12 Of The Biggest Mistakes Landlords Make

I’m surprised I haven’t compiled this list already. Strange, because it seems like such an obvious choice. I’m usually the first to point out misfortunes.

One of the luxuries of having a website dedicated to an interest of mine, where people continually ask for advice and complain about shit, is that it allows me to gage where others go wrong. It’s a great learning tool for myself, and for those that keep up with the new comments, I suppose (which quite frankly, should be every last one of you punks!).

While every landlord has their own unique dilemma, when you laymanise most of them, they can usually get catorgorised into one of several common problems, which could have been prevented by taking a specific key step.

Here is a list of the biggest mistakes I read about, based on the comments left on this blog and various other landlord forums which I anonymously mooch around on:

1) “Forgetting” to secure deposits

Probably one of the hottest issues right now, and an issue I’ve talked about too much recently.

Many landlords still fail to secure their tenants deposit into a tenancy deposit scheme. Shocking because it’s basic shit. Real bread and butter stuff.

What many landlords fail to realise is that if the deposit isn’t secured with in the allocated time of 30 days (from the moment the deposit is received), the tenant instantly gets a massive advantage. It’s like a scratch card win to them. They can prosecute the landlord for 3 x the deposit, and they become immune to Section 21 notices, which effectively means the landlord cannot regain possession without jumping through a lot of high and potentially expensive hoops!

Also note, it is the landlords responsibility to ensure the deposit is secured (even if you’re using a letting agent).

Update: as well as securing the deposit, landlords now also need to provide tenants with Prescribed Information regarding the deposit! Click on the link for more info.

2) Failing to use regulated letting agent

I’m not sure how or why it’s legal, but there are letting agents that operate without being a member of The Property Ombudsman (TPO). EVERY reputable letting agent is a member, because it means they’re willing to adhere to a strict code of conduct, which effectively increases consumer protection. If an agent isn’t a member, something is very wrong. I suspect they either got deregistered for ill-practices or subscribe to unusual activities so cannot become a member.

Every landlord that funds these unregulated agents is most likely feeding the bellies of very unsavory characters.

Don’t use an agent that isn’t a member of a regulated body.

3) Skimming the letting agent contract

Everyone hates reading contracts, but unfortunately, in this industry it’s a necessary evil. Every mofo in this industry is yearning to squeeze an extra penny out of the next person, especially letting agents, and those pennies are usually extracted by taking advantage of negligence.

If you’re using a letting agent’s service, it’s important to read and understand every term in the agreement. They’re often riddled with penalties and fees, most of which are pretty sinister.

A common problem I read about is landlords getting stung with unexpected tenancy renewal fees. The fee in principle is bullshit, but it’s legal as long as it’s clearly stipulated in the contract. So if you’re unexpectedly stung by it, you probably made the gross error of failing to read the contract properly. Oops.

4) Providing new tenants with long-term contracts

I never understand why landlords offer new tenants with long-term contracts! It doesn’t make sense to me because short-term contracts best serves both parties, tenant and landlord.

My rule of thumb is to never give new tenants a contract longer than 6 months, regardless of how mouth-watering their credentials are. Simply, you never know how good or bad a tenant will be until they’re actually your tenant. References are useful and good, but they don’t guarantee anything.

Knowing you have a tenant tied into a 12+ month contract can make for a beautiful feeling; you assume you don’t have to go through the painful and mundane task of trying to find new tenants anytime soon.

But actually, offering a 6 month contract can be safer, and the positives for “initially” providing a short-term contract far outweigh the positives for a long-term contract, as I discuss in-depth in another post on how long a tenancy agreement should be.

You can find out a lot about a tenant in the first 6 months, especially based on property inspections and their rent payment history. If after 6 months both landlord and tenant are happy with the arrangement, there is absolutely no reason why a long-term contract can’t be arranged. However, if problems occur with in the 6 months, both parties are effectively tied in for a whole year. And remember, it’s a lot easier for a landlord to repossess their property at the end of a fixed term than evict their tenants halfway through a tenancy.

The idea is to test the water first, and then consider committing. [insert joke about women and marriage]

In conclusion, landlords that offer long-term contracts to strangers are opening themselves up for long, drawn out affair if things go wrong, which in this climate, it frequently does.

