There is a phrase being bandied about by the media which is rather euphemistic- “Accidental Landlords.” This phrase is being used to describe people who, in the main, feel they have been forced into becoming a landlord because they can’t sell, or can no longer cover their mortgage for whatever reason.
Caution For Accidental Landlords
If this describes you then I must inject a note of caution. Being a landlord is not as simple as downloading an AST and getting a tenant. Even if you choose to do it all with an agent, you should be aware that really good agents are few and far between. Most are average at best. Many don’t even do the monthly checks they are contracted to do. It always pays to check back on them and also for you to keep in contact with the tenant.At the very least you should meet the tenant.
When things go wrong for accidental landlords one thing that people are often unprepared for is that the law always favours the tenant in the UK. If you ever have the issue where you end up in court with your tenant, if anything at all is out of place with your paperwork, you will not only loose whatever money you were hoping to get back, but you may have to pay the tenant for the priveledge!
Here are a few things to watch out for if you find yourself in the position of becoming an “accidental landlord;”
- Always put the tenant deposit into the Deposit Protection Scheme.
- Always get the safety checks done before rental- ie gas safety cert.
- Get a proper agreement, not just a standard AST.
- Take inventory including photos and even video of the state of the property, and, get the tenant to sign and give them a copy.
- Do not get involved in taking money from tenants, collect rent via the bank-and check it arrives.
- ALWAYS credit check them and ask for copies of bank statements.
- Make sure you switch all utilities to their name AND have their responsibility for them in the agreement.
- Check with your insurers, you may need to add specialist insurance.
- If you rent with furniture included, it too must adhere to safety standards.
- Get smoke detectors fitted, tenants are often negligent and will not care for your former home as you would.
- If you rent to friends, use the same rules as above! ( Personally I never rent to friends-it’s a minefield of potential problems.)
- You must get permission from your current mortgage provider to rent, and they may want you to change mortgages to BTL
- There are over 70 pieces of legislation that cover renting a property, get familiar with them.
- Get familiar with the eviction process, delays in acting can cost you a lot of money if problems occur.
- Check your tax situation before you begin, you could be liable for Capital Gains Tax, also, there are tax expenses you can deduct.
- Build up a fund for when things get damaged or broken or if there is a void you need to cover.
Let’s be clear. If you rent to tenants you are still responsible for repairs and for their safety whilst at your property. Don’t leave it to chance. If you feel you are forced into a position of becoming and accidental landlord, you must put measures in place to protect both yourself and them. People always appear to be nice….until they are not!