Carolyn Uphill, NLA Chairman discusses the importance of planning and financial protection
Having looked at our recent research it is quite worrying that more than a quarter (27pc) of landlords who let out a single property break even or run at a loss, but with some good financial management and appropriate safety nets in place this can be avoided.
There are various reasons why a person becomes a landlord, from it being an investment opportunity to it being more beneficial financially to let a property than to sell. However if they are barely breaking even or are actually running at a loss landlords should step back and reassess how they are managing their business. It should be stressed that taking a professional approach to letting property and using all available help can make a huge difference.
Managing your portfolio
Keeping an eye on the outgoings as well as the income can be very useful in pinpointing any shortcomings. One of the many services that the NLA offers is our online rent management solution, Rent Manager. Like all of the NLA’s services, Rent Manager is designed by landlords, and aims to make the task of rent management much easier, saving you both time and money, no matter the size of your portfolio.
Using Rent Manger, which is free to full NLA members, allows you to:
- Set-up different tenancies for all tenant and property types e.g. HMOs, student lets, LHA tenancies, full property lets etc.
- Create rent schedules for tenants in properties/rooms
- Enter and keep track of full and partial rent payments
- Receive rent arrears alerts
- Record all tenant communications
After having put in place a rent schedule it will be much easier to act quickly and address any issues such as arrears. Leaving arrears for even a month or two without addressing it could come back and bite you as debt could potentially mount up to an unmanageable level leaving you out of pocket and with an even more difficult task of rectifying the problem without any further costs. We recommend that all landlords should budget for 10 months’ rent in a year in order to cover any periods of voids or arrears.
A tenant who can’t, or won’t, pay the rent is every landlord’s worst nightmare. Even when including a two month buffer in your budget, a landlord could still be faced with arrears, which is all the more concerning if the profit from the rental income is relied on for mortgage repayments. This is where a service such as the NLA’s Rent Protect could prove invaluable as it protects you if a tenant fails to pay the rent.
Rent Protect covers landlords for up to £2500 per month in unpaid rental income and it covers legal costs to help you in the recovery of unpaid rent.
This gives you peace of mind that you won’t lose out if your tenant can no longer pay the rent and will give you the time to consider your options.
For more information about Rent Protect visit http://www.landlords.org.uk/services/nla-rent-protect