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Landlords Don’t Be Fooled, Why Guaranteed Rent Isn’t Always the Answer

Landlords Don’t Be Fooled, Why Guaranteed Rent Isn’t Always the Answer

As a busy landlord juggling a portfolio of multiple properties, you might be thinking about ways to reduce your workload or secure a regular income. Have you been enticed by promises of guaranteed rent?

Guaranteed rental schemes or rent-to-rent (R2R, not R2D2) schemes are growing in popularity. But hold on for a minute, what do they actually mean?

In a nutshell, it’s where you rent your property to a rent guarantee specialist who promises to pay you a certain amount every month and takes on the burden of managing your property.

Sounds great, doesn’t it? But is it too good to be true?

In this two-minute read, we look at why you should be cautious of rent-to-rent schemes and how they could be less profitable in the long run.

 

Less rental income

While you might be tempted to enter one of these contracts, often, the way the business offering you the R2R option can be profitable is to offer you less than the typical market rate.

By offering you a lower rate for a fixed term, the R2R business model will only work if the person managing your property charges tenants a higher rate. Therefore, you could be earning significantly less than if you were to rent through a regular letting agent.

 

The unknown agent

Once you sign up, you’re basically losing control of your rental property for a fixed term. How many tenants will be living in your property? Who will ensure that all the correct procedures are followed? What happens if significant repairs are required? What’s the tenant turnover like?

While a lot of these details can be included in a rent-to-rent contract, as a landlord, you may be putting your reputation at risk by offering up your rental to a third party.

 

Fast cash

The attraction of the guaranteed rental model is quick profit and few overheads. Little to no experience is required before setting up this type of business. This means your rental investment may be put at risk by agreeing to work with people who have little, or no cash at stake. Can you really afford to hand over your hard-earned investment to someone with no proven track record?

 

Using a local agent

When you use a reputable local agent, they are regulated and experienced in letting out properties and often have a strong team behind them. They know what certifications are required, what makes a good tenant, and have access to tenancy deposit schemes and such like. So, you can feel confident in the knowledge that your property and tenants are looked after.

At Chamberlains, our lettings team has been working in the local community for many years.

We can achieve market rate rents and we keep our fees as competitive as possible. Call us on 01626 365055 for more information.

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Four Things You Must Do If You’re an Accidental Landlord

Four Things You Must Do If You’re an Accidental Landlord

If you’ve become a landlord due to unexpected circumstances such as bereavement or a new relationship, here’s some helpful advice. A two-minute read.

 

It’s surprising how many people become landlords more by chance than design – or in other words, ‘accidental landlords’.

Whether through inheritance, a change in a relationship or a new job, sometimes people find themselves in the (rather fortunate) position of owning a property that they don’t want or need to live in. And instead of selling up, the owner decides to rent the property out.

While this usually works out well in the long run, accidental landlords can slip up if they underestimate what the job involves – it’s not as easy as it looks.

Here are four tips for accidental landlords.

 

  • Talk to your lender

If you have an owner-occupier mortgage on the property, you must notify your lender if you intend to rent it out (otherwise you could be penalised). Sometimes, the lender will grant ‘consent to let’, which is permission to rent the property under your existing mortgage. But this is usually a short-term solution, and you’ll probably be expected to get a buy-to-let mortgage eventually.

 

  • Get landlord insurance

A bog-standard home and contents policy won’t suffice – you’ll need specific landlord insurance. Do your research on this because the policies on offer can vary significantly. On top of buildings and liability cover, some policies allow you to opt in to cover legal costs, loss of rent, or accidental damage.

 

  • Understand the rules on deposits

There are strict laws regarding tenant deposits. When a tenant pays you a deposit, you must register it within 30 days with a government-approved scheme. (This is a third-party scheme that protects tenant deposits.)

 

  • Get to grips with red tape

There are all sorts of laws – at least 175 – that apply to UK landlords covering everything from evictions and gas safety to electrical checks. It can be overwhelming trying to get your head around these, but most successful landlords develop systems to make sure they stay on top of things. And if you really wanted to sit back and let someone else take the strain, employ the services of a professional letting agent to do it for you.

