There are 101 bad property mistakes you can make as an owner occupier or investor – but here are 20 of the worst mistakes you can make…
Avoid these mistakes to save yourself money and headaches.
1. Fail to take out building insurance
2. Fail to take out contents insurance
3. Fail to take out sufficient insurance cover
4. Fail to comply with the duty of utmost good faith
5. Fail to take out life insurance policy to pay off your mortgage
6. Leave your property unoccupied for longer than the period allowed by your insurance policy
7. Fail to take advice before you buy
8. Fail to read the purchase contract
9. Fail to read the lease in the case of leasehold land
10. Buy a property jointly with someone else without a joint ownership agreement or trust deed
11. Leave a property where you are joint tenant without “severing” or ending the joint tenancy by a “notice of severance”
12. Sign an agreement limiting your rights in relation to a property without seeking legal advice from solicitors
13. Build, convert or change the use of your property without planning permission or building regulations approval
14. Take on a lodger without a written letting agreement
15. Buy a property without a survey report
16. Fail to carry out regular maintenance and repairs to your property
17. Fail to secure your property when away from it for an extended period
18. Fail to take measures to prevent burst pipes in very cold weather
19. Fail to take advice from an independent mortgage adviser
20. Fail to have a reserve fund to deal with big ticket replacements
1. Fail to take out building insurance…if there is fire or other major loss or damage you would need to reinstate the building with your own money at huge cost.
2. Fail to take out contents insurance…in the event of loss you would need to replace damaged items from your own funds.
3. Fail to take out sufficient insurance cover…under-insuring – not having cover for some items or having insufficient cover for others will hit you in the pocket in the event of loss or damage to such items.
4. Fail to comply with the duty of utmost good faith when completing a building/contents insurance proposal form…if you fail to provide accurate information or to disclose material information, even if innocently, your policy is likely to be voided, depriving you of the ability to make a claim.
5. Fail to take out life insurance to pay off your mortgage…if there are no funds to pay off your mortgage on your death, your family or loved ones may have to sell the property and move out if they cannot take over or pay off the mortgage
6. Leave your property unoccupied for longer than the period allowed by your insurance policy…that may entitle your insurer to avoid a payout.
KNOW ABOUT INSURANCE
Why insurance is super important (the main do’s and don’ts you should know)
5 must know things about building insurance (know them or risk paying the price)
Reducing home insurance costs (14 simple steps to lower your premiums)
Mistakes having legal implications
7. Fail to take advice before you buy…a property will probably be the most expensive thing you will ever purchase; it is a no-brainer to seek advice from people in the know – professionals as well as family and friends – before you proceed.
8. Fail to read the purchase contract….the purchase contract sets out the binding terms and conditions applicable to the property being bought and it is vital to read it with the greatest of care, raising any comments or questions with your lawyer.
9. Fail to read the lease in the case of leasehold land…where you are buying a leasehold property, you will be bound by the covenants and obligations in the lease and it is therefore essential for you to be fully aware of them before you buy.
10. Buy a property jointly with someone else without a joint ownership agreement or trust deed…in the event of disagreement or dispute you will not have a document spelling out what should happen and resolution by costly court action may be necessary.
11. Leave a property where you are joint tenant without “severing” or ending the joint tenancy by a “notice of severance”…if you want your share of the property to pass to your heirs and successors and not the surviving joint owner in the event of your death, severance of the joint tenancy – converting it into a “tenancy in common” – is necessary.
12. Sign an agreement limiting your rights in relation to a property without seeking legal advice from solicitors…for instance, if you own a property jointly with a spouse or partner, you may be asked to sign a deed postponing your rights in the property to a bank which is providing your spouse/partner with a loan, say for business purposes; you should only sign after seeking independent legal advice.
13. Build, convert or change the use of your property without planning permission or building regulations approval…if you do not obtain necessary permissions, the local authority may be able to bring enforcement proceedings against you, requiring you to demolish or reinstate the changes you have made.
14. Take on a lodger without a written letting agreement…that can lead to disputes and even court proceedings as to the nature of the occupation and the rights and obligations of the lodger.
Errors of a practical nature
15. Buy a property without a survey report…where you are not obliged to obtain a survey report – for instance because you are a cash buyer – you may be tempted to do without a report; however that is risky because you will be subject to any defects in the repair or condition of the property under the principle “let the buyer beware”.
16. Fail to carry out regular maintenance and repairs to your property…a regular programme of maintenance and repairs minimises the risk of major, unexpected, expensive and perhaps unaffordable works being needed; basically, a stitch in time saves nine.
17. Fail to secure your property when away from it for an extended period, such as when on vacation…minimise the risk of break-in by activating any alarm and arranging for someone to keep an eye on your property while you are away.
18. Fail to take measures to prevent burst pipes in very cold weather…especially if your property is unoccupied, burst pipes can cause serious loss or damage; take practical steps to minimise the risk.
KNOW ABOUT MAINTENANCE & REPAIRS
Don’t ignore maintenance & repairs (the first level of protection for your property)
Budgeting for repairs is smart (how to be prepared for surprises and big bills)
Property maintenance checklist (what to do to keep your property in tip top condition)
Errors of a monetary nature
19. Fail to take advice from an independent mortgage adviser with access to the whole mortgage market when taking out a home loan… that could end up with you obtaining a mortgage which is not the best deal or not in your best interest.
20. Fail to have a reserve fund to deal with big ticket replacements…you may need to replace expensive items such as a boiler, central heating system or roof – having a reserve for such matters can avoid issues of not having the money to do what’s necessary.
Can you think of any bad property mistakes I have missed? Please leave your comments below.
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Rebel Property Coach
My website is: www.rebelpropertycoach.com