Landlord Guide for Letting Residential Property
Below is an advice guide for Landlords on renting out residential property. As always, these guides are subject to alteration at any time and should be used as a frame of reference only. If you need specialist advice on any aspect of this guide, please contact us and we will talk you though everything you need to know.
If a property is provided in good condition from the outset, you are more likely to attract a tenant will want to maintain the property and start the tenancy on a positive footing.
The property should be presented to the highest standard possibly and in full working order. Most tenants will be looking for neutral and fresh decoration throughout with high quality furnishings, fittings and flooring. Kitchens should be equipped with contemporary appliances including oven, hob, extractor hood, dishwasher, washing machine and dryer and a good sized refrigerator/freezer. Bathrooms should also be contemporary with good quality fittings and adequate water pressure, ventilation and heating.
Where applicable, the exterior of the property should be in good decorative order, garages clear and gardens in good seasonal condition.
It is essential that the property is professionally cleaned before the tenancy commences. If we are managing the property for you, we will organise this on your behalf.
You will need to ensure that all appliances are serviced and in good working order. Manufacturers operating and instruction manuals for all appliances and electrical equipment must be left in the property. If there are any maintenance contracts in place, these should be provided and both the agent and tenant informed.
You will need to provide the tenant with sufficient sets of keys and security fobs. If we are managing the property we will need to hold a full set of keys throughout the full term of the tenancy.
Telephone Line and TV Aerials
You will need to ensure that there is a working telephone line and TV aerial socket at the property before the start of the tenancy. You will also need to confirm whether satellite or cable is or can be installed.
You will need to ensure that you re-direct your mail if applicable.
It is strongly advisable that a detailed and independent inventory is carried out to protect all parties. We will be able to recommend an independent company to do this. The tenancy agreement requires that the tenant returns the property and contents at the termination of the tenancy in the same condition, save for fair wear and tear, as recorded in the inventory. An inventory will also be required as evidence should there be any dispute regarding deductions claimed from the tenants deposit at the end of the tenancy. Unless otherwise agreed, the landlord will normally provide and pay for the inventory check in report at the start of the tenancy and the tenancy will pay for the inventory check out report at the end of the tenancy.
It is recommended that you have insurance for buildings, contents and public liability and advise your insurance company that you will be renting out the property. The tenant will be responsible for ensuring their own personal belongings.
In most cases when a property is subject to a bank loan or mortgage, written permission is normally required by the lender to let the property. The landlord must obtain the necessary consent and we would ask that this is applied for at the earliest possible time prior to making your plans for letting. Tenants may require proof of consent or official documentation to confirm that permission has been granted.
If the property is leasehold you will need to check the head lease to ascertain if there are any necessary consents need to let your property and any restrictions. For example, there may be a clause which prevents tenants from having pets.
Houses with Multiple Occupancy (HMO)
The Housing Act 2004 changed the definition of a house in multiple occupation (HMO) and introduced mandatory licensing for certain types of HMO. The main changes to the definition are:
The dwelling is an HMO if it is occupied by more than one household and amenities are shared.
Converted buildings which do not comprise entirely of self contained flats and contain more than one household are HMO’s.
Houses converted to self-contained flats, which do not comply with the 1991 Building Regulations, and where more than one third of the flats are occupied under short tenancies will be HMO’s.
The Housing Act 2004 introduced mandatory licensing of those HMOs with three or more storeys and five or more persons comprising two or more households which came into effect on 6th April 2006.
It is the responsibility of the Landlord of the HMO to ascertain if a licence is required and to apply for a licence. The fee for the licence will be determined by the local Council and the local Council will grant the licence if the property is deemed suitable for occupation.
Managing issues during the tenancy
Even with new properties, there can be issues during the tenancy such as problems with noise from neighbours or your tenant not maintaining the property well enough. You can help identify problems early by having a detailed inventory and carrying out regular checks on the property.