5) Skipping property inventories

Since the introduction of the tenancy deposit scheme, property inventories have been crucial for landlords, yet it still doesn’t seem to be high up on the pecking order. Why is it crucial? Because no longer is the tenant’s deposit in the fate of the landlord, it’s now in the fate of an impartial adjudicator, who will assess the situation by the evidence that he or she is provided with.

God forbid if a tenant causes destruction to the property and refuses to take responsibility, the landlord will have to prove to the adjudicator, appointed by the deposit scheme, that the property was never given to the tenant in the condition he/she has left it in. Without an inventory, it’s extremely difficult to do that.

Inventories don’t take long, and they don’t have to cost anything more than a limited amount of time, so excuses are difficult to find.

6) Skipping Property inspections

The point of an inspection is to find out how well or poorly a tenant is treating a landlord’s property. If a landlord is investing £100k+ into a property, why wouldn’t they take 20 minutes out of their day, once every 3 months, to find out what condition their investment is in? Seems like very little work.

I’m pretty sure if every landlord did regular inspections they could identity problems earlier than they actually do and nip them in the bud before they spiral out of control.

7) Too lazy to do research

Research is key, but people still love to opt for convenience over value. No wonder chronic heart failure is escalating.

Don’t use a letting agent just because they’re positioned 10 meters from your front door. In this competitive market there’s always someone offering a better service at a better rate, so search for it. Don’t use any service without typing their name into Google. Believe me, if they’re notorious for offering poor service, odds are, someone will be having a hissy-fit about it on a forum somewhere.

Whatever you do, whoever you plan on using… research. It’s the key.

8) Purely relying on short-term market growth

This is a personal gripe of mine; when novice landlords invest for the short-term and rely on market growth to make a quick 20k. Then, when it inevitably doesn’t happen, they play the victim while drowning in negative equity because they took out a heart-stopping mortgage, with the initial intention of jumping out of the game before feeling the full-force of the repayments.

I’m not saying it’s not possible to make money in the short-term, I’m just saying that no novice landlord should enter the market relying on rapid rates of inflation. Strap in for the long-term.

The dying days of the mid 2000 property boom gave a lot of landlords insight to a false economy. But the success stories are still floating around, and people still believe it’s a quick in-and-out affair. It’s not.

In this climate, buy-to-let is a long-term strategy, and market growth won’t happen over night unless there’s a sudden boom. And I don’t see that happening for a long time.

9) Harassing tenants

I genuinely hate the whole landlord harassment law. It’s so jacked up because it provides “rogue” tenants with rights they don’t deserve. If a tenant is 2 months in arrears, as a landlord, I should be able to knock on their door and/or call/text them constantly frequently, insisting that they pay the rent. That should not be classed as harassment; not in my book anyways. But according to the less awesome book, the one that matters, it can be.

This is what the law stipulates, Protection from Eviction Act 1977:

The landlord of a residential occupier or an agent of the landlord shall be guilty of an offence if—

(a) he does acts likely to interfere with the peace or comfort of the residential occupier or members of his household, or

(b) he persistently withdraws or withholds services reasonably required for the occupation of the premises in question as a residence,

and (in either case) he knows, or has reasonable cause to believe, that that conduct is likely to cause the residential occupier to give up the occupation of the whole or part of the premises or to refrain from exercising any right or pursuing any remedy in respect of the whole or part of the premises

The important bit is in bold, “has reasonable cause to believe, that that conduct is likely to cause the residential occupier to give up the occupation”

If you constantly hound a tenant for arrears (which I believe is reasonable conduct given the circumstances- but isn’t), the tenant could argue that you’re forcing them to surrender their occupation. If that’s the case, it can be classed as harassment. That never made sense to me, because given the circumstances, why wouldn’t I want to try and get the tenant to leave? Seems like the logical step.

In any case, one of the biggest mistakes made by landlords is that they don’t understand, or perhaps choose not to acknowledge, what constitutes as “harassment”. The actual definition is sickening, and I don’t blame any landlord for burying their head in the sand. The reality of it makes me want to blow my brains out, but it is what it is…a pile of steaming shit.