 

To learn more about our property management services, contact us here at Chamberlains.

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Energy Bills: How to Avoid Disputes and Help Your Teignbridge Tenants

Energy Bills: How to Avoid Disputes and Help Your Teignbridge Tenants

This eight-point plan outlines the best way landlords can manage the issue of energy bills. A two-minute read.

This year’s colossal hike in energy costs has left millions of households reeling. And with no relief in sight, the problem is likely to stay at the top of the agenda throughout 2022.

 

Here’s an eight-point plan to help landlords deal with the issue as best they can.

 

  • Make sure your tenancy agreement clearly states who is responsible for paying energy bills (most typically, it is the tenant).

 

  • Even though your tenant will most likely pay the bills, do your bit to keep costs down by staying on top of maintenance and draught-proofing. Repair any rickety windows that might allow heat to escape and install energy-saving light bulbs.

 

  • Take a meter reading when a new tenant moves in and record it in the inventory. (That way, there can be no confusion or dispute with the previous tenant.)

 

  • Explain to your tenant (if the bill is in their name) that they are entitled to shop around for the best energy deal. Also, discuss the benefits of having a smart meter. These provide detailed energy usage information to allow tenants to understand what’s driving their fuel costs.

 

  • Some energy suppliers require a few days’ notice to end a contract. It’s the bill payer’s job to notify the fuel supplier. Your tenant may not be aware of this, so give them a gentle reminder a week or so before their tenancy ends.

 

  • When your tenant moves out, take a meter reading and pass it on to the relevant energy supplier along with the tenant’s forwarding address.

 

  • As the landlord, you’re responsible for the energy bills during void periods. Ensure that most of the lights are switched off (you might want to leave a few on for security purposes). In the warmer months, turn the boiler off, too. In winter, you might want the heating on intermittently to ensure the pipes don’t freeze and protect against dampness.

 

  • Consider investing in big-ticket energy-efficient measures such as solar panels, insulation, and triple glazing. These will bring down fuel bills and add value to your property.

 

Much of the above can be handled by an experienced letting agency – making your life a whole lot easier.

For more advice on our property management services, contact us here at Chamberlains.

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What to Do Before Renting Your Property to Family or Friends

What to Do Before Renting Your Property to Family or Friends

Here are some questions you should ask yourself before you rent your property to family or friends.

Do they need to sign a tenancy agreement?

Yes, yes, and yes again! They might be family, but they’re also your tenants and both parties need to know what is expected of them. For example, they might say they want to stay for 12 months but then leave after just six. Without a tenancy agreement, there’s nothing to stop them – putting your income at risk.

Should I take a deposit?

This is a personal decision that you need to make, as there’s no legal requirement for a landlord to take a deposit. However, it is a good way to protect your property and any contents from damage.

Similarly, by having a professional inventory carried out before they move in, both parties know the exact condition of the property and how it should be left.

Should I do a tenant reference check?

Asking family for personal finance details? It might make you feel awkward just thinking about it, but it’s an essential step of the rental process.

While you may think you know your family/friends’ financial background, it’s still worth making extra checks. Referencing will ensure that your potential tenant can pay the rent and highlight any issues with previous landlords.

Are there any legal issues I should be aware of if I rent to family/friends?

Not exactly, but renting to family/friends could cause problems if you have a mortgage. In fact, a lot of lenders are quite strict about this issue, and you may need to ask their permission before you move family in.

This is because the lender could be concerned that you’d charge family members less rent, or be more lenient if they didn’t pay – both of which could impact loan repayments.

Renting to friends or family can often be a great option, but it’s one you need to consider carefully and go into with your eyes wide open.

For more advice on anything and everything related to rental property in Teignbridge, call our lettings team today.

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Why Landlords Should Respond Promptly to Tenants (And Not Mess Them About)

Why Landlords Should Respond Promptly to Tenants (And Not Mess Them About)

When a tenant gets in touch, don’t faff about – a prompt response will save you time and money in the long run. A three-minute read.

