| Avoiding the pitfalls of being a first-time landlord
PEOPLE are turning to letting as properties fail to sell- but many are unprepared for the complications Frustrated home-sellers are letting out their properties in ever-growing numbers as the housing market recovery remains elusive - but many underestimate the scale of a challenge that is set to become harder over the coming year. Be competitive Make sure the property presents itself well to the market in terms of the décor, the state of the furnishings and also the mechanics of the home - such as the heating. You'll also need to comply with all health and safety requirements for gas, electricity and furniture and furnishings. If your void periods are less, the extra return is a bonus. ". Find a licensed agent: Look for a local agent who abides by a code of practice and importantly, is subject to a redress scheme, and offer client money protection like all licensed ARLA members. It said the bulk of the complaints were around deposits, administration failures and tenancy agreements. The problem is that many are entering the lettings market unwillingly - and it shows, according to David Alexander, owner of letting agent DJ Alexander. Grieve was referring to Scottish government proposals for tenants to be given a mandatory information pack and to the tenancy deposit scheme coming into force this summer. The scheme is similar to the system already operating in England and Wales and requires deposits paid to landlords to be transferred to an approved scheme within 30 days of the tenancy starting. "Most of the difficulties that arise are because of novice landlords who forget that it is a commercial venture. "It's not a simple case of taking the rent and not spending money on the property. David Alexander even advises tenants to do their homework on their prospective landlord. "If you're a tenant dealing with a letting agent it's worth asking if the landlord is a commercial one or a reluctant landlords who might sell up as soon as the housing market turns," said Alexander. Other letting agents have raised concerns over the impact on the market of the recent influx of first-time landlords. Ross Hadden, of Hadden Rankin, said: "I agree that private landlords without agents do sometimes find it difficult to cope with the level of regulation that now applies to the lettings market, and it may well be the case that they also don't fully understand what are reasonable deductions from deposits. Julie Greave, managing director at Braemore Property Management, said landlord awareness of regulation and policies - such as health and safety requirements and what can and can not be deducted from deposits - remains sketchy. And she warned that a brand new wave of guidelines coming into force over the next year would pose problems for inexperienced landlords. "There's a lot more to it than meets the eye. However, the phenomenon has coincided with a surge in complaints about letting agents that experts believe reflects problems with inexperienced landlords. Scottish complaints about letting agents soared by forty per cent in 2011 compared with a 26 per cent spike across the United Kingdom as a complete, according to the Property Ombudsman. The outcome for landlords is more paperwork and potentially increased costs. "Audit trails will be so important when making deductions from the deposit because adjudication will be written only, so landlords will need detailed paperwork," said Grieve. The impact of the new scheme will really be felt next year, when tenancies set up prior to the deposit rules coming into force begin to come to an end (the average rental term in Scotland is now around 20 months). "In lots of places there will presently be no inventory or audit trail. "These are rights protected by law, and every landlord has a duty to find out about the minimum legal standards they are required to meet - even if they are inexperienced, or have got into the property letting business accidentally," she said. "The regulations aren't there to inconvenience landlords, but to keep tenants safe and make certain that they are treated fairly. This normally covers both rent and legal expenses. Compile an inventory Prepare a full, detailed inventory of the property to include a schedule of condition of all of the contents along with walls ceilings doors and other fixtures and fittings, to be certain there are no surprise claims. Don't be lazy It's important to hold on to tenants for as long as possible - but that won't happen if they receive bad service. But the changes in the pipeline for the coming 12 months or so shouldn't deter people from renting out their houses, said Grieve. Landlords will also have to offer the tenant with confirmation of the amount paid in deposit and details of the scheme in which it is held. Deposits will be held by the scheme administrator and an independent dispute resolution service will be on hand in the event of disagreement over the return of the deposit. "Some people are now seeing renting out as a key part of their income. Insure yourself Put specialist buildings and contents insurance in place covering the items you own in the property - without a specific reference to letting you might be uninsured. |
Monday, 7 May 2012
Avoiding the pitfalls of being a first-time landlord