10) Accepting DSS tenants without knowing what they are

Guilty. I did this once.

My first ever tenant was a DSS tenant, and I had no idea what it meant; I didn’t care to find out at the time either. All I remember is that my letting agent told me it was guaranteed rent because the Government paid it direct to the landlord (which was the case at the time), but the agent conveniently failed to inform me of the following:

  • 1) The tenant’s benefit allowance can change at anytime, literally with a click of a finger e.g. the powers that be can reduce or even completely cut off their allowance. So in reality, the rent isn’t guaranteed- there’s no such thing. This actually happened to a tenant of mine, and I was left helpless. One minute I was receiving their allowance, the next I wasn’t.
  • 2) DSS tenants typically have a short-fall to pay each month. This means that if a tenant’s benefit allowance doesn’t quite cover the entire month’s rent, they have to pay the short-fall. This effectively means the landlord has to collect 2 separate rent payments per month, for the same tenant. It can get annoying, and it becomes more apparent that the entire rent isn’t guaranteed.
  • 3) Payments are made every 30 days, which is extremely impractical and confusing for the landlord because we typically charge rent on a PCM basis.
  • 4) DSS tenants struggle to find landlords that accept them, so I didn’t need to pay my agent £800 to find me one. I could have put a free listing up on Gumtree and found the exact same product. At the time I didn’t realise how tough they had it.

Someone else recently left a comment on my blog, saying they felt they were pressured into accepting a DSS tenant by their agent. It’s not hard to believe that landlords, especially new ones, are often encouraged by agents to accept DSS tenants without actually educating them first on the subject. One could argue it’s not the agents duty to educate. However, they often do paint a pretty picture, by using magic words like “guaranteed rent”, “government funded”, and all these wonderfully reassuring words.

But don’t be fooled, it actually means shit. It’s just smoke and mirrors.

I’m not saying landlords shouldn’t accept DSS tenants, I’m simply saying that a common mistake is that landlords accept DSS tenants without actually understanding what the implications are.

11) Allowing rent arrears to escalate

This one astounds me the most. The amount of times I read the following is scary, “My tenant is currently 8 months in arrears, what should I do?”

What the hell? What kind of shit-for-brains allows a tenant to fall 8 months in arrears before taking action? It’s crazy! From the moment a tenant is approaching 2 months in arrears, the landlord should be seeking legal advice from tenant eviction specialists (if they need it), and start planning the process of serving notices.

Why do landlords wait around? What are they waiting around for? The biggest trap landlords fall into is believing that the tenant will resolve their arrears. It almost never happens, regardless of how reassuring the tenants are. And if it does, the notices that were served can be terminated/ignored.

12) Disregarding the requirement of a Guarantor

Putting a Tenant Guarantor in place costs nothing, and it provides landlords with an extra layer of reassurance and security. It’s a no-brainer, yet some people don’t seem to bother with it.

In many cases, tenants claim that they can’t get a Guarantor. In that case, I don’t even consider them as prospective tenants. I ensure that my advert(s) clearly specify that a Guarantor is a prerequisite.

I find that a Guarantor doesn’t only give the landlord an extra avenue to pursue costs for damages and rent arrears, but it also gives the landlord a psychological edge. Most Guarantor’s are either close friends or family members of the tenant, so the last thing the tenant will want is for the landlord to be knocking on their door chasing money. The potential shame and embarrassment of it all usually provides the tenant with extra incentive to pay the damages, and go that extra length to source the funds, if required.

Well, that’s my list. Anyone got anything else to add? Please share! x

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14 Comments- Join The Conversation...

