How to Protect Your Rental PropertyWritten By PropertyLoop August 18, 2021
It goes without saying that when a landlord enters into a new rental agreement they expect to return to the property come the end of the fixed term, without seeing their investment be left in a state of disrepair by tenants they thought were being respectful. These discoveries not only burn a significant hole in the pockets of rental property owners, but leave the landlord juggling what is now a void period whilst the appropriate works are carried out. But, what can a landlord do to protect their rental property?
Do You Need a Property Inventory?
It is difficult to overstate the importance of curating an accurate property inventory. If collected correctly a property inventory can save both the landlord and the tenant when trying to dispute the condition of the rental property come the close of the tenancy’s fixed term. This is because the property inventory is carried out by both parties of the rental agreement at the start of the rental period. This document comprehensively details the condition of the rental property, its appliances and furnishings, with the landlords and tenant supporting their findings with descriptions of each issue and accompanying photographs. This report is commonly put together prior to the tenant moving into the property, seeing the landlord and tenant assess each individual area of the property, documenting signs of wear, scuff marks, the function of appliances, issues with hinges, locks, windows, wiring ect. Once the initial property inspection has been carried out and the overall condition of the rental documented, each party of the rental agreement will need to provide a witness to counter sign the document ensuring its legitimacy. Come the close of the rental period the landlord or letting agent will conduct a final inspection of the rental property, using the information supplied in the original property inventory to clearly highlight any changes in the property’s condition.
When to Carry Out Property Inspections
It goes without saying that perhaps the best way in which a landlord can maintain an accurate understanding of the condition of their rental property, and if any remedial work needs carrying out is by conducting routine property inspections. With this being said whilst it is natural for a landlord to want to keep a regular eye on their investment they must remember that upon the signing of the tenancy agreement possession of the rental property was granted to the tenants. This means that the renters were granted the right to quiet enjoyment of the property, something that must be respected by the landlord. Put simply this right to quiet enjoyment allows the occupants of the rental property to dictate which parties are able to access its grounds and when. This means that when a property inspection is to take place, the landlord or letting agent must first request permission to enter the rental preppy from the tenants. The permission of the tenants must be obtained no later than 24 hours before the intended visit and in writing. Although the occupants of the rental property are able to decline any requests for access that the landlord or letting agents make, this is most commonly only done for the arranged inspection to take place at a more suitable time for the tenants. This is not to say that is acceptable conduct for the residents of the property to continually prevent the landlord, letting agents or their appropriate parties from gaining access to the rental. If after multiple attempts to establish contact the landlord does not obtain a reply or has had their requests continually denied and cannot attend to any matters of remedial work, the landlord could be absolved of this duty if the matter is taken to court.
When carrying out a property inspection landlords should keep an eye out for any areas of the property that may need repair work carried out, or appliances that could be unsafe for use. If left unattended these issues often grow far worse, with the associated repairs coming at greater costs to the property owner. This is also a perfect opportunity for landlords to ensure that their tenants are abiding by any terms specified within the tenancy agreement, such as any refusals to keep a pet or the prohibition of smoking within the property. As previously outlined, it is important that landlords consider their tenant’s right to quiet enjoyment of the rental and should therefore need to carry out inspections appropriately to avoid infringing on this right. With this in mind many landlord choose to carry out inspections of their rental properties anywhere between every 3 months to twice annually. Whilst some residents may not like regular property inspections, it can be said that above all the inspection promotes transparency, allowing the landlord to provide a safe rental property, and that there are no surprises come the return of the tenancy deposit.
Do You Need Landlord Insurance?
Although landlords are not under any obligation to take out some insurance policies, against their rental property, buildings insurance aside, it is often only in hindsight that the value such policies offer is truly appreciated. Now, with this being said, in some cases buy to let mortgage providers will stipulate that the landlord will need to take out specific insurance policies to protect the property. However, it goes without saying that all a landlords take appropriate measures to ensure the safety of the property, alongside their tenants, after all if the rental deteriorates not only are the tenants left without a home, but the owner without an income. Those new to letting out a rental property may make the mistake of assuming their standard residential property insurance will offer adequate protection once they choose to move tenants into the property. Unfortunately, this is not the case as these policies will often be void and will leave the owner of the rental property without any financial safeguarding measures in place.
