Deposits or insurance?

The tenants' deposit is not the equivalent of a new-for-old insurance policy.

The government knows that tenants do a bit of damage here and there so they give you 10% leeway on your rental profit for 'wear and tear' per year. They also kindly allow you to offset any expenditure on your property against your profit to reduce your taxable profit even further.

Folks like HomeLet offer landlord insurance policies to cover damage by tenants or the burning down of your property at pretty reasonable rates.

Or you can self-insure by putting away a bit of your monthly rent and not using it all to finance expensive cars or three holidays a year.

So why oh why do some landlords want to squeeze the tenant all the time? Why have they forgotten that there is a little bit of risk in every investment and frankly you are better off with a flat or a house as an investment than you would be with Equitable Life, Kaupthing or AIG to name a few.

All landlords need to treat their properties like a business. If you had a sweet shop you would expect some seasonal ups and downs as well as the possibility of the credit crunch affecting the business in some way. Little and often would be the best kind of scenario with happy customers and repeat business keeping things on the right track.

Investing in property should be seen the same way; it won't always be 'making hay while the sun shines' and there may be bumps in the road but if you keep everyone happy and watch the pennies whilst maintaining your property in a good state (note that I didn't say perfect there) it will all work out in the end.

Fair and reasonable are the watchwords because the Deposit schemes aren't keen on greedy landlords and tenants don't like feeling that they are being taken advantage of.

If you are looking for a good book to read over the summer which will also help you get in the Landlord Mind Set try the 3+1 Plan which I've linked to at the foot of this page.