Trouble with tenants? 7 tips to protect you and your rental property - Total Landlord Insurance

Total Landlord Insurance
Trouble with tenants? 7 tips to protect you and your rental property - Total Landlord Insurance

Ownership of any property comes with risks. The building or its contents might suffer damage, either because of the elements or through accidents; there may be break-ins or vandalism; you’ll need to carry out periodical maintenance and repairs to make sure the structure and fabric of the property stays in good condition – and older fittings could fail and need replacing or upgrading at any time.

When you let other people live in a property you own, the risks multiply:

  • A tenant may be far less careful in a property that’s not theirs
  • When the property suffers damage or something needs repairing, tenants either might not notice or may simply not bother to report it, leaving a small problem to get much worse
  • Tenants may fail to keep the property secure – and that’s more of a risk if it’s an HMO and you have multiple, unrelated people coming and going at different times
  • You could get a ‘bad tenant’, who may cause deliberate damage, move other people in without you knowing, stop paying rent, change the locks and refuse you entry

So, as a landlord, you need to do what you can to mitigate these risks and make sure your property remains in good condition and you’re not left out of pocket if things go wrong.

Here are our seven tips, covering the things you can do to help protect both your rented property and your finances:  

1. Carry out tenant referencing

Every landlord is looking for a good tenant – one that will pay the rent on time and in full and take care of the property and its contents for as long as they live there. Having a responsible tenant is key to a successful tenancy.

A comprehensive reference check will gather evidence on a prospective tenant’s identity and finances, and uncover whether they have had any issues during previous tenancies. 

“When it comes to tenant referencing, you’re putting a jigsaw together, building up a picture of the prospective tenant’s renting history – whether they have defaulted on rent in the past or caused malicious damage to a property, whether they have had County Court Judgements against them and, most importantly, whether they can afford to pay the rent. No tenant should really be paying more than 30% of their income on rent. Affordability is key.”

Paul Shamplina, Founder of Landlord Action and Chief Commercial Officer at HFIS

While referencing is common good practice that will help minimise many of the risks of letting your property, it may also be a condition of your mortgage and/or insurance policy, so check with your provider.

“Our Premier policy offers protection against malicious damage by tenants and their guests, as well as loss of rent resulting from the need to carry out repairs. But if you need to make a claim, you’ll need to show that your tenant passed a full and robust reference check and that you carried out regular inspections. As a minimum, we recommend a four-point check which should include proof of identity, proof of residency, a credit check and confirmation of employment.”

Steve Barnes, Head of Insurance at Total Landlord

If you use a letting agent, they should handle the whole referencing process on your behalf. And if you’re self-managing, there are plenty of companies that offer referencing services for around £20 per tenant, for example, TenantVERIFY, which, like Total Landlord,  is part of the HFIS group. 

Here are five key things that should be included in the referencing process: 

  • Proof of identity and address

This is to make sure the applicant is who they say they are. A driver’s licence is ideal, as it has both a photo and their address. If they’re using a passport, they’ll also need to provide a utility bill or recent bank correspondence that shows their address.

  • A ‘right to rent’ check’

In England, you must check that every occupant of your property has the legal right to be in the country, in accordance with immigration laws – and these checks apply to everyone, whether they’re foreign or UK nationals.  If you fail to carry out a right to rent check properly and it turns out that your tenant is in the UK illegally, you could be fined £1,000 for a first offence and £3,000 thereafter!

To satisfy the check, you must have sight of original documents. The government website has a list of acceptable documents and a step-by-step guide on how to make the checks. 

If the prospective tenant has an application or appeal outstanding with the Home Office, or the Home Office is currently holding their documents, you can use the online Landlord’s Checking Service. And for British and Irish applicants who hold a valid passport, you can use certified identification document validation technology (IDVT) service providers to carry out digital identity checks. Our Ultimate guide to right to rent checks contains more information. 

  • A credit check

This is a series of checks of public registers, to find out the tenant’s address and credit history, and whether they have any county court judgements (CCJs) against them. Importantly, you need to have the tenant’s permission in writing in order to carry out a credit check. 

  • Three months’ bank statements

Asking the tenant to provide their last three months’ bank statements will let you see their regular income and expenditure so you can judge whether the rent will be affordable for them.

If you have any concerns about affordability but the person seems like they would otherwise be a great tenant, you can always ask for a guarantor – someone who agrees to cover the tenant’s financial obligations if they can’t. Any guarantor should be fully referenced in the same way as the tenant and sign either the tenancy agreement or a separate guarantor document. 

  • References from the tenant’s previous landlord and employer

If the tenant has rented previously, try to secure a reference from their previous landlord, confirming whether rent was always paid on time and in full and whether they would let to the tenant again. An employer’s reference will confirm that the tenant is working there and being paid regularly.

For more detailed information, check out our ultimate guide to tenant referencing.

