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Risk expert warns buy to let landlords
to choose carefully
Although thousands of students are about to hit the streets
in search of accommodation, many landlords will see their
dreams of a steady rental income shattered due to the actions
of some third-rate letting agents.
Those landlords who don’t use agents need to take special
care in choosing their tenants or they, too, can lose a lot
of money. The warnings come from Mairi Scott, managing director
of specialist risk consultants Leaseguard who provide insurance
and tenant referencing services for thousands of landlords
and tenants across the UK.
“Too many landlords get caught out by thinking they
can just appoint a letting agent, hand over the keys, then
sit back and wait for the money to roll in. Others put a postcard
in a newsagent’s window, and then accept the first tenant
who agrees to pay the rent they are quoting,” says Mairi
Scott.
Every year many small landlords get their fingers badly burned
by letting agents who are inefficient or unprofessional –
or by plausible-seeming tenants who fail to pay their rent.
Choose the wrong agent and your problems can pile up faster
than junk mail in a vacant apartment’s letterbox. If
your agent fails to find reliable tenants you could face months
with no rental income, leaving you struggling to pay the mortgage
on the empty premises.
Even when a tenant is found, disputes over tenants’
deposits can lead to legal costs as landlords take action
against the agent and/or the tenant to recoup loss of rent
or the cost of repairing damage to the premises. Landlords
could face court appearances, fines or other actions if they
do not comply with housing regulation.
However, there are many good agents out there – to
find one, Mairi Scott recommends that you check the quality
of their service by asking the following questions:
•Are they a member of a recognised industry body? These
include:
o Association of Residential Letting Agents (ARLA)
o Association of Residential Managing Agents (ARMA)
o National Approved Letting Scheme (NALS)
o National Association of Estate Agents (NAEA)
o Ombudsman for Estate Agents (OEA)
o Royal Institution of Chartered Surveyors (RICS)
o UK Association of Letting Agents (UKALA)
• Are their staff trained to industry standards?
• How long have they been in business?
• Do they carry out tenant reference checks themselves
or do they use a referencing company? Can you see some samples?
• Are they up to date on legislation affecting landlords?
• Do they have professional indemnity insurance?
• Do they have a detailed knowledge of the local market,
especially the area where your apartment is located?
• What are their fees? Can they show you a list of all
charges? Can they tell you, in writing, the total amount you’ll
be paying?
• What is their policy on holding rent and deposits
on your behalf and are they a member of the voluntary Tenants
Deposit Scheme?
• Can they offer insurance to protect your property
or a Rent Guarantee with Legal Expenses policy?
Mairi Scott also warns landlords to beware of agents whose
valuation of your rental income seems too high, compared with
their competitors.
If you decide not to use a letting agent, then you should
choose your tenants very carefully. Before signing up a tenant,
Leaseguard advises that landlords should always use a legally
drawn-up Tenancy Agreement. •Other things they should
check with tenants include:
o Are they employed on a permanent contract?
Check with employer
o What about affordability?
o What about credit worthiness?
o Self-employed? Ask to see their accounts for
last three years. If not available, ask for an accountant’s
reference or, if you are still not satisfied, insist on six
months rent in advance.
o Can you see their passport or photo driving
license? Ask them to sign something, then check signature
against passport or driving license.
o Can you see utility bills from the last three
years? (To check their last addresses)
o Request a reference from any previous landlords.
o If they are from overseas, can you see their
work permits?
“If they are working temporarily in UK, it’s
worth popping into the property now and again to check that
it is not being overcrowded. I’ve heard of cases where
two or three people sign up for a flat, then sub-let the couch
and floors to half a dozen other people,” says Mairi
Scott.
www.leaseguard.co.uk
For further information, contact: Chris Knight, General Manager,
Leaseguard Ltd
Direct Tel no. 01698 368899
Mobile: 07980 626504
E-mail: cknight@leaseguard.co.uk
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