Avoid Taking Risks With Rental Properties

Thursday, January 29, 2015
Risks To Rental Property Businesses Can Be Mitigated

Risks To Rental Property Businesses Can Be Mitigated

Risks To Rental Property Businesses Can Be Mitigated

Landlords choose to rent out properties for a variety of reasons including retirement planning or they may be unable to sell their former home or may have been left property by a deceased relative.

Whatever the reason for rental properties, there are always risks and challenges associated with it that must be faced and overcome by landlords in order to survive.

There are so many risks that could threaten a landlord’s lettings business, from interest rate rises and rent arrears to deliberate property damage to rental properties and anti social behaviour as well as much worse case scenarios!

UK landlords need to be prepared for all eventualities and should attempt to minimise risks by using the wide range of specialist products and services that have been specifically developed to aid landlords maximise their portfolios of rental properties .

Bank of England interest rates have been at a record low for a long time, but it has been widely hinted that rises are likely to occur during 2015, although probably nit until after the general election in May.
According to the National Landlords Association (NLA), 32% of landlords have had problems with late/ non-payment of rent in the last 12 months. This could be a serious problem affecting a landlord’s finance’s, however, rent protection insurance can guarantee continued rental income should the tenant experience a change in employment circumstances or become too ill to work, provided that they have been properly tenant referenced before the start of the tenancy.

The average amount of rent arrears owed to UK PRS landlords from rental properties before they can even begin the eviction process to remove the tenant is over £1500 (GBP), before legal fees and additional lost income due to the length of time the whole process can take.

Landlords need to plan ahead and be prepared for all eventualities and Legal 4 Landlords offer a few tips to help minimise potential risks:

  • If interest rate increases will affect mortgage payments, is it possible to secure a better buy to let mortgage product or re-mortgage rental properties with your existing buy to let mortgage lender to keep running costs down?
  • Plan ahead and try to keep an eye on the figures, have contingency plans in place should operating costs increase, consider limiting rent increases where possible so as not to alienate tenants.
  • Background check all potential tenants, by conducting thorough tenant referencing and credit checks through established specialists, so that you have a better idea of who you are renting your property to.
  • Meet tenants in person wherever possible, don’t just leave everything to the letting agent and trust that all will be okay with your rental properties. Build working relationships with your tenants, listen to their concerns and attempt to ease concerns and tackle problems positively, building trust and providing excellent customer service will help retain tenants longer and encourage better communication, allowing issues to be reported and rectified quickly.
  • Calculate rental returns based on only 10 months of the year, rather than 12, allowing for void periods and possible payment delays into your working budget to be able to absorb potential rental income shortfalls.
  • Build the cost of specialist insurance into monthly rental prices to provide tenants with greater peace of mind, should the unexpected happen, products include: Rent Protection Insurance to guarantee continued rental income and Tenant Liability Insurance protecting the tenant’s deposit even if they cause accidental damage to the rented property.

Discover the wide range of specialist products and services that can help landlords operate their rental properties and lettings businesses successfully visit Legal 4 Landlords

This was written by Mike Clarke. Posted on at 11:30 am. Filed under Insurance. Tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , . Bookmark the permalink. Follow comments here with the RSS feed. Both comments and trackbacks are currently closed.