05 Dec A Landlord’s Guide To Costs: Part Three
If you’ve got a property you want to rent out, you’ll need to be aware of the potential costs involved. Here’s the final part of our three part guide to landlord costs in association with Propertymark.
The cost to find suitable tenants for your property can vary on whether you wish to undertake it yourself or use a letting agent.
An ARLA Propertymark Protected agent can advertise your property, find prospective tenants and reference them to see if they are suitable to rent out your property. Although there are costs involved, the length of time it takes an agent to find a tenant can be quicker, meaning your property won’t be empty for as long and you can earn income from rent faster.
Referencing checks, although an additional cost, can be beneficial in the long run, as they will warn you of any tenants that may be unreliable in paying their rent. The small costs involved in credit and tenant referencing can save you much more compared to potential rent arrears from an unreliable tenant.
Tenancy deposit protection
Some of the tenancy deposit schemes, which you must legally hold a tenant’s deposit in, may charge a small amount, either to protect the deposit or to allow you, the landlord, to hold the deposit. At Robinson Reade we use the Deposit Protection Service and we don’t charge our landlords a separate fee to register the deposit on their behalf
Be prepared for unexpected costs during a tenancy. Appliances breaking, leaks, cracks and other issues can always happen, so it helps to be prepared for them. You can either do the repairs yourself or call out a third party for any maintenance.
If a tenant falls into arrears, it will inevitably mean a loss of income for you as a landlord. It is always worth talking to your tenant to see if there are any alternative arrangements to ensure rent is paid back. There are ways to reduce this risk and to mitigate any further losses, such as paying for thorough referencing, having the right insurance or serving a Section 8 notice after two months of rent arrears to evict the tenant. An ARLA Propertymark trained letting agent will be in a good position to assist you with rent arrears where you have employed them on their rent collection or fully managed service.
An inventory is a report detailing the contents, furnishings, fixtures, fittings and condition of a property before it is moved into by a tenant. Usually, it is accompanied by photographic or even video evidence of the property’s current state and condition. The reason for an inventory is as a reference point and evidence for when a tenant moves out, in case there are any disputes regarding tenancy deposit deductions in relation to the condition of the property. Inventories can be carried out by a landlord, but an inventory clerk will be trained to perform them thoroughly and professionally.
Since most tenancies require a protected Security Deposit, you can deduct from this amount for any loss on your part caused by the tenant. For example, unpaid rent can be claimed back through the deposit, as well as cleaning costs and damage to property (that isn’t covered by fair wear and tear). The costs you charge must be reasonable and like-for-like, so be sure to present receipts, pictures of damage, a check-in report or inventory (if used), a copy of the tenancy agreement and any other evidence, as tenants can dispute any deductions you wish to make. Be sure to contact your chosen deposit scheme for further advice.
Good letting agents can save landlords money in the long run, given that they have the experience and knowledge of how to smoothly run a tenancy. Agents can value the potential rental yield for your property, undertake any referencing, put together tenancy agreements, protect the deposit, arrange any necessary maintenance, provide inventories and assist you to ensure you and your property are compliant with the law.
Their fees are either upfront or can be a percentage of the property’s rent, but importantly, their services can cover a lot of what is mentioned above.
By using an ARLA Propertymark Protected Agent, you’ll have added protection, as our agents hold professional qualifications, regularly undertake training and adhere to a strict code of practice.
Thanks for reading … if you would like to chat about anything lettings, please give us a call – we’d love to get to know you!
Emma Macgregor MARLA