Real Life Examples of Why You Should use a Regulated Agent When Renting out your Property31 Oct 2017
“ I don’t need to use an agent, I can find a tenant myself- I’ve got potential tenants waiting in line to rent my property- why would I need an agent?”
I tend to hear this from time to time, and I know what you’re thinking, of course you are going to tell me I should use an agent, but even if you aren’t going to use an agent to manage the property, at least use one to set things up properly from the start! The start of a tenancy is always the time that its most important to make sure things have been done properly, that you’ve met all the current legislative requirements, that you have protected both yourself and the tenant in terms of being absolutely clear on the condition of the property upon hand over (and its detailed in writing) and most importantly of all, that you have a proper tenancy agreement signed.
I thought I would disclose the 4 most popular issues that we see when landlords don’t use a regulated agent from the outset and the problems that they can lead to in real life, with some real life examples.
Number 4 – Close personal involvement causing issues when tenant struggling with rent
“Everything was great at the outset of the tenancy, for the first year everything was fine and there were no issues, then the tenants split up and everything started to go wrong. The rent started to become late, got later and later, he stopped responding to my calls and I felt really awkward discussing rent with him and the fact that I wanted him to leave my property”
By using an agent, it takes away the personal relationship and is purely business. The agent doesn’t have that close relationship with the tenant so can take a less emotive stance.
Number 3 – No signed inventory of contents and condition upon move in
“ Everything was brand new when they moved in, new carpets and it had just been painted, the tenant knew that”
I hear this comment all the time but unless you can offer signed written and photographed date stamped evidence, if the tenant chooses to dispute that it was all new upon move in then its your word against theirs upon check out and given that the deposit is assumed to be the tenants, proving it can be tricky! The agent should offer you a professional inventory preparation service including photographic evidence with specifically worded disclaimers attached. That means that should there be a dispute at the end of the tenancy, there is written evidence is of the condition.
Number 2 – Deposit not lodged or paid up correctly
“The tenant said they would pay up their deposit, so I lodged £200 of it and didn’t really chase the rest”
This is a disaster waiting to happen, having a reduced deposit at the end of the tenancy is crazy in my opinion. The absolute minimum deposit should be 1 months rent, on any property. That at least means that you are protected from non payment of last months rent. In cases where a deposit wasn’t paid up, you might only have half a month lodged for example and it can leave you stuck at the end of the tenancy.
Any regulated agent will advise you clearly of the potential problems and will also advise you of your legal obligation to lodge it. Failure to lodge can lead to big fines if your tenant decides to report you.
Number 1 – An incorrectly drawn up lease agreement
“ I downloaded a lease from the internet and input the details, I’m sure its fine – after all these things are all standard aren’t they?”
They really are not standard and you MUST MUST MUST make sure your lease is correctly drawn up , from the outset.
I’ll give you an example, a landlord came to us with a tenanted property, signed lease (internet version) and asked us to manage the property. The tenant then started to get allegations of anti social behaviour and rent became an issue. The landlord instructed us to obtain repossession of her property. It turns out that no notices have been served on the tenant to allow repossession (AT5), the lease is an English version and contains very basic contractual terms. So what are the ramification for the landlord? She can’t get repossession of her property for a further 8 months, whereas if the correct lease had been drawn up at the outset, she would have her property back 8 months earlier! That’s a big mistake and a long time to wait for repossession, and could potentially be very costly.
The single most important thing you should spend your money on is getting that lease properly drawn up as any errors can have a significant impact on your investment property.