Guest Avatar
E Smith 13th March, 2013 @ 11:10

I would be interested to know whether you would have accepted the following tenant:-
1) The Tenant moved from abroad, so his official credit score was back to zero again
2) The Tenant has their own business, but had to have a top up from tax credits and housing benefit
3) The Tenant therefore could not get a reference from an employer, being self employed
4) The Tenant did not wish to use a family member (the only one being eligible but elderly) as a guarantor
5) The only thing that the Tenant could offer was to take a 6 month contract and pay 3 and a half months, as a security deposit instead of one and a half, as well as the month in advance in full.
Judging by the fact that most people renting these days are entitled to some form of top up by a means-tested benefit (High earners would have bought their own home ages ago) I wonder how you would have judged this tenant?
The tenant has now been living in the property for 10 months, the rent is paid not only on the due date, but often several days in advance and the property is always spotless! However, because this tenant could not provide any of the required references, you would have dismissed him, missing out on the perfect tenant, and probably taken somebody on who could provide all the references but who was made redundant shortly afterwards or trashed the property beyond repair!

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The Landlord Avatar
The Landlord 13th March, 2013 @ 11:30

I wouldn't have accepted the tenant, and yes, by the sounds of it, I would have missed out on a good tenant. But that's not to say I wouldn't have found an equally good tenant that wasn't from abroad, and is employed by someone else..etc.

It's about "reducing" risk for me. While that particular tenant turned out to be great for you, it's not to say that other landlords haven't been stung by tenants that have the exact same characteristics as yours.

My point is, i'm not saying all DSS tenants will be bad. I'm not saying everyone that can't get a guarantor will be a bad tenant. I'm saying, I go with the best odds, so if I'm presented with 2 tenants, one of which sounds more appealing than the other, I'm going to accept the that sounds better to me. It may not pan out that way, but the odds are in my favour.

I've got it wrong a few times, but over the duration of being a landlord, I know that the game of odds do work.

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YesAdam 22nd March, 2013 @ 16:29

You know number 9 is an AND.

So the law for harassing tenants can only apply if you also "persistently withdraws or withholds services reasonably required for the occupation".

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Elevate 22nd March, 2013 @ 21:10

I have been advising landlords to take out rental protection insurance with every tenant referred. for the amount it costs your rent is covered and you can also qualify for legal assistance plus DSS applicants qualify too. I'm surprised this wasn't number 14. For more information:

http://elevateestateagents.co.uk/services

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frustrated landlord 10th April, 2013 @ 18:49

My letting agents have just withheld my rent for 2 months due to the Gas Certificate. They reminded me it needed doing, and I sent my plumber - the tenants went away for a long weekend and weren't there, so the plumber did the gas inspection/service on the last legal date and gave a copy of the certificate to the tenants; however due to other circumstances I didn't get a copy so I asked the agent to get a copy from the tenant. The agent called a couple of times to ask if I had received a copy. in the meantime I was phoning asking about why I hadn't received a statement as I needed to know how much I was going to receive from them as the tenants had also reported work needed doing and I had authorised the agent to get this dealt with - at no point was I told that they were withholding rent until they had a copy and they couldn't be bothered to ask the tenants. If the tenant has a copy of the gas certificate, can they legally refuse to pay me? I've sorted it now, but am interested in whether the agents can legally do this when they know that the gas inspection/service has been done as I've now had my statement but am still awaiting my rent?

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Paul Barrett 12th April, 2013 @ 05:20

@Elevate
please advise as to which wonderful RGI company will offer policies on DSS tenants.
I have been looking for the past 6 years; never found a DSS tenant that would pass RGI checks for my rent for £99 per year!!??
RGI for DSS tenants would be the answer for all LL.
It doesn't exist though!!

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Noelle Tickner 27th April, 2013 @ 13:03

I have to say a huge thank you - I'm doing some research now into buying property in the UK as I'm wanting to renovate for profit. I realise that being new means my learning curve is going to be huge by the time I'm actually ready to purchase and then renovate. I also realise that just because I'm wanting to make a profit, doesn't always mean that I'm going to be able to sell a property asap and that I just might have to rent out a property for a certain amount of time. I've rented property in Australia on and off for 6 or so years now and many of the things you have mentioned in your list have been followed out by the real estate agents who I've been associated with. So it's good to be the tenant but also looking at what a landlord takes into consideration on his end too. This has been huge to read your list here as it really shows me how I need to be on top of my game (so to speak!) when it comes to renting a property out too. Thank you very much for all your research and the time you have taken to compose this list. Regards, Noelle.

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Tom R 14th April, 2014 @ 18:51

Most of your points I agree with -- even as a tenant myself and not a homeowner! -- but I take issue with your characterisation of #7.

