The Cost of Moving House? A List for Property Owners

Author: Zoopla property news author Robin Stenson previously worked as an estate agent and now consults to regional agencies.

If you're a property owner, especially an owner of multiple properties, you’re likely to get an email every week that asks: “how much does it cost to move house?” If you’re as sick of this as we are, here's an easy moving house checklist you can adapt and give to renters or prospective tenants when they have questions about the various costs of renting, moving out and other topics – today, we’ll focus on security deposits.

When Can a Landlord Keep a Security Deposit?

For tenants considering a move, the first thing many consider is, “am I entitled to get my security deposit back?”

Be upfront with renters about how you expect the flat or property to look when they move out, and the conditions that could potentially prevent the tenant from reclaiming their security deposit. 

Having a list handy of the things you want cleaned or put to rights (repainting walls, steam-cleaning carpets, etc.) in the property before a tenant moves out can help prevent later disputes over the security deposit. Also, be clear that a failure to do these things can result in a loss of security deposit; this is proactive and in the best interest of all parties. Here are five common reasons why property owners withhold a security deposit: 

1) Breaking the Lease Early

Check your lease carefully – most specify that moving out early entitles the landlord to part, or all of, the security deposit. In some cases landlords are even entitled to further compensation, depending on how much time remained in the lease. 

 2) Failure to Pay Rent 

Again, consult your own lease and potentially a legal advisor, but a tenant’s failure to pay rent typically entitles the landlord to withhold the unpaid amount from the security deposit. 

3) Property Damage 

Here, we must make the distinction between normal wear and tear and actual damage. Be specific in communicating with your tenants what you consider wear and tear and what you consider damage, as these terms are very open to interpretation. These are a few general examples: 

Wear and Tear: nail holes in walls from hanging pictures; rust stains or tarnish around drains or faucets; loose handles or hinges on doors, cupboards and cabinets; small amounts of mildew on shower tiles, shower door or shower curtain. 

Property Damage: Holes in the walls (bigger than a nail hole); rips or tears in carpet or wallpaper; large and noticeable stains on carpet, curtains or furniture; broken doors or windows; failure, after repeated requests to do so, to return keys; missing or damaged smoke detectors or other appliances; damaged furniture; cigarette burns or smoke damage to property; items or furniture which has been removed from property.

4) Cleaning Costs 

If your tenants haven't cleaned the property as specifically requested, or if their neglect is considerable (food left in refrigerator, or rubbish, clothes and other items left behind) and requires the landlord to bring in outside help, this is reasonable cause to keep as much of the security deposit as needed to cover these costs. 

5) Money Owed for Utilities 

If the rent didn't cover utilities, and your tenants paid for these services separately, it should be communicated to them that any unpaid bills will result in the loss of their security deposit.

PRS parliamentary review committee

A committee of MPs is set to begins an investigation into the problems faced by those stuck in the Private Rented Sector. Rent controls, landlord regulation, letting agents and the revision of tenancy laws are all set for review.
The Local Government Association are calling for legislation to battle rogue landlords and letting agents and their spokesperson Tony Newman will be giving evidence to the committee today.

MPs will be told today of the extortionate fees charged to tenants by letting agents. Local Government Officials will be reporting of some non-refundable administration costs in excess of £500 placed on tenants and call for more powers are needed to protect tenants from unscrupulous agents, as well as rogue landlords, as more people are forced to turn to the private rented sector.

For the full details on the Parliament website

For more details see this Telegraph article 

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Accidental landlords like it

Rightmove research indicates that a lot of the 'accidental landlords' that came to the market as owner-occupiers who were forced to rent homes they were unable to sell - are now keen to take on the role for real.  The research shows that one out of eight 'accidental landlords' have had such a positive experience in their impromptu foray into property management that they are now looking to  to build a portfolio by buying further rental property.

Avoid Studio Apartments

I was chatting to a mate the other day.  His partner is on the hunt for another buy-to-let apartment to add to her growing buy-to-let portfolio.  It seems that there are plenty of one bedroom apartments and studio apartments available under 70k in the centre of Sheffield and with a big student population there is a ready market of tenants.  This probably explains why a good one bedroom apartment will let for over £500 a month. 

Smaller rental apartments have higher rental yields

Generally when it comes to rental yields, the smaller the rental property the higher the rental yield.  So by buying a studio apartment a landlord stands to pay less and thereby tie up less of their vital capital and secondly secure a higher rental yield.  However, generally I would never consider buying a studio apartment.  I would always pay more for a one bedroom or two bedroom apartment. Why pay more and get a lower rental yield.  Surely this does not make sense for someone who has always emphasised the importance of income and rental yield when evaluating which buy-to-let property to buy.  The reason is the all important re-sale market. 

Re-sale market is key

If you think of who you will eventually sell to when a landlord crystalizes their buy-to-let investment.  What you don't want is to have is the choice of only a collection of yield hungry landlords all desperate to drive down your price and maximise their rental yield.  Instead, you will get a much better price for your property and endure far less haggling from a bevvy of buyers that fall in love with your buy to let and want it as their first home.  Most first time buyers of the type you want as a buyer will always look to save a little more and buy a one or two bed apartment.  There are exceptions to this rule.

The exceptions and when to buy a studio apartment

There are two exceptions that I can think of when buying a studio apartment makes sense.  Firstly, in London.  People in London will buy anything and pay a fortune for even a rabbit hutch or cupboard so normal rules don't apply.  In a property boom, first time buyers desperate to get on the property ladder and not miss out will look to buy a studio otherwise most will save up the extra and buy themselves a one or two bed rather than being stuck with a 1 room apartment (not good for impressing a potential partner with and pulling!).  Therefore, as a property investor I would always tend to avoid a studio apartment and spend a little more cash and invest in a one bed.

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New Rental Arrears Recovery Laws

The Government is to introduce a new rental recovery system under changes to the rules governing how bailiffs enforce against debtors.
Regulations will be prepared by the Summer 2013.  The changes will tighten up how bailiffs can act including requiring them to undergo mandatory training and certification.

Many landlords would disagree that the laws on debt collection need tightening arguing that tracing and then collecting unpaid rent is hard enough as it is without curtailing the powers of bailiffs in any way.

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