest rates?
Fixing the interest rate on their mortgage is an obvious way to reduce fluctuations, plus keeping void periods to a minimum is also recommended. If you keep tenants happy they probably won’t want to leave in a hurry!
Look to review the rent each anniversary. Nevertheless, it is not always the case that rent increases annually - this may make tenants look elsewhere for alternative accommodation.
5. Dealing with damage
How can landlords deal with damage to their property and minimise their financial loss?
It is always recommended that landlords have sufficient buildings’ insurance cover in place. This should include malicious damage cover as well as cover while empty for longer than 30 days.
Landlords are also recommended to have some contents cover to include items such as floor covering and appliances.
Having a dilapidation bond is also important, together with a robust inventory/statement of condition for the property in case there is a dispute at the end of the tenancy. A good lettings agent will be able to provide insurance cover and prepare inventories for you.