 

Picture this: you’re frantically busy at work, scrambling to meet an urgent deadline when your phone pings.

It’s your tenant raising what seems like a pretty minor issue, so you make a mental note to get back to them in a few hours when things calm down.

But time flies, and before you know it, days have passed, and you still haven’t taken action to address the issue raised.

Most landlords will be familiar with this scenario, although you could easily substitute ‘urgent work deadline’ for ‘important family commitment’ or ‘life in general’.

While time management is a challenge for us all, it’s not good practice to drag your heels when addressing tenant concerns.

Here are six reasons why you should always respond to tenants in a timely fashion.

 

  • Build trust– Ignoring your tenant sends a message that you’re not that bothered – about them or the state of your property. To build a good rapport (one that encourages your tenant to stay long term), you need to be responsive.

 

  • Nip problems in the bud– Issues like leaks and damp will only get worse (and more expensive to fix) the longer you leave them. Address problems before they escalate into serious repair jobs.

 

  • Health and safety– It can be difficult to tell if an issue is a minor quibble or a major safety risk unless you investigate. Ignoring a concern or jumping to conclusions without knowing the facts could put your property and your tenant’s safety at risk.

 

  • Avoid getting fined– Your tenant could be raising a valid issue – one that, if left unaddressed, could land you with a hefty fine from the local authority for breaching health and safety regulations.

 

  • Insurance – Failing to act on an issue that has been raised could invalidate your insurance and leave you footing the bill after a major incident, such as a burst pipe or fire.

 

  • Good karma– What goes around comes around. If you ignore a tenant’s texts and emails, what do you think they’ll do when you try to get in touch with them?

 

In today’s digital world, people expect a quick response day and night. If this 24/7 obligation is too onerous for you, get a letting agent to manage the property – they’ll be the ones on call round-the-clock instead of you.

 

Get in touch with us here at Chamberlains to learn more about our property management services.

 

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Top Tips for Managing Joint Tenancies

Joint Tenancies

When they run smoothly, joint tenancies can be a good source of income for landlords. This three-minute read explains how to get the best out of them.

Joint tenancies are a great way for friends or couples to live together and share the rental burden. (Think about best buddies and flatmates Joey and Chandler in Friends, they had a ball, right?)

And joint tenancies can also be good news for landlords, providing steady long-term income and low tenant turnover. (If your tenants are happy and get along like Joey and Chandler, they’ll stay for years.)

But sometimes, the relationship between tenants turns sour and things can get complicated. Before we look at managing tenant relationships, here’s a quick recap on joint tenancies.

  • As a general rule*, all tenants in a joint tenancy are liable for the rent. This means that if one tenant falls into arrears, the landlord can ask any or all the other tenants to cover the shortfall.
  • The same goes for damage to the property – all tenants are liable. Even if only one tenant (or their guest) caused the damage, any or all tenants could be required to pay for the repairs.
  • One person can’t pull the plug on a joint tenancy; the landlord and all tenants must agree to end the tenancy.
  • If end-of-tenancy deductions are agreed upon, they’re taken from the overall deposit.

 

Getting the best out of a joint tenancy

  • Never rely on one tenant to share important information with other tenants for you (they may fail to do so or may get it wrong).
  • If there’s an issue with arrears, notify all the tenants and explain that they’re all liable. Tenants who have paid their share of the rent can be valuable allies and help persuade the tenant who is behind to get back on track.
  • Remain professional and don’t get caught up in a melodrama between friends or lovers who have fallen out (they may want you to take sides). Remind all parties of their joint liability and encourage them to sort it out amongst themselves.
  • Always notify people who sign up to be the sole guarantor on a joint tenancy that they’re liable for all rent and damages. Often a parent thinks they’re just covering their own child – not all the tenants.

To find out how Chamberlains can help manage your property and avoid tenancy troubles, get in touch.

 

*Always check the terms of your rental agreement and, if in doubt, seek expert advice.