One of the main concerns which landlords have when renting to any party is the possibility of their property being damaged by their tenants, whether this be accidental or not. Damage, other than fair wear and tear, can have serious financial impacts on the successful running of a rental property or rental property portfolio.
UK landlords are currently spending £4.7 billion a year on their rental properties for costs such as maintenance, repairs and decoration. The average landlord spends over £3,134 on each of their rental properties according to a recent study. Landlords in the South West are likely to outlay the greatest amount at £3,461. Whereas landlords in the North West can expect to pay the least per property at £2,738.
When also considering the tightening tax conditions for private UK landlords and Tenant Fees Act, landlords will be looking to save money where they can to protect their investment. The following three simple methods can reduce damages at rental properties.
Tenancy / Security Deposit
Landlords often choose to charge their tenants a tenancy deposit. This is sometimes called a security deposit. This is a sum of money, capped at 5 weeks rent for properties with an annual rent of up to £50,000, which can be used by the landlord to cover the cost of any damages to the property or in the case of rent arrears.
A landlord is not required by law to take a rental deposit, although they must correctly protect it if they do, and in an ever increasingly competitive rental market if may appear like a good idea to attract tenants by not requiring a tenancy deposit for the property. However this leaves the landlord with very little control when it comes to damages.
The tenancy deposit can be used to rectify any unfair damage caused by tenants as the landlord can make deductions to cover the cost of returning the property to the condition at the beginning of the tenancy. The deposit also provides motivation for the tenant to keep the property in good condition as if they do, their full deposit should be returned.
Although making deductions from tenancy deposits can rectify situations if they occur, however most landlords would prefer for this situation not to arise in the first place, to avoid extra tasks and the potential that the deposit may not fully cover any repairs.
Preventing damage to begin with is the most advisable option. This can be achieved by communicating with tenants, possibly during their move in orientation, what is expected of them and how the property should be returned upon the conclusion of the tenancy.
Student landlords should conduct quarterly inspections of their properties. Regular inspections can uncover potential problems early and avoid serious damage. It also gives the landlord the opportunity to identify areas of unfair damage and communicate to the tenant what they must do in order for their deposit to be returned fully.
Regular contact with tenants will also help build a relationship which should result in more respect for the property and landlord.
Tenant referencing can be a useful tool for landlords to assess potential tenants and avoid tenants which may cause issues, such as damage, during the tenancy. Seeking references from tenants’ previous landlords, if available, and will show if they are good tenants.
There are numerous private companies which provide background checks on potential tenants and will identify the suitability to the property. These services are not free and will need to be covered by the landlord as the Tenant Fee Act has removed the ability for landlords and letting agents to charge tenants for referencing checks and other fees associated with the letting process.
Buy to let properties are significant investments and should be well protected by landlords. Preventing damage caused by tenants or being able to deduct from a deposit to cover the cost of repairs will ensure that a property has the best chance of financial success.
Property Investor Today. 2019. Accessed 28th November, 2019, from https://www.propertyinvestortoday.co.uk/breaking-news/2019/7/uk-landlords-spend-4-7-billion-a-year-on-their-rental-properties
Landlord Law Blog. 2010. Accessed 28th November, 2019, from https://www.landlordlawblog.co.uk/2010/10/05/do-landlords-have-to-take-a-deposit/
Homelet. Accessed 28th November, 2019, from https://homelet.co.uk/landlord-insurance/tips/how-do-you-reduce-the-risk-of-problem-tenants