Record keeping for your rental property

24th January 2018 posted in Landlords

Record keeping

Whether you choose to manage your property yourself or use a qualified agent, the importance of good, accurate record keeping cannot be over emphasised.  Some experts believe there is a link between poor record keeping and tenancy failure. If something goes wrong and you are unable to access vital documents, legal action can be delayed, costing you more money.

The following tips will help you keep your records in order:

Rental income

This is arguably one of the most important areas of your property portfolio. Here is an example of the minimum information that should be kept:

Date rent due: This is the date specified in the tenancy agreement. It is good practice to check your bank account on the due date and contact your tenant if it hasn’t been paid to find out why. Good communication can prevent problems. If you are letting through an agent, agree what date you will receive the rent.

Amount of rent due: Check the amount paid is the same as agreed, particularly at the start of a tenancy.
Date rent received: Some tenants are late with their rent; if this happens to you, note down their reasons as you may need this information if you need to end the tenancy in the future.

Amount received: Often, tenants don’t pay the full amount of rent. If this happens frequently, it can be grounds for eviction, so do keep a record.

Cumulative rent arrears: This is the outstanding rent owed by the tenant and it’s particularly important to note this as you can begin eviction proceedings if a tenant in arrears by two months or more, as in our example:

Date rent due

Amount due

Date rent received

Amount received

Cumulative rent arrears

1st June 2016

£800

1st June 2016

£800

£0

1st July 2016

£800

3rd July 2016

£600

£200

1st Aug 2016

£800

5th Aug 2016

£550

£450

1st Sept 2016

£800

1st Sept 2016

£700

£550

1st Oct 2016

£800

14th Oct 2016

£500

£850

1st Nov 2016

£800

Not received

£0

£1,650

 

Expenses and costs

Every single expense and cost should be recorded. This will help you calculate exactly how profitable your portfolio is. Also, this information will be required by your accountant to calculate tax; some costs will be allowable against tax, so if you don’t record them, you may end up paying too much.

Some of the expenses you need to record include:

•    Tenant find, adverts, marketing
•    Management fees
•    Builders and contractors
•    Professional fees (legal and accounting)
•    Insurances
•    Council tax (if paid by landlord)
•    Utility bills (if paid by landlord)
•    Ground rent and service charges
•    Any other suppliers
•    Any other costs associated with managing your portfolio (telephone calls, petrol, etc.)

Important documents

•    A receipt/invoice/statement to support every expense you record
•    Rent books (required if you charge rent weekly)
•    Tenant references
•    Inventory
•    Deposit certificate (if your agent has arranged to put the deposit in the scheme, make sure you find out which one)
•    Safety certificates (gas, electric and EPCs).

Other records to keep

You need to keep a copy of any documents produced by your tenant to prove they are legally allowed to rent your property under the new Right to Rent rules. These could include birth certificates, passports and driving licences.
It’s also useful to make a note of tenants’ car registration numbers, previous address and details of their next of kin; these can all be useful in tracking them down if they disappear.  However, you should be aware of the Data Protection implications of storing this information: for more information, visit https://ico.org.uk/for-the-public/housing/landlords.