The strong rental returns that can be obtained as a landlord have become the main reason for the upturn in investment in the private rented sector across the last few years. With landlords able to achieve income that rivals some of the best assets around, it has become one of the most popular investment options for people across the UK.
And while there are a great many across the country who are operating large portfolios and renting a number of different properties to a range of tenants, the strength of the market has become such that there are now a large number of people who buy a single rental property in order to become what is increasingly becoming known as a part-time landlord.
These owners are typically newcomers to the sector who are simply looking to supplement their earnings by bringing in an attractive return from their rental property. At the moment, LV Insurance estimates, five per cent of the population as a whole are now part-time landlords, with one in every 20 people operating in this sector.
The company said that nationwide, the average part-time landlord is able to bring in some £678 per month to add to their income, which makes for a collective £28 billion per year across the country.
In London, this total rises to an average of more than £1,000 per month for investors. And with 60 per cent being spent on things like borrowing costs, management and maintenance of a property, landlords are left with 40 per cent of the income in profit, a sizeable boost to their monthly income.
With these figures in mind, it's hardly surprising that a great many people nationwide have opted to take this step into becoming a landlord, even if they only earn from one home. However, LV says that many are not aware of their obligations and costs as landlords before they take on the properties and rent them out, which can leave them out of pocket.
So what are some of the most common issues that come from new landlords, and how can new owners take steps to make sure they don't fall into the most common traps?
Landlord gas checks
Anyone who rents out a residential property to another person must make sure that they have had it checked by a gas safety engineer. LV reports that some 500,000 owners failed to do so in the last 12 months. The risk of not doing so is high as well, with properties not properly checked by an engineer in danger of a £20,000 fine.
Anyone who purchases a rental home should make sure it is certified by a Gas Safe Register engineer, and if not, this should be one of their first priorities before they let it out to a tenant.
Perhaps the most common pitfall new landlords will come across will be related to the cost of maintaining and repairing their rental properties. You may think that it's as simple as buying a property and then finding someone to live there, but it's important to budget for the cost of upkeep throughout the time a tenant is resident, as landlords need to make certain repairs, even if they have been caused by a tenant.
According to LV, the average cost of maintenance for a rental property in any given year is £1,200 if damage has been caused. And this is not something that is rare either, with the insurer saying that some 32 per cent of landlords have seen damage to their property at some point.
Tenant deposit scheme
The practice of taking a deposit at the start of a tenancy is something that has been in place in the UK for many years, but in recent times it has become mandatory for any deposit held by a landlord to be paid into an official deposit protection scheme.
This protects both tenants and landlords at the end of a tenancy agreement and means that any disputes between the two can be mediated and a resolution achieved through impartial judgements. If a deposit is not paid into such a scheme, the landlord could find themselves in breach of regulations and risk being fined.
If you're unsure, it's always best to check with an experienced letting agent to make sure you're paying into an approved scheme that gives both you and your tenant protection in the long run.