I started a post about low risk property investing yesterday, and now I'm thinking of high risk, in the respect of risks landlords SHOULDN'T take ....
Please understand I am not being negative with this post. If you are aware of the pitfalls you can avoid them!
Here's what I have come up with and the penalties involved:
Risk
Penalty
Failure to protect the tenant's deposit within 30 days and giving "prescribed information"
Up to 3 x the deposit to the tenant.
Failure to undertake an inventory
Deposit dispute will likely find in favour of the tenant.
Tenant replaces expensive furniture with cheap furniture.
Tenant brings in non fire safe furniture > fire blamed on LL.
Failure to take our Landlord's insurance
Public liability risk
Failure to take out Buildings insurance
Against T & C's of mortgage.
Property could burn down!
Failure to pay service charges on flats
Forfeit of lease!
Arrears and late payment fees added to mortgage.
Building deteriorates/loses value.
Not vetting tenant
Rental arrears
Damage to property
Cannabis farm
Buying a property NMD with mainstream lenders
Mortgage fraud
Allowing sub-letting
Breaking T & C's of mortgage
Unlicenced HMO
Heavy fine.
Long term mortgage arrears
Giving lender an excuse to call in loan/re-possess.
Not using accredited lettings agent/SAFEagent
Rents & deposits not protected.
Letting out residential property without "consent
to let"
Breaking T & C's of mortgage conditions.
Interest rate penalty.
Possibility of lender calling in loan.
SARB
Illegal!
Buying from "distressed" sellers
Possibly un-ravelling of sale if vendor later goes bankrupt.
Taking a bridging loan with no exit in place
Left on expensive finance.
Buying a property without viewing it.
End up with a pup!
Serving notice incorrectly
Court proceedings thrown out or delayed.
Use our Free Section 21 calculator or call Landlord Action to undertake serving notice for you.
Leaving a property void
It is better to get 80% of something than 100% of nothing. If a property does not let quickly, try lowering the rent.
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I have got the ball rolling - there are more risks - please add your thoughts ... !
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Most deadly landlord pitfalls and how to avoid them.
Top 10 fatal mistakes made by novice investors
Tribes guide to avoid becoming property "shark" bait