Letting advice for landlords
Being a landlord can be very rewarding, but it also carries certain responsibilities. Whether you ask us to be your managing agent or choose to manage your property yourself, here are our tips for ensuring successful tenancies.
What is an 'assured shorthold tenancy'?
Most tenancies will automatically be assured shorthold tenancies, provided the rent is under £25,000 a year and the property is let to private individuals. Tenancies are usually granted for an initial fixed term of either 6 or 12 months. When the fixed term has expired, you can regain possession of your property, provided you give two months' written notice to the tenant. In addition, if the tenant owes at least 2 months' or 8 weeks' rent, you can apply through the court to seek a possession order.
Important requirements
As a landlord, you have certain important rules and regulations to be aware of:
- Mortgage – If your property is mortgaged, it is your responsibility to obtain your mortgage provider's written consent to the letting. They may require additional clauses in the tenancy agreement: you must tell your letting agency about these.
- Leaseholds – If you're a leaseholder, you should check the terms of your lease and obtain any necessary written consent before letting.
- Insurance – You must ensure that both your buildings and contents insurance cover you to let the property out. Failure to inform your insurers could invalidate your policies. We can provide landlord's legal protection, rent-guarantee cover and landlord's contents and buildings insurance, if required.
- Income tax – If you're resident in the UK, it is entirely your responsibility to inform the HMRC of rental income received and to pay any tax due. If you are resident outside the UK during a tenancy, you'll need an NRL1 form before you can receive rental income without tax being deducted.
Start off on the right foot
A good relationship with your tenants is essential to a smooth-running tenancy. If we're acting as your property managers, this relationship is largely our job; if you're handling it yourself, you might want to think carefully about how to achieve this.
Bills and regular outgoings
For your own organisation, we recommend that you arrange for regular outgoings, such as service charges and maintenance contracts, to be paid by standing order or direct debit. If we're managing the property for you, we will arrange for the transfer of council tax and utility accounts to the tenant. Meter readings will also be taken. British Telecom will require instructions directly from both the landlord and the tenant.
Warranties and guarantees
If we're managing your property, we will require copies of any warranties or guarantees for appliances and any other equipment provided. Otherwise, make sure you keep them somewhere safe.
Preparing the property
It's important that your tenants feel comfortable and at home. For example, good decorative order is important (preferably plain, light and neutral): this will maximise your chances of achieving the highest rental figure, and will also encourage tenants to treat your property with respect. We will be happy to advise you when preparing your property for let. In the meantime, here are some helpful tips:
- General condition – Electrical, gas, plumbing, waste, central heating and hot-water systems must be safe, sound and in good working order (you will need to obtain some safety certificates – more details on the following pages). Repairs and maintenance are at the landlord's expense, unless misuse can be established. Interior decorations should be in good condition.
- Furnishings – Your property can be let fully furnished, part-furnished or unfurnished. This will depend on the type of property and local market conditions. We will be pleased advise you on whether or not to furnish, and to what standard. As a minimum, you will need to provide decent-quality carpets, curtains and light fittings. Remember that some wear and tear is inevitable.
- Personal items – Your own personal possessions (such as ornaments, pictures, books, etc) should be removed from the premises, especially those of monetary or sentimental value. Some items may be boxed, sealed and stored in the loft at your own risk. All cupboards and shelf space should be left clear for the tenant's use.
- The inventory – It is vital to prepare an inventory of contents and to note their condition, to avoid misunderstandings or disputes at the end of a tenancy (without such safeguards, it will be impossible for you to prove any loss, damage or significant deterioration of your property or contents). In order to provide a complete service, we can arrange for an independent inventory clerk to do this, at the cost quoted in our agency agreement.
- Garden – Gardens should be left neat, tidy and rubbish-free, with any lawns cut. The tenant is required to maintain the gardens to a reasonable standard, provided they are left the necessary tools. However, not many tenants are experienced gardeners, and if you value your garden, or if it is particularly large, you may wish us to arrange visits by a regular gardener. If managing your property on your behalf, we can arrange this for you.
- Cleaning – At the start of a tenancy, your property must be in a thoroughly clean condition. Equally, at the end of each tenancy, it is the tenants' responsibility to leave the property in a similar condition. If they fail to do so, cleaning can be arranged at their expense.
- Information for the tenants – It is helpful if you leave a folder of useful information for the tenants; for example, how to operate the heating and hot-water system, washing machine, etc. Your safety certificates could be stored here, too. You might even want to offer information about local amenities, including shops and schools.
- Keys – You should provide one set of keys for each tenant. If we are managing the property for you, we'll arrange to have duplicates cut as required.
