Rainy Day Savings are Essential for Maintenance

Property owners have to comply with a range of regulations to ensure they are operating within the law. Normally these are governed by legally binding documents, such as rental agreements with tenants, which set out rights of access to a property, what is included in the property contract – an inventory is normally provided – and responsibilities for key areas, such as repairs and renewals.

Property owners have to comply with a range of regulations to ensure they are operating within the law. Normally these are governed by legally binding documents, such as rental agreements with tenants, which set out rights of access to a property, what is included in the property contract – an inventory is normally provided – and responsibilities for key areas, such as repairs and renewals.

Property Maintenance

Property maintenance differs from one rental agreement to the next, but one thing that does not change is the fact that maintenance at any level has to be funded – and often this is the landlord’s responsibility as the owner of the property. This may not mean replacing light bulbs, but it does mean, for example, ensuring that heating and ventilation systems are fully functioning and that the building is protected in case of damage from fire or water. External maintenance, including landscaping, is nearly always the responsibility of the owner, although grass cutting and other routine tasks may well be included in a rental agreement as being one of the tenant’s duties.

Provision for Funding

It is vital to make provision for funding maintenance and many shrewd landlords set aside a percentage of their income from renting property in preparation for that rainy day when a major intervention is needed – think winter months and burst pipes, for example. In fact, just as it makes sense to ensure a normal household budget sets aside sufficient funds for utility bills, food and general maintenance, so income from a rented property should be divided in such a way as to allow at least 10% to be assigned to maintenance costs.

Aside from the burst pipe scenario, properties need regular upkeep and older houses or apartments may well require external pointing or roof tile replacement at some point. Internally, boilers and central heating radiators need to be regularly checked, and doors and windows too so that draughts and leaks can be dealt with quickly before they become more serious problems. Equipment is also an issue for many property owners. If a washing machine, fridge, dishwasher and/or freezer are included in the tenancy agreement, then the upkeep or replacement is generally the landlord’s responsibility.

Dont spend all your rental income!

It is all too easy to regard rental income as 100% profit – but that is a big, and often costly, mistake to make. Landlords who routinely spend all their income get caught out when something needs to be fixed or replaced, and badly so if this is a major item such as a central heating system. Instead, those who are aware of the pitfalls will often work with an umbrella company to protect themselves and their investment. The protection afforded means the property owner is confident of being fully compliant with the law in relation to the income earned, without having to undertake any of the paperwork directly. This saves time, which can then be spent on undertaking necessary repairs at the earliest possible stage, thereby saving money. Business expense savings allow landlords to make provision for the inevitable maintenance costs they will face at some point.

 

 

Written by Julie Hanson

Julie is passionate about property – development, investment and portfolio planning. Along with husband Alec, Julie is actively building a property portfolio while helping others to do the same.

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