Avoid these 10 common mistakes when letting out your property
Whether you’re a first-time landlord or an experienced property owner, navigating the world of renting can be tricky.
From legal obligations to tenant responsibilities and relationships, it’s easy to stumble if you’re not careful.
Today we’re looking at the top 10 pitfalls that landlords face and how to avoid them.
1) Ignoring legal obligations
Let’s start with the big one; UK landlords must comply with numerous laws and legislation acts, which includes legal obligations like carrying out gas safety checks, electrical inspections, and energy performance certificates.
Failing to meet these requirements can result in hefty fines or even legal action.
Keep a checklist of compliance requirements and review it annually. Apps and property management software can help track deadlines/expiration dates for certificates and inspections
2) Failure to protect deposits
Did you know that landlords must protect tenants’ deposits in a government-approved scheme within 30 days of receipt of funds? This isn’t just for good practice – it’s the law.
Failure to comply could mean repaying up to 3 times the deposit amount, so be sure to use schemes like DPS, MyDeposits, or TDS, they not only safeguard deposits, but also facilitate, oversee, and act on disputes.
3) Skipping tenant references
It can be tempting to rent out a property quickly to avoid void periods, but skipping tenant references can be costly.
Without proper checks, you may house tenants who cannot afford to keep up the rent payments, or who damage the property.
As such, always conduct credit checks, verify employment, and request references from previous landlords and/or housing providers.
If time is a concern, consider letting agent or tenant screening services, you can never be too specific when it comes to referencing a potential client for your property.
4) Insufficient tenancy agreements
Whilst a handshake may seal the deal for some, in property management, a written tenancy agreement is a must – it protects both parties and sets clear expectations.
Using an Assured Shorthold Tenancy (AST) agreement that complies with UK legislation is best for most arrangements. Contract templates are available online; however, many landlords may opt to consult with a solicitor to customise a contract that suits your needs, which can be used for all future tenancies.
5) Overlooking maintenance and repairs
Landlords are legally obligated to maintain their properties in a safe and habitable condition
Ignoring these repairs can lead to unhappy tenants, legal disputes, or penalties under the Homes (Fitness for Human Habitation Act 2018).
To stay on top of potential maintenance and keep on the same page as your tenant(s), conduct regular inspections and respond to repair requests promptly
Setting aside 5-15% of rental income for maintenance can help cover unexpected costs.
6) Miscalculating landlord tax obligations
Rental income is taxable and not declaring it correctly can land you in trouble with the HMRC.
On top of that, changes to mortgage interest relief and other tax rules have made property income less straightforward to calculate.
Consult an accountant who specialises in property to ensure you are claiming all allowable expenses like letting agent fees and repairs.
7) Neglecting tenant communication
Good communication is paramount to maintaining a successful landlord-tenant relationship, as poor communication can lead to misunderstandings and disputes later down the road.
Be sure to respond promptly to messages, provide clear updates, and always maintain a regular level of professionalism, consider using property management software to help streamline communication.
8) Misunderstanding legal notices
Ending a tenancy isn’t as simple as asking tenants to leave, the UK has strict eviction rules, including notice periods and procedures such as Section 21 and Section 8 [Housing Act 1988].
Mishandling these can delay eviction and even result in legal action.
Seeking possession of your property from a tenant via such notices is often a complicated legal procedure, and the consequences of mishandling or serving incorrect paperwork can range from failure to repossess, to rent repayment orders, to being countersued by tenants (in the most extreme examples).
Always familiarise yourself with the correct processes and seek legal advice if unsure, when it comes to legal notices, its always wise to err on the side of caution.
9) Underestimating cost of void periods
Void periods when your property sits empty can quickly eat away at profits. Many landlords fail to budget for these – leaving them financially vulnerable.
The bane of many a landlord is the threat of a void period, which is a period where an investment property is vacant i.e. incurring charges such as mortgage payments and council tax but not generating the rental income to cover it.
Plan for 1-2 months of vacancy per year and set aside emergency funds to cover mortgage payments during voids.
How can you reduce the impact of a void period?
Now, of course, it’s impossible to know when a tenant will give notice, or if the local rental market will dry up.
By having regular property inspections, you can stay up to date with a property’s condition as well as the tenant(s’) circumstances, so you can have a rough idea on when they intend to move out – and the inspections will mean that you should already have an idea on anything that needs to be updated when the current tenant checks out.
When a tenancy is coming to an end, plan for 1-2 months of vacancy and set aside the necessary funds to cover the property’s expenses – this gives you a buffer to cover the time taken to carry out any works, remarketing, and new tenant referencing.
10) Not using landlord insurance
Standard home insurance simply will not be sufficient for rental properties. Landlord insurance is essential to cover risks like property damage, loss of rental income, and liability claims.
Shop around for policies which include extras like legal expenses or emergency repair coverage.
There you have it, the top 10 pitfalls UK landlords face.
Avoiding these mistakes can save you time, money, and a lot of stress
Remember, being a landlord is a business, and like any business, preparation is key.
If you found this article helpful, be sure to check out some of our other blog posts, or speak with us directly if you’d like to discuss your property further.