Things To Remember When Becoming A Landlord

According to the Office for National Statistics, in March 2011 there were over 2 million enterprises in the UK registered for VAT/PAYE. This is a decrease of 2.4%, when compared to the figures for the same period in 2009. However, with the country now said to be in recovery, many businesses may well be looking to expand their premises. As a property owner you could benefit from this by renting out your commercial property or serviced offices.

Becoming a landlord can offer huge benefits, but you must be aware of the risks involved with becoming a landlord

If you own commercial property, you will have noticed that lease lengths are getting shorter. Tenants are unwilling to sign new leases for terms longer than 5 years, as they don’t know if their businesses will continue to exist that long.

This is awful for landlords, as they have no long term security and they face having a vacant shop, office or industrial unit in as little as 5 years time. The landlord will then have to start the process of finding a new tenant all over again. Along with this, short leases decrease the value of commercial property and give the banks even more reason not to lend.

Also, with more and more small businesses going to the wall as banks continue their onerous and restrictive practices, the landlord stands the very real risk of losing a tenant overnight. This will leave the landlord trying to cover the mortgage during the time it takes to find a new tenant. It can also get even worse, if the tenant goes out of business still owing the landlord rent, leaving the landlord a double whammy.

A prospective landlord must bear in mind the possibility of the building being damaged, by fire, water, or any number of possibilities. If the tenant cannot use the premises and has to move out, even on a temporary basis, then once again the landlord will lose income. So a landlord must make sure they are adequately insured against any possibility.

All in all, there are risks, but also the possibility of great rewards. Each property is different and it is up to the individual to weigh the pros and cons before they act.