Our article will help you avoid the most common (and costly) rental property mistakes that private landlords make
Not lodging a tenant’s deposit in the correct place
Most letting agents will lodge the tenants deposit on your behalf under their full property management service as this service is designed for landlords who want a hands-off approach for their rental property. The amount that can be charged as a deposit cannot be more than two months’ rent. For example, if the rent is £500 a month, you cannot ask for more than a £1000 deposit. The deposit can be used to cover costs, so you do not have to pay them. The Deposit will protect you against any damage to your rental property and any cleaning costs if the property has been left in poor condition.
You must lodge the deposit within 30 working days of the tenancy starting. There are three tenancy deposit scheme providers to choose from in Scotland:
If you do not use a tenancy deposit scheme your tenant can apply to the First-Tier Tribunal for Scotland (Housing and Property Chamber), either during the tenancy or up to three months after it ends. The Tribunal can order you to pay up to 3 times the deposit to your tenant.
Not allowing ‘Quiet Enjoyment’
A tenant has a right to ‘possession’ of the property. This means that they have the right to live there and to stop other people from entering without permission. This means they have the right to prevent people from entering their home and to be left alone by other people Under the Private Residential Tenancy Agreement in Scotland, there is a clause stating that landlords must give their tenants 24 hours’ notice to request access to the property for good reasons (such as repairs, routine quarterly inspections)
Charging prospective tenants illegal fees ‘Illegal premiums’ include charges for registering with the letting agency, charges for credit checks, and administration fees. Any fees charged by the landlord to create or renew a tenancy agreement are also illegal.
Some Landlords and Letting Agencies are still asking prospective tenants for a ‘key money’ or a ‘holding deposit’ to secure the property a prospective tenant wishes to apply for. If the landlord doesn’t refund this deposit at the start of the tenancy or if you decide not to take the tenancy it becomes an illegal fee, also known as a premium.
A tenant can ask the landlord or letting agency to repay these fees up to 5 years after the tenancy has ended and if the landlord refuses, court action can be taken.
Not providing the correct Tenancy Agreement
A new type of tenancy called a private residential tenancy has replaced assured and short assured tenancies in Scotland. Every new tenancy from 1 December 2017 is a Private Residential Tenancy as long as the:
- tenant lives in it as their only or main home
- tenancy is not excluded under schedule 1 of the Private Housing (Tenancies) Act
- property is let to a person as a separate dwelling
Assured and short assured tenancies which began before 1 December 2017 can continue until they’re ended by you or your tenant. If your tenant’s Short-Assured tenancy is renewing on a contractual basis this can continue to renew under the Housing (Scotland) Act 1988 until either you or the tenant brings it to an end.
Not creating an Inventory Report for your rental property
As stated by Inventory Report “A property inventory report is essential for helping to prevent disputes with tenants, and ensuring that your rental property is in the same condition (less fair, wear and tear) at the end of a tenancy. We strongly recommend having an inventory Report as Landlords and Tenants need to be able to compare the condition at the start and end of a tenancy which helps identify who is liable for any discrepancies as a landlord may struggle to prove that theft or damage has occurred without this document.
What is an inventory report and what should it include?
An inventory report is a detailed list of all the components, contents, and a detailed description of the condition of the rental property at the time. The inventory report should include furnished items as well as a description of the condition of the property’s doors, walls, floors, and windows. The inventory report should contain supporting evidence in the form of time-stamped photographs and, or a video recording.
Not credit checking or reference checking your tenants
Referencing and credit checking a prospective tenant is the most important thing a landlord can do with their rental property. A credit check can help give landlords information about the tenant’s previous history when it comes to paying back debts. As well as a credit check, a landlord may also ask for references from the prospective tenant’s previous landlords which may mention any issues such as property damage, rent arrears, or anti-social behaviour. In some cases, it might be necessary for a tenant to use a guarantor. A guarantor is someone who agrees to pay the rent if the tenant cannot. This will often be a parent or relative who has a better credit history or proof of a steady income.
Not employing a good letting agent and property management company
Hiring a good letting agent will ensure that landlords and their rental properties remain compliant with current legislation. A good letting agent will be fully accredited, advise on all requirements before letting your property, and will take care of the marketing, letting, and ongoing management of your rental property on your behalf. This is an area where paying a property management fee is worthwhile (it is also an allowable tax expense). Bridge Letting has replied to landlords frequently asked questions and has created a simple landlord guide which is everything you need to know and do before letting a property. Read our article “What should landlords look for in a letting agency”
Want to know more about us?
Bridge Letting is a letting agent and property management company with a solid background in rental property and customer service. We cover all aspects of the letting process and provide a full management service to property owners throughout Edinburgh, Dundee, Perth & Fife.
We are currently offering new clients a great introductory offer. Sign up with us on our full property management package and we will not charge you a fee for the first three months. Thereafter, we charge an ongoing management fee of 8% (No VAT) of the monthly rental income
Landlords, if you would like a no-obligation, free rent appraisal of your rental property please don’t hesitate to contact us Content Credit: Equifax, Citizens Advice Scotland & The Scottish Government.