The worst and the most expensive mistake: buying a property in the wrong area. If you do not know Edinburgh well, how can you tell which neighborhoods attract good tenants and which should be avoided? If you think about an HMO property and consider buying one online with a lapsed licence; how do you know if you can renew that licence? Perhaps the licence lapsed for a reason? Are you hunting for an investment property and calculating your future profits? Or has the process become emotional? If you overpay in a bidding frenzy; do you know if the rent received covers the cost of mortgage, wear and tear, potential factoring fees? If you see a suspiciously cheap property in a “not so good area”, have you thought about longer voids and difficulties attracting ideal tenants?
Access to Zoopla, Letting Web, City lets, On The Market and Rightmove is expensive, so some individual landlords may be tempted to advertise their property just on sites with free classified ads or online marketplaces. This idea may look like a money saver, but it will severely limit the outreach of the rental advert and its audience. Certain portals tend to attract specific demographics. On the other hand, reputable lettings agents use many channels, including main property portals. The more limited outreach, the longer the void – and you may have to wait even longer for good tenants. So, you have longer voids, less applicants vs shorter voids and much better interest in your flat. What will you choose?
Do not reference tenants
Referencing tenants takes time and costs money- third party referencing providers usually charge around £25-30 per person. Good references include credit checks (to make sure your applicant is not bankrupt and does not have any county court judgement), employment checks (how else would you know if the applicant has not been made redundant or whether their declared salary matches their payslips?), accommodation checks (would you really consider letting your property to somebody who keeps on causing serious condensation and mold in all their properties? Or to somebody who was always late paying their rent?). Diligent referencing ensures that your applicants passes all checks. We live in unprecedented times when thousands are furloughed and lose their jobs daily – it can happen to the best tenant. Do you really want to increase your risk by not weeding out potentially disastrous tenants who would have failed basic reference checks? All such risk to save some time and £30?
No inventory, no problem? Not really!
Inventory is a snapshot of the property on check in. If accompanied by a checkout inventory, it could be used for deposit deductions and deposit adjudication. Good inventories take time to compile, so if landlords do not do them themselves, third party inventory providers may charge up to £200 for a detailed inventory of a furnished property – it is costly. Please remember that deep cleaning of a dirty flat will cost more than £200. Fixing kitchen worktops or a bath chip is around £100 and repainting on walls covered with blue tack marks will cost you around £50. How much will you pay to replace a carpet with an iron burn mark in the middle of your living room? Please remember that it is up to the landlords to prove that it was the tenants who caused any damage – during deposit disputes full burden of proof lies on the landlords or their agents.
Lease? What lease?
We have come across some private landlords who rented their property to tenants without a legitimate lease in place. Private Residential Tenancy agreements, mostly, protects the tenant(s), but the legislation gives rights to the landlord as well – all deposit agencies require a lease for deposit disputes. If your tenants were referenced and required guarantors, why would you even entertain the idea of not including a guarantor on the lease? How will you prove your rights before First Tier Tribunal without a valid lease?
Avoid letting agents
Good Edinburgh letting agents and property managers charge, on average, around 10% of rent (VAT may be applicable) – it is a significant cost indeed. If you do not live locally or do not have time to manage your property – do you think you can cope without an agent? If you decide not to use a property professional, at least to find good tenants, you risk making all above mentioned mistakes. Good letting agents will offer advice on a property hunt, can view an investment on your behalf, will prepare a suitable advertisement and utilize many major portals, will reference tenants, create inventory, carry out inspections and take care of any maintenance issues. If you cannot do it yourself and decide not to use an agent – you risk a serious financial detriment.
Go for the ‘cheapest’ agent in town
When choosing an agent, do not look for the cheapest available – always check their terms and conditions. Some agents may offer 6-7% commission but charge a ludicrous marketing fee, charge for inventory – some even charge for inspections. 6% may sound cheap, but you need to work out all additional costs, if applicable, to calculate the real commission rate.