Prospective landlords attending last weekend's Invest in Property Show in London were warned that short cuts could prove costly when entering into tenancy agreements.
Speaking at the buy-to-let seminar, Tim Wakelin of letting insurance specialist Letsure, pointed out that failure to take up references on prospective tenants could lead to months of unpaid rent and substantial amounts to gain legal possession.
He told the audience that the all-too-common practice of agreeing a tenancy without any form of reference and without the help of a reputable agent could not only prove costly in terms of lost rental but could also lead to expensive legal bills to secure an eviction.
He says: “Too many new landlords focus on their initial investment but don't think of the long-term problems they could encounter if they get the wrong tenants. At the outset, you have to be clear what your intentions are, stick to them and don't try to rush the process. The important thing is to ensure that your investment is protected because, particularly at a time of reduced yields, losses could take years to recover whilst the mortgage still has to be paid.”
To illustrate how easy it is for inexperienced landlords to fall for confidence tricksters, Wakelin outlined a typical example. He says: “In one case the tenant turned up in a brand new Porche, was very presentable and had a vast knowledge of moving large quantities of money around European banking networks. Obviously, though, he could not come up with the money on the day. He kept in touch every day and even took the landlord out to lunch. Eventually he was allowed to borrow the key and, of course, moved in. He then didn't pay any rent, but continued to promise that the money was on the way right up until the day he was evicted.”
Wakelin explained that successful buy-to-let investment involves finding the right property in the right location and getting the finance in place to purchase. A key recommendation was to use the services of a professional letting agent who would know all the right questions to ask and ensure that proper references were taken out and checked.