2. Have a written tenancy agreement

While there is currently no specific legal requirement in England to have a formal written rental agreement (although there is in Wales, since the Renting Homes (Wales) Act 

came into force on 1 December 2022), every landlord should have one. This ensures there is a clear record of exactly what both parties are agreeing to by accepting the tenancy. It is also likely to be a requirement within the terms of your mortgage and insurance agreements.  

The default contract for residential letting is an assured shorthold tenancy agreement (AST) – or Private Residential Tenancy in Scotland. This sets out the terms of the tenancy, including:

  • The names and contact details of the property owner and tenant(s)
  • The amount of rent and how often it is to be paid
  • The rights and responsibilities of both the landlord and tenant
  • The tenancy length and criteria for ending it

There are standard clauses that protect the rights of tenants and landlords that will apply in law, regardless of whether they are amended by either party. However, you can add certain terms – such as who is responsible for garden maintenance and whether smoking is allowed – although you should consult a legal  lettings specialist before making any changes to the agreement, as not everything you want to include may be legally valid and some terms and conditions may be considered ‘unfair’. Both parties should sign the AST before the tenancy begins.

If the tenant then breaches any of the terms during the tenancy, you have the written agreement to prove exactly what the tenant agreed to, which can help quickly resolve any dispute.

There is a model agreement on the government website and you can easily find other ‘standard’ templates online – although there is likely to be a small cost. The downside of agreements online like this is that you won’t necessarily be aware if they need to be updated when the law changes. 

Note that if you don’t have a tenancy agreement, but the tenant has the exclusive use of the property and is paying you rent, legally the standard terms of an AST are likely to apply.

Find out more in our separate guide to tenancy agreements.

If there is any change to the individuals living in the property – for example, if the tenant’s partner moves in or they let a friend or relative stay there for any length of time - those people must also be referenced (including, most importantly, a right to rent check) and added to the tenancy agreement. 

This means if anything goes wrong with the tenancy, you can demonstrate that you fulfilled your responsibilities. If not, you could be fined. Read more about landlord fines here

3. Take a deposit

Taking a deposit from your tenant gives you a small financial cushion in case they default on their rent, cause damage that they refuse to pay for – over and above reasonable wear and tear - or the property needs extra cleaning at the end of the tenancy.

Under the Tenant Fees Act, you can take a deposit of up to five weeks’ rent where the total annual rent is less than £50,000, and up to six weeks’ rent if it’s £50,000 or more a year.

Deposit protection

If you take a physical deposit from a tenant, you must protect it in a government-approved scheme such as mydeposits, the only scheme to operate throughout the UK, otherwise you could be fined up to three times the deposit amount. Details of the deposit taken and how that money will be protected must be included in the tenancy agreement and information about the scheme given to the tenant. If you fail to do any of that, you may be unable to evict via a section 21 notice should you want or need to, so it’s very much in your interest to comply with the law!

Deposit replacement

There are also now a number of deposit replacement schemes available – including Ome, operating in partnership with mydeposits, where the tenant pays a monthly subscription, rather than having to find a traditional deposit amount up-front. These schemes guarantee the landlord protection equivalent to up to five weeks’ rent, so you get the same protection as with a traditional deposit. 

4. Take an inventory at check in and check out

Now that tenant deposits have to be protected, if you want to retain any monies at the end of the tenancy to cover the cost of repairs and the tenant disputes the deduction, you will need to submit evidence to the deposit protection scheme to support your claim. 

A thorough, professional inventory lists and describes, in writing and with photos, the contents and condition of everything in a property - from the paint on the walls to light switches and shower heads. 

Taking an inventory at check in and check out will enable you to prove exactly how much general wear and tear there’s been during the tenancy and whether anything has been damaged or is missing. You can then get quotes for making repairs and submit those, along with the inventories, to the deposit scheme provider’s adjudication service. That should make sure the tenant pays their fair share for returning the property to the condition it was in when the tenancy began. 

“Putting in the effort to prepare a quality, truthful and robust inventory is the first step to making sure any tenancy starts with firm foundations. As well as safeguarding the interests of both landlord and tenant, it should go a long way to helping you avoid a number of issues both during and at the end of the tenancy.” 

Suzy Hershman, Head of Disputes at mydeposits

For more information, take a look at mydeposits complete guide to inventories, which includes a comprehensive list of the most important things to include in the report, to safeguard both the landlord and the tenant, and manage everyone’s expectations throughout the tenancy. 

5. Take out appropriate landlord insurance 

The best way to protect yourself financially against the cost of repairing property damage is by taking out insurance. 

As a homeowner, you are likely to have buildings and contents insurance that should cover you for things like escape of water, subsidence, storm damage to the fabric of the property and accidental damage to fittings and furnishings.

