Being a first time landlord can be a daunting journey, with many newbies stumbling at some pretty common pitfalls. To help ensure your first landlords experience is as smooth as possible, we’ve put together a list of eight rookie errors and how to avoid them.
Not drawing up an official lease agreement
Whether you’re renting out your property through an agency or are planning on finding private tenants, it’s essential to have a physical lease agreement that states important factors such as rent, liability, tenant/landlord responsibilities, length of contract and general house rules. Having a written document to refer to in the case of any disputes will make things a whole lot easier.
Neglecting to regularly review rent
Many first time landlords completely neglect the need to regularly review rent costs. While you don’t want to rip your tenants off and force them to consider relocating, you do want to ensure that your rent matches current market values. This is fair for both parties. Note that this should only really be done at six or 12 month intervals.
Not taking out landlords insurance
Taking out landlords insurance is not only smart but also a legal requirement. While you may not be living in the property you still have a responsibility to fix/repair any issues and ensure that the space is safe for human inhabitation.
Not taking an inventory
If you’re renting a furnished property it’s always advisable to write down an inventory of what’s included and the condition it is currently in. This will help solve any disputes over missing or damaged items.
Not applying for a buy to let mortgage
If you don’t plan on living in your property the banks require you to take out a buy to let mortgage. This is because relying on tenant payments is considered more risky than normal. If your bank finds out you are leasing a property on a non-buy to let mortgage, you could risk fines and damage to your credit rating.
Not meeting official regulations
As a landlord, you’re obliged to ensure that your property meets a number of governmental health and safety regulations, such as electrical safety and fire checks. You’ll also need to secure an Energy Performance Certificate.
Not carrying out background checks on tenants
To minimise the risks of any issues or payment disputes, landlords should always carry out tenant reference checks before agreeing to a lease. This will give you an idea of what your tenants will be like and give you the peace of mind that you have found renters with a good renting history.
Underestimating ongoing costs
As a first time landlord it’s important to have a realistic idea of what costs may arise in the future. Always make sure you have back up funds to cover things such as repairs, maintenance, missed rental payments etc. Of course, taking out a comprehensive landlords insurance policy will help minimise any stings.
Armed with these eight tips, you can make sure that your journey as a landlord is smooth, safe and hassle free. Make sure you compare landlord insurance online to find the best possible deal, and you’ll be safe whatever happens.