For those that choose to provide their tenants with a fully or partly furnished rental opportunity there is the obvious additional consideration of maintenance repair and replacement costs for the upholstered items and appliances found throughout the accommodation. Whilst some landlord may choose to be dependent on taking the maximum amount possible for the tenancy deposit to recuperate any costs they incur in replacing furnishings, if the landlord needs to recuperate any missing rent payments alongside these remedial costs, there will be little compensation to be found. Contents insurance for landlords will provide the costs of repairing or replacing any of the landlord’s belongings within the rental property that have been damaged as a result of an accident, water leaks and storms, typically encompassing furniture, appliances, lights, curtains, carpets and in some cases outbuildings. However, it is important to note that if the landlord taken out a contents insurance police, this protection will not apply to any items or belongings that the tenant’s introduce to the rental property and they will therefore need to take out their own insurance policy.
Perhaps of increasing importance to many rental property owners, in light of the recent criticism of the rise in landlords asking for their tenants to pay increasing amounts of rent in advance, those looking for more security surround their rental income could take out tenant default or rent guarantee insurance. These insurance policies will cover the landlord in the event that the occupants of the rental property fail to pay their rent. Whilst there will of course be some differences between providers and individual policies, most will commonly pay the landlord when the tenant misses a rent payment for either a specified amount of time, or up to an agreed upon threshold after which the landlord will not be able to claim any missing rental payments. It is also worth noting that the majority of such insurance policies will demand that the tenant passes their referencing checks and will often not pay out if the tenant in arrears failed their affordability checks but was still allowed to rent the property.
Do I Need to Reference Tenants?
Often hailed by rental property owners as the best way in which to determine if an aspiring renter is the best fit for the opportunity, tenant referring is a series of comprehensive checks that outline a renter’s suitability for a rental. Alongside affordability checks that evaluate a tenants ability to maintain regular rental payments, will assess their employment status, income and credit history. Alongside determining if the renter has the right to rent within the UK, the process will also provide a reference from the renter’s previous landlord. This is invaluable as it gives rental property owners a first-hand account of the tenant’s previous behaviour, if they paid rent on time, respected the condition of the property or caused any issues without neighbours, other tenants or the landlord themselves.
Tenancy Deposit Deductions
Arguably the most common way in which landlords protect themselves from the deterioration of their rental property is by taking a tenancy deposit from their tenants. In effect the tenancy deposit acts as a financial safeguarding measure for the landlord, minimalizing their exposure to the costs of repairing or replacing aspects of their rental property and its contents, providing the damage is not seen as fair wear and tear. Essentially fear wear and tear is the expected deterioration of a rental property, its furnishings and appliances after years of high use. Many landlords request that their tenants pay them the maximum amount for the tenancy deposit to grant themselves the greatest protection. This threshold on the amount a landlord can request their tenants pay for the tenancy deposit was introduced with the Tenants Fees Act. These regulations dictated that the amount a tenant can be asked to pay for their tenancy deposit is dictated by the amount they are required to pay each year in rent. Providing that the annual rental charge for the accommodation is no more than £50,000 then the maximum amount a tenant can be compelled to pay for the deposit is the equivalent of five weeks rent; however, if the amount they pay in rent each year is over this amount, the landlord is able to ask their tenants for up to six weeks rent for the tenancy deposit.
If upon the final inspection of the rental property the signs of damage and neglect are discovered, or the condition of the rental property has declined considerably, then it is safe to say that deductions will be made from the amount of the tenancy deposit that is being refunded to the tenant. It is essential to note that the landlord is not able to simply overrule the tenant and return an amount that they see fit. Instead landlords are under a legal obligation to enter any amounts taken for the tenancy deposit into a government approved deposit protection scheme. These protection schemes will vary slightly in which party will physically maintain possession of the amounts taken for the deposit until the end of the tenancy’s fixed period. However, if any disputes are made regarding the deductions, if the landlord has held the tenancy deposit this will be handed over to the protection scheme to be dispersed between the two parties appropriately.
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