With a rented property, all those things still need covering, but you also should consider financial protection for things like:

  • Malicious damage by tenants or their guests
  • Liability protection in case a tenant, contractor or visitor injures themselves in your property
  • Cover for the cost of alternative accommodation for your tenants if the property becomes uninhabitable

Because of these additional risks and the fact that insurers consider tenanted properties as being at an overall higher risk of suffering any kind of damage, you need specialist landlord insurance.

Be aware that if you have standard homeowner insurance on a property you rent out, any insurance claim is likely to be invalid.

It’s also worth considering adding to your policy: 

  • Home emergency cover, which gives you and your tenants 24/7 access to emergency contractors  six and 12 months
  • If your tenant stops paying, most policies include legal expenses to cover eviction costs

You can read more about how to work out which is the best landlord insurance cover for your needs in our separate guide. And if you’d like to discuss appropriate cover, just get in touch with the team at Total Landlord Insurance for a free, no obligation quote.

5 tips for securing your rental

Tenanted properties can be vulnerable to break-ins and vandalism so, to help make sure any insurance claim you might need to make is successful, here are five tips for keeping the property secure and your tenants safe:

  • Make sure all windows and doors close and lock properly and form a tight seal – and periodically remind you tenants to secure the property each time they leave
  • Make sure all boundary fences are in good condition and any gates and outbuildings have secure locks 
  • Install motion-activated lights at the front and rear entrances and anywhere else where break-ins could be attempted
  • Cut back or remove shrubbery around windows and doors that could provide cover for an intruder
  • Use shingle or pebbles for the driveway and paths so it’s hard for people to approach the house quietly

More information and tips on securing your rental property can be found here.

6. Keep up with maintenance and repairs

Making sure that your tenants’ home is maintained in a good condition is a legal obligation. The Landlord and Tenant Act 1985 specifies that landlords are responsible for repairs to the exterior and structure of a property, and must make sure the equipment for supplying water, gas and electricity is kept in safe working order, including sanitary fittings. And, under the Homes (Fitness for Human Habitation) Act 2018, landlords must ensure their rented homes are fit to live in at the start of a tenancy and remain that way for the duration of the let. 

Protecting yourself by complying with the law is one thing, but there are additional benefits to maintaining your property well and staying on top of repairs: 

  • It will help protect the capital value of your investment 
  • Properties that are clearly taken care of by the landlord tend to let more quickly, minimising void periods and helping protect your rental income
  • There will be less work to do between tenancies to prepare for re-let

So, the first thing you should do is put together a maintenance schedule. Think about what needs doing throughout the year – such as clearing guttering, bleeding the radiators and checking roof tiles and brickwork – and then plan ahead for the next five to ten years so you can also budget for the cost well in advance. 

To help, we’ve created this handy list of the key maintenance checks you should make each season to keep your rental in good condition and reduce the need for costly repairs further down the line.

Then, if tenants report an issue, make sure you respond quickly and make necessary repairs as soon as possible, so that damage to the property is limited and you keep your tenants happy. A happy tenant, living in a well-maintained property is much more likely to treat their home well and pay their rent on time! 

It’s also important to know that, under the Deregulation Act 2015, if you don’t make necessary property repairs and the Local Authority has served notice on you, you may not be able to evict your tenant within the following six months.  

See our full guide to landlords’ and tenants’ repair and maintenance responsibilities.

7. Make periodical inspections

An inspection of the property should be carried out by you or your property manager every six months, at least for the first year of every tenancy. 

Regular inspections are also a requirement of most landlord insurance policies and buy to let mortgage agreements – so check your paperwork to see if any interval is specified. 

“Regular landlord inspections are vital for making sure that your tenant is looking after the property and not breaching other terms of the tenancy agreement. Most landlord insurance policies, including Total Landlord Insurance, specify that an inspection should be carried out within a month of the tenant moving in and then every six months during tenancies. Weekly inspections are generally recommended when the property is vacant. We also ask that you keep written reports of these inspections, as well as rectifying any defects they reveal.”

Steve Barnes, Head of Insurance, Total Landlord 

One reason for these inspections is to see whether any maintenance or repairs are needed that may not have been picked up within your regular maintenance schedule. Although tenants should be reporting any faults, damage or necessary repairs to you or your property manager, the reality is that some won’t. Or they wait until the problem has become so bad that it’s turned into an emergency, which tends to result in a much higher repair cost, so it’s very much in your interest to make periodical checks yourself.

The other important reason for visiting the property in person, is to see how the tenants are living. Are they keeping it clean, is there any evidence of malicious damage or illegal activity, and are the occupants the same ones you expect to be living there? 

You must remember that this is your tenant’s home, so it’s important to be sensitive and not make them feel as though you are ‘snooping’. For much more information and advice on how to carry out landlord inspections, see our ultimate guide

By following these seven tips, you will be doing what you can to reduce your risks and protect both your rented property and your finances.

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