Complying with the law
As a landlord, you have a duty of care towards your tenants, and sometimes the law makes it clear what you must do. In other cases, you may not be required by statue to take a particular action, but it might be best to do it anyway: you could be prosecuted under common law, or sued, if you haven't shown a proper duty of care. The following requirements detail your main responsibilities as a landlord. If you have signed our full management agency agreement, they are also our responsibility:
Is your property a house in multiple occupation (HMO)?
If your property is on three or more levels, and let to five or more tenants comprising two or more households (ie not all of the same family), it will be subject to mandatory licensing by your local authority. Whether mandatory licensing applies or not, if there are three or more tenants who are not all related in any property, it is still likely to be an HMO, and special management rules apply. Ask us or your local authority for details. Find out more about HMOs.
The tenancy deposit scheme
From 6 April 2007, all deposits taken by landlords and letting agents for assured shorthold tenancies in England and Wales must be protected by a tenancy-deposit protection scheme. To avoid any disputes going to court, each scheme is supported by an 'alternative dispute resolution service'. Patrick Williams is a member of the government-approved custodial Deposit Protection Service Scheme. This holds the tenant's deposit independently of the landlord/agent, permitting impartiality in the event of a dispute. Find out more about the Deposit Protection Service Scheme.
If you, as landlord, decide to hold the deposit yourself, we will transfer it to you within five days of receiving it. You must then register it with a tenancy deposit protection scheme within a further nine days if the tenancy is an assured shorthold tenancy. If you fail to do so, the tenant can take legal action against you in the county court. The court will make an order stating that you must pay the deposit back to the tenant or lodge it with the custodial scheme. In addition, a further order will be made requiring you to pay compensation to the tenant, of an amount equal to three times the deposit. You will be unable to serve a Section 21 Notice on your tenant until you have complied with the above conditions, and the court will not grant you a possession order. We have no liability for any loss suffered if you fail to comply.
The Disability Discrimination Act 2005
This act addresses the limitations of current legislation by extending disabled people's rights in respect of premises that are let or to be let, and common-hold premises. Landlords and managers are required to make reasonable adjustments for disabled people.
Under the act, provided certain conditions are met (for example, that a request has been made), landlords and managers of premises which are to let, or of premises which have already been let, must make reasonable adjustments, and a failure to do so will be unlawful unless it can be justified under the act. Landlords will only have to make reasonable adjustments, and they will not have to remove or alter physical features of the premises. Find out more about the DDA.
Energy performance certificate
You will be required by law to obtain an energy performance certificate prior to putting your property on the market. This costs £65 + VAT. Patrick Williams can arrange this for you: we will commission an inspector to visit your property and compile the energy report.
Safety
As a landlord, you will rightly want to do all you can to ensure the health and safety of your tenants. The following will also help you to stay on the right side of the law:
- The Housing Health and Safety Rating System (HHSRS): The HHSRS assesses 29 potential hazards found in housing to produce an analysis of how hazardous a property is. Landlords must maintain their properties to provide a safe and healthy environment. The HHSRS is enforced by local authorities. Find out more about HHSRS.
- Gas safety: You will need an annual safety check of all gas appliances and flues within 12 months of being installed and thereafter at least every 12 months. This must be done by a Gas Safe-registered engineer. A copy of the certificate must be given to each new tenant before their tenancy commences, or to each existing tenant within 28 days of the check. You also have a duty to ensure that all appliances, flues and pipe-work are maintained in a safe condition at all times. Full records must be kept for at least two years after the inspections of each appliance and flue, showing any defects found and any remedial action taken.
- Electricity safety: There are several regulations relating to electrical installations, equipment and appliance safety, and these affect landlords and their agents. We can provide full details of these. Although there is currently no legal requirement for an electrical safety certificate for properties let out to tenants (except in the case of all HMOs) it is now widely accepted that the only safe way to ensure safety, and to avoid the risk of being accused of neglecting your duty of care (or even of manslaughter) is to arrange such an inspection and certificate.
- Fire-resistance: The law requires that items supplied in the course of letting property must meet minimum fire-resistance standards – this applies to all upholstered furniture; beds; headboards and mattresses; sofa-beds; futons and other convertibles; nursery furniture; garden furniture suitable for indoors; scatter-cushions, pillows and non-original covers for furniture. They do not apply to antique furniture or furniture made before 1950; bedcovers including duvets; loose covers for mattresses; pillowcases; curtains; carpets; or sleeping bags. Items which comply will have a suitable permanent label attached. Non-compliant items must be removed before a tenancy begins.
- Smoke alarms: All properties built since June 1992 must be fitted with mains-powered smoke-detector alarms from new. Although there is no legislation requiring smoke alarms to be fitted in other tenanted properties, it is generally considered that the common-law duty of care means that landlords and their agents could be liable should a fire cause injury or damage in a rented property where smoke alarms are not fitted. We therefore strongly recommend that you fit at least one alarm on each floor (in the hall and landing areas).