Most Common Mistakes Residential Landlords Make & How to Avoid Them
Being a landlord can be challenging and with rules and regulations surrounding tenancy agreements and letting your property, differing across the UK, it can make it easy for landlords to make mistakes that can lead to problems with their rental properties, tenants, and even legal issues.
Our team is made up of experienced letting agents who are landlords themselves. So, we’re taking a deep dive into common mistakes landlords make and how to avoid falling into the same traps.
Illegal or Unfair terms within the Tenancy Agreement
Using generic or outdated tenancy agreements can leave landlords vulnerable to legal troubles, so it’s important to have a comprehensive, legally sound agreement that outlines both tenant and landlord rules and responsibilities, making sure each term within the contract is clear and fair.
A term is deemed unfair if it reduces the tenant’s statute and common law rights, imposes unfair penalties or charges or is not made in good faith. Prime examples of unfair and potentially illegal terms include: excessive security deposits (legally, the maximum is set to five weeks’ rent), increasing the rent during the fixed term or giving the landlord excessive rights to enter the property.
The Renter’s Reform is one of the biggest shake-ups to the UK rental system in recent years and will impact AST terms. Find out what the Renters Reform Bill means for you as a landlord, here.
Unclear or Impractical clauses within Tenancy Agreement
It is imperative for landlords to ensure the terms within the tenancy agreement are both practical and immediately clear for both parties’ protection. This reduces the chances of miscommunication which can lead to costly disputes and legal action.
Insufficient Tenant Referencing
Failing to conduct thorough tenant referencing can result in problematic tenants which can cause problems for landlords which are hard to rectify. For example, tenants who consistently fail to pay their rent or cause damage to the property can be a very costly mistake brought on by improper tenant referencing.
Before you agree anything with your prospective tenants, it’s a great idea to conduct thorough referencing which should include credit checks, background checks, rental history, and employment verification.
Both of our landlord service levels include comprehensive tenant referencing and right to rent check including share code verification or international ID check. This can take the stress out of this and help to minimise the risk, giving you the confidence that your property is being let to trustworthy and reliable individuals.
Improper Handling of Security Deposits
A security deposit serves as protection against potential property damage or unpaid rent and failing to collect one can lead to huge financial losses.
Similarly, mishandling security deposits or not following legal procedures for deductions can result in legal trouble and penalties, so it is imperative you follow the rules. It is your legal responsibility as the landlord to secure your tenants’ deposit within 30 days of receiving it in a government approved tenancy deposit scheme, even if you are using a letting agent to manage your property.
To avoid any legal penalties, we recommend having a go-to government-approved tenancy deposit scheme for all rental properties and ensuring you transfer the security deposit immediately after receiving it.
Each of our services for landlords include deposit protection with a government-approved tenancy deposit scheme as standard.
Overlooking Proper Insurance
In order to add a level of security when letting your property, it’s a good idea to get to grips with various insurance policies and indemnity schemes to protect your property and your income. Some landlords make the mistake of believing ordinary household cover will help in an event of any issues, but this is not the case.
To avoid any shortfalls, we recommend taking out specialist policies with a trusted provider to help protect against any issues that can have a severe financial impact, such as unpaid rent or extensive property damage.
Our landlord services include both rental guarantee insurance and landlords’ insurance as optional add ins and our team is always available to talk you through the ins and outs of both.
Choose a Lettings Agent for Landlord Services
Being a landlord can be difficult and time consuming, but our experienced team of letting agents are well versed in ASTs and property management, and are eager to take away the hassle and help you maximise your rental income. By choosing a professional letting agent to help you manage your rental property, you can benefit from peace of mind that your rental property is legally compliant and managed appropriately whilst saving you time and effort.
How to Maximise Your Rental Income
Now that we’ve covered the top 10 most common mistakes landlords make, discover the easiest ways to maximise your rental income, here.