‘Accidental’ landlords are being warned that they must take care if they are not to suffer even more as the recession takes hold.

“We have observed a 68 percent increase in the number of rental properties in January compared to a year ago, with a large majority coming from homeowners not wanting to sell in a depressed market,” said Virginia Skilbeck, director of lettings at Douglas & Gordon.

“At the same time there has been an increase in the number of people wanting to rent as they can’t raise the finance to buy in the current market.”

Jo Bishop from Property Vision says there has also been a significant increase in the number of tenants at the top end of the market they are working for.

She explained: “Many people believe the market will get worse before it gets better, so they are renting in the meantime – at very competitive prices. However, an uncertain financial market means tenants must take precautions to ensure their rental property will be unaffected during the course of the tenancy.”

Beware of the accidental lettings agency
“Many agents who only did sales in the past have now switched to letting property, but it's not the same thing and often they're not giving the right advice to their landlord clients,” claims Skilbeck. “Would-be landlords and tenants may be surprised to learn there is no legal requirement for estate agents to be regulated. Both parties would be best advised to choose an agent regulated by ARLA (The Association of Residential Lettings Agents) or the NAEA (National Association of Estate Agents). Both have strict codes of conduct, they can address complaints and even impose penalties on offending members,” she says.

Ensure the mortgage lender
knows the property is to be let
“Landlords must inform their mortgage lender of their intent to rent out a property,” says Bishop. “If they don’t, they are in breech of their mortgage agreement which could leave the tenant exposed to eviction if the landlord defaults on the mortgage payments. Tenants should ask to see the letter of consent before moving in to avoid complications later.”

Insist on tenancy deposit protection
“For all assured shorthold tenancies (AST’s) with rents less than £50,000 per year, the law requires the deposit to be registered with an approved Tenancy Deposit Scheme,” says Skilbeck. “Beware of rogue agents who don’t do so and always ask to see the deposit certificate.
“Tenants in large houses must but be aware that government legislation does not protect tenancies with rents above £480 per week,” added Bishop. “Therefore they must ensure their deposit money is kept safe in a Tenancy Deposit Scheme for peace of mind.”

Have all the safety checks been done?
“There are a number of checks that must be undertaken by the landlord to make the property legally acceptable,” warns Bishop. “The property must have an Energy Performance Certificate (EPC) accredited by a domestic energy assessor, and more significantly a CORGI certificate to approve any gas installations. Electrical appliances and fire alarms should also be checked on a regular basis.”

Skilbeck adds: “All upholstered furniture should comply with fire and furniture regulations, and landlords should provide mains operated smoke alarms.”

Don’t forget about insurance
“Most tenants don’t realise they are responsible for arranging their own home contents insurance,” says Skilbeck. “Landlords are only responsible for insuring the building and their own contents within the property. Notification to the insurance company is also required and failure to do so may invalidate the landlord’s insurance policies.”

What happens when the boiler breaks?
“Tenants like to know they’ll be protected if something goes wrong while living in a property. Therefore landlords should put in place the necessary day-to-day property maintenance and repair procedures well in advance. If a landlord can’t manage the property, they should appoint an agent or assign a friend or relative as the first point of contact. In all cases, a full set of emergency after hours contact numbers should be provided,” says Skilbeck.

What happens when financial circumstances change?
“In the current climate it is quite possible for a tenant or landlord to loose their job which may affect the tenancy agreement. This will require a willingness from both parties to negotiate new terms of the contract.

“If the landlord needs to move back into the property they’ll need to negotiate and incentivise the tenant to surrender the lease; or if the tenant can no longer afford to stay, the landlord may enforce a break out penalty,” says Skilbeck.

“Rising unemployment means there is a greater risk of tenants defaulting on rental payments, but this can be insured against for 1-3 percent of the annual rent. As rents continue to fall, this could prove invaluable for landlords with only one property, where a lengthy void could be financially crippling.”

Ensure the tenancy period meets your needs
“In a buoyant market, traditional buy to let landlords prefer a long term let, but new landlords are renting their property as a stop-gap until the market improves. Therefore tenants should ask what the landlord’s plans are and ensure the length of the tenancy meets their needs. Also discuss the option to renew the contract and be aware of the small print in terms of break-out clauses,” says Bishop.

Flexibility with furniture and fittings
Skilbeck said: “When deciding between two similar properties, tenants always prefer a landlord who is willing to make changes to the furnishings. From an agent’s point of view, it makes it easier to close the deal at the first viewing if we know the landlord is flexible enough to bring in a larger bed, or replace an old sofa.”

Home sweet home
“Moving into a new home is always a significant lifestyle change and getting used to your new surroundings can take some time. Landlords can make it easier by providing a welcome pack including useful contact telephone numbers and information,” says Skilbeck.

“Tenants like to know when the refuse is collected and what the recycling arrangements are. Also, by providing the instruction manuals for all the household appliances, and clearly labelling the keys for the back door and the garage can make a big difference. Having all this done before the property is put on the market makes a good first impression on a viewing.”

Retain some exclusivity
“Tenants like to know a property is in high demand,” says Skilbeck. “Recently a client in Kensington offered the first month rent free thinking tenants would jump at the opportunity, but instead they ran a mile. Potential tenants want quality and value, not the property on sale.

“In a competitive market, landlords often instruct a number of agents thinking they will get it rented more quickly. Instead, it becomes overexposed online and potential tenants perceive it to be blighted. By offering an exclusive instruction agents will achieve the same exposure and will work harder to get the property let. Perceived exclusivity goes a long way in negotiating a higher rent.”