Repairs budgeting and approach

A key question for many landlords is what happens if I do not look after my rental property? The short answer is you will have higher tenant turnover and higher costs in the longer term.

All the research shows that tenants move home for the same reasons as homeowners i.e. change of job, needing a bigger house etc. However the biggest reason for tenants changing after these issues is the landlord not doing maintenance.

Why is that important? Changing tenants’ costs money. Average annual repair costs increase by around 60% when there is a tenant changeover, even after receiving any damages from your outgoing tenants. It does not make good business sense to lose a tenant due to lack of maintenance.

Any maintenance cost simply protects your asset against wear and maintains its market value, whether renting or selling. Shabby properties attract lower rent and often end up with tenants who do not look after the property well. It does not make economic sense to not maintain the property

The way your property is presented when a tenant moves in and is recorded on the inventory will clearly communicate expectations. This has an impact on how your tenant looks after the property.

E.g. if the home is shabby when they move in, they will be less inclined to look after it. They will also leave it a bit shabby. Sadly this means the condition at the end of the tenancy is usually worse than at the beginning and deteriorates with each subsequent tenancy.

The reason for this is inventories can only clearly define things which are clean. Inventories with terms like ‘dusty’, ‘poorly decorated’, ‘walls generally scuffed and marked’, ‘grass in need of cutting’; have wide scope for interpretation. When tenants are preparing a property for their departure they will, understandably, go to the minimum standard shown on the inventory as they interpret it.

Therefore it is essential to have your property properly prepared before the inventory is done, so the inventory says ‘clean’, ‘unmarked’, ‘newly decorated’, ‘short well-maintained lawn’. These terms have almost no scope for interpretation, particularly in association with the inventory photographs, thereby clearly setting the standard expected when the tenants leave.

One of the biggest areas of concern is cleaning. We all think we are clean and know what clean means. However when checking properties at the end of tenancies it is rare that tenants who have cleaned the property themselves achieve an acceptable standard compared with professional cleaners, even after a great deal of effort.

Sadly landlords preparing a property for tenants often do their own cleaning, thinking this saves them money and the work will be good enough. In our experience the cleaning is rarely of an acceptable standard, leaving incoming tenants to start their relationship feeling dissatisfied. This is a false economy and a house should always be professionally cleaned before new tenants move in. If we hire a car or a hotel room for a day we expect it to be clean. Tenants are customers who we expect to pay a great deal more money than for a car hire or hotel room.

In our experience most tenants are sensible and reasonable people and only report genuine maintenance issues. However we find some landlords can feel they are getting too many calls. There are several reasons for this.

• Tenants are encouraged to report faults, as an unreported issue can be more expensive to fix later.
• Tenants do not wish to be held accountable for failing to report something.
• We all have a different tolerance of items not working in our own homes. Many of us have a list of things to do at home, but trade off the work/cost required to make a repair versus any inconvenience of something not being fixed. A tenancy is a commercial arrangement, so we can’t expect tenants to be as tolerant of things not being fixed as we maybe in our own homes.
• Landlords who rent a home they have lived in often feel more things are ‘going wrong’ than when they lived in the home. Sadly things do fail with age and different people use things in different ways, so tenants may use the shower more, or have the heat set to different levels. This can expose issues which may have been stable before.
• There is usually a flurry of reports when someone first moves into a home. Issues which the previous tenant ignored or tolerated as they came to the end of their tenancy often get identified by new tenants, keen to get things ‘just right’ in their new home. We find this is helpful to resolve any issues.

Inevitably we do get reports of issues which simply require tenant education or tenants doing minor jobs themselves. We usually handle these directly without troubling our landlords.

We also get reports where the tenant may be the cause of the issue – often blocked drains. We always make it clear we will get the work done but if they have caused the problem, then they will meet the cost.

There are various levels in decreasing urgency.

Obviously a gas leak or major water leak is urgent and needs dealing with as soon as possible.

There are the high priority issues e.g. where the heat, water or electric has failed. These must be handled as a priority, certainly within 24 hours, usually sooner. Sadly it is not reasonable or acceptable to wait a few days to get a cheaper plumber to look at a failed boiler, particularly when the weather is cold. It is essential that you are seen to be doing what you can to get things working. Happily we have a stable of trusted tradesmen for most of these priority jobs. They have enough work with us to be responsive, good value and trustworthy.

Then there is the wide range of works where the priority depends on the circumstances e.g. If the property has just one toilet then the repair of a failed toilet will need to be done more quickly than if there is another toilet in the property. These works include everything you will encounter such as failed appliances (where you supply them), dripping taps, failing locks and windows, pest control, clearing gutters etc.

On all works it is important to show how you are responding to the issue so tenants know what to expect.

There are several low frequency, high cost works which need to be done.

Decorating – you should expect to decorate internal walls every five or six years. You may often be able to do the work less frequently, but you can’t expect to claim much, if anything, from a tenant’s deposit for damage for decorating if the walls were decorated more than five years ago. Usually landlords take the opportunity of a void after a longer-term tenant to refresh the decoration. We think this is cost effective and sets a good standard for the new tenants.

Carpets – you should expect to change these every 8-10 years. Again you can’t expect to claim much, if anything, from a tenant’s deposit for damage to carpets that are much older.

Boilers – modern boilers have a life expectancy of 10-12 years. Cheaper models tend to need more repairs and have shorter warranties. Replacing a gas condensing boiler typically costs about £2,500, more if there are few other changes required e.g. new controllers, thermostats, pumps or pipework. We always recommend that where an older boiler has multiple repairs then quotes are obtained to replace it. This can save money compared with having to do an urgent replacement to a failed boiler in winter where you may not have the luxury of getting comparative quotes or access to the boiler you want.

Kitchens and Bathrooms – Obviously these can last many years. However do not under estimate the impact these have on whether someone chooses a property: Bright, modern, well maintained ‘designer’ fittings will always attract a premium, and will certainly differentiate your property from the competition. Therefore avoid falling into the trap of being reluctant to change fittings which are dated, but in good condition. They will need changing at some point, it is often better to change them earlier than you may your own kitchen or bathroom at home, as you are trying to keep your property attractive.

Management of major works and refurbishment – Our property management team will manage routine repairs and replacements over the life of a rental property as part of our property management service. Typically we would manage decorating and replacement carpets or vinyl/laminate flooring at no extra charge. Where there are significant replacement works, such as new kitchens and bathrooms, we will do what we can to absorb these, particularly we can streamline decisions and contractors. Otherwise we may need to make a charge to manage more significant works.

Based on our analysis of over 800 properties we manage we recommend landlords of properties with rent above £650 per month allow an annual budget of:

• 75% of one months’ rent a year for repairs and maintenance
• 50% of one months’ rent a year for longer term replacements (e.g. new boiler, kitchen etc)