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HOW TO PROTECT YOUR INVESTMENT? Part 2 Last week I discussed the importance of protecting your p...


Last week I discussed the importance of protecting your property investment with thorough referencing and the relevance of taking an appropriate deposit. This week I will discuss other means of safeguarding your investment. One of the crucial parts of managing a property is recording the state of the property and agreeing it with the tenant.

An inventory is a legal document that records the state of a property and is usually performed by a qualified and trained person who is able to make an assessment of the fixtures, fittings, furniture and general state, both internally and externally of the property. A Check out is carried out at the end of the tenancy and records the state of the property comparing it with the original inventory.

When looking to claim against your tenant’s deposit it is very important to remember that the onus is upon you as the landlord to prove that any dilapidations, damage or cleanliness issues have been caused by the tenant. Any claim against the deposit is only likely to be valid if a professional inventory has been drawn up, agreed and signed with the tenant at the start of the tenancy. Guidelines for the inventory and check out process are stringent and place a moral responsibility on the landlord to ensure that all documentation relating to the property prior to the move in and at check out is prepared using the requisite skills. If at the end of the tenancy there are damages to the property and you do not have an inventory which has been dated and signed by the tenant, you have almost certainly lost your chance to withhold money from the deposit. Unfortunately, I meet a lot of landlords who prefer to save £100 in not having a professional inventory conducted, and then at the end of the tenancy, want to claim £800 from a tenant. The question arises: What is the expensive option now?

At the same time, this also raised the question about the quality and reliability of free inventories provided by some agents.

Another crucial consideration in protecting your investment is insurance. An insurance policy is extremely important when it comes to protecting yourself from the financial repercussions of any major issues. First and foremost, is the buildings insurance, and this is mandatory for all property whether rented or not. It should be noted that a standard buildings insurance policy which is not orientated for a rented property may not provide you with effective cover for the risks you could face as a Landlord. In some cases you may even find yourself liable to cover the cost of housing or moving your tenants into alternative accommodation. It is imperative that you inform your insurance provider that a property is rented.

Rent and Legal insurance is another insurance that I strongly recommend. Policies range in cover and many people buy insurances of this nature solely based on price. Looking at the cover provisions in depth and ensuring the policy will actually pay in the event of a claim is more important. There have been a number of landlords in the last few years claiming on this policy and were glad to receive rent each month even though the tenants had defaulted.

In the event that you have serious issues with a tenant a rent and legal insurance could really provide you with peace of mind. Should you find that you are owed large sums of money in rent or even if you end up in the dreaded realms of court evictions, a sufficient policy will cover your unpaid rent and legal cost. In a worst case scenario, you could find yourself in the unpleasant position of a problem tenant not paying your rent and you will have to wait until the tenant is two months in arrears before you are able to serve a section 8 notice. In the event that they fail to vacate the property you will need to begin court proceedings. Court evictions can take many months to complete, and it could take up to six months to even arrive in court to claim an eviction. All this time you will not be receiving rent while running up large legal costs. Try to find a cover that offers you rent and legal cover as well as cover for malicious damage caused by tenants. Some policies will even offer to pay your rent whilst you repair a damaged property ready to be re-let.

If you have any questions, or would like to share your thoughts, please email us on hitchin@belvoirlettings.com and we will answer them.

Question 1:

I bought a house for £128,000 and it is now worth £280,000. Should I sell my property now and capitalise on the high prices?

I can resist everything except temptation.
Oscar Wilde The key question is what to do with the money once you have sold your property. If you intend to buy more property then, you may just be trying to achieve the same objective but adding more work and worry to your life. House price inflation is set to continue and if you own a property you are already benefitting from it.
However, if you are cashing in to use the money you may want to consider taking out a loan on the property or increasing your current level of borrowing. Rates are favourable and return on residential property is much higher than the foreseeable interest rate.
In a nut shell, do not sell.

Question 2

The previous tenant has left a car in the drive way and I have not been able to contact them. Can I dispose the car?

If the car has been left on your land then it is your responsibility to remove it. Some local authorities or police may remove it.
If you choose to remove it yourself, you must write by recorded delivery to the registered keeper (having obtained their details from the DVLA with the form V888) and place a notice on the vehicle giving them 14 days notice to remove it.
If you get any proceeds from selling it to the scrap yard, you will have to retain any surplus after deducting your costs of disposal, for the owner if he turns up. If the car is worth more than the scrap value, you may want to seek legal advice.


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