You need to remember that whilst for you the property is an *investment*, for those living there it is their home, and I have a right to quietly enjoy it while living there. If I don't pay the rent, you have legal remedies (the efficacies of which are another matter entirely) to get rid of me.

There's no reason why as a landlord you should be exempt from any laws that other debt collectors are subject to.

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Tom 6th October, 2014 @ 21:52

To be honest I never bothered with a guarantor, but then I only accept working tenants and I am qualifying/meeting all prospective tenants myself, using your method of staying clear of high street letting agents and using online ones instead. My last two tenants were from abroad (Polish and Greek) but both worked in financial services, I used a NLA to get references and then bought rent guarantee insurance, having insisted on 6 week deposit. I think for someome from abroad, getting a guarantor can be a pain and the guarantors themselves won't be property owners so basically I have little leverage. I figured if they work in financial services their employer will not be happy with a County Court Judgement on their credit file, so that will act as an incentive to behave! I would definitely want a guarantor if I was desperate enough to let the property to a DSS tenant, and I would insist on a homeowner - my manager at work had a tenant who stopped paying rent and he successfully applied to turn a CCJ against a homeowner guarator into charging order secured on guarantor's property!

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emma6 3rd November, 2014 @ 15:11

I think my letting agents are scamming me on repairs.

I have had endless problems with their choices of maintenance people (including one trying to charge a second callout fee for walking from the bathroom into the kitchen - I shit you not). Such that, they are now banned from hiring anyone to do anything without checking with me first.

The latest scam? They sent a plumber round to fix the kitchen tap. He fixed the RIGHT HAND tap, told the tenant the left one was leaking but he "hadn't been hired to fix that". And left.

So now I'm supposed to pay him another callout fee to go back and fix the other tap! I. Don't.Think. So.

Note to self. Enrol on basic plumbing evening classes.

Just how dumb do agents and workmen think we landlords are?!

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Tenant 30th December, 2014 @ 21:40

Landlord- you seem like a bit of a cock. Just like my landlord. You forget that we, the tenant's, are paying you rent. Your property is an investment for you but is a home for others. Seems that landlords are very quick to judge, slate and take the piss out of tenants but it's another matter when you hold out your sweaty palm for money..

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emma6 30th December, 2014 @ 21:49

Dear Tenant
And you are precisely the type of over-entitled, jumped-up arrogant little twit that we come to this site to get away from. We are trying to make a living (from something we own and you and your ilk devote all your time and effort to damaging and destroying). If you learned a little manners - and some basic punctuation - you might find you could do the same. Earn a living, that is.
Best wishes
Someone very thankful that you are not their tenant.
P.S. If you'd like to leave a note of where in the country you live, so that we can all avoid renting to you, that would be lovely, ta.

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Guest Avatar
emma6 30th December, 2014 @ 21:53

Dear Tom

If you rent to people from elsewhere in the EU, I recommend bookmarking this site, just in case. https://www.gov.uk/recover-debt-from-elsewhere-in-european-union. The process is surprisingly straightforward, if the instructions are to be believed, but, thankfully, so far, I have never had to find out.

em

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Guest Avatar
Paul Barrett 31st December, 2014 @ 09:18

Tenant
Ithink you misunderstand the concept of renting
Lle provide a service of a legally acceptable standard
The tenant agrees to pay an amount that the LL wishes to charge
The fact that you choose to live in the property as your PPR is irrelevant
To the LL it is purely an investment to make as much profit as can be achieved
We do not hold our sweaty palms out for your hard earned rent
We are just expecting to be paid for the Service we have provisioned for you and for which you have agreed to enter into a legally binding contract at your behest
No LL ever has forced or forces a tenant to sign an AST!!
Of course every tenant has the right to expect the terms of the AST to be adhered to by the LL
This is a responsibility that sometimes appears to be lost on tenants!!!
Remember a LL cannot force a tenant to remain in a rental property
You as a tenant can always show your opinion of the way the LL conducts his business by vacating
It is just not so easy and can be very expensive for a LL to get rid of a tenant who is not adhering to AST conditions

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