If we are managing the property for you, we will carry out regular inspections and assist with all issues that may arise during the tenancy including any disputes.
Electrical Equipment (Safety) Regulations 1994
You will need to provide instruction manuals for all items of electrical equipment and ensure that all appliances comply with the above regulations. It is highly recommended that you have an NICEIC DOMESTIC ELETRICAL INTALLATION CONDITION REPORT carried out periodically as well as a portable appliance test (PAT) before each tenancy. If we are managing the property, we will be able to arrange this for you.
Energy Performance Certificate (EPC)
By law, we are prohibited from marketing a property until an EPC is available or has been commissioned. We will be able to help you arrange this if required.
Flood and Water Management Act 2010 (Section 45)
The landlord has an obligation to provide the tenant’s contact details to the relevant water company at the end of the tenancy or they will become jointly and severally liable for any unpaid water charges during the tenancy.
Furniture and Furnishings (Fire) (Safety) (Amendment) Regulations 1993
It is a criminal offence to let premises with upholstered furniture or soft furnishings containing foams that cannot be proven to comply with the above regulations. The regulations require that specified items must be match resistant, cigarette resistant and carry a permanent label.
Gas safety (Installation and use) regulations 1998
It is a criminal offence to let a property with gas appliances, installations and pipe work that have not been checked by a Gas Safe registered engineer. You will need to provide a copy of a Gas Safety Certificate (GSC) carried out no more than 12 months previously. The GSC will need to be renewed annually and copies left in the property. If we are managing the property, we will arrange for an annual GSC automatically.
How to Rent Guide
From October 2015, a landlord must provide a current copy of the government publication along with the EPC and GSC. If these documents are not provided to the tenant at the start of the tenancy this may invalidate any Section 21 notice for possession served during the tenancy.
In order to comply with the Health and Safety Executive Code of Practice, landlords are strongly advised to carry out a risk assessment to their premises prior to letting.
Part “P” Building Regulations (Electrical Safety in Dwellings)
From 1st January 2005, the above regulations came into force requiring qualified personnel to carry out certain electrical work at premises. To ensure compliance with the regulations we will only use a competent person to carry out any electrical work at the property.
Safety standards for internal blinds and curtains
It is a legal requirement that all blinds and curtains which include a cord or chain must comply with the recent published safety standards. Blinds and curtains that are already fitted in a property must be made safe or replaced.
Smoke Alarms and Carbon Monoxide Alarms
Under current legislation (Building Regulations 1991) it is a legal requirement that all newly built premises from June 1992 must have mains fitted smoke alarms with battery back up.
From October 2015, all rented properties are legally required to have both smoke detectors and carbon monoxide alarms fitted. If battery operated alarms are fitted, you will need to ensure that the alarms are in working order at the start of a tenancy.
Right to Rent Checks
For all tenancies starting on and after the 1st February 2016, all occupants have to undergo ‘Right to Rent’ checks. As the landlord, you are required to establish who will live in the property, check and copy one or more original documents that demonstrate to the Right to Rent in the UK for all adult occupiers, in the presence of the holder.
We will carry out the Right to Rent checks as part of our referencing process.
Tax and Overseas Landlords
You will be liable for tax on income arising from letting the property and you must inform Her Majesty’s Revenue and Customs (HMRC) that you are letting out the property. There are a number of allowances that you can claim against this income. You should seek advice on these allowances from your accountant or from the HMRC website.You must also keep all your invoices for six years for tax purposes. You should be aware that we are required to forward a form to HMRC annually detailing all landlords whose premises we have let and the rental income they have received, regardless of the country of residence of that landlord.
HMRC has special rules regarding the collection of tax on rental income if you are a landlord who is resident overseas for a period of more than 6 months in any tax year, or you subsequently move abroad. If you fall in to this category, it is your responsibility to obtain a tax approval number from HMRC. The relevant form and guidance notes can be downloaded from www.hmrc.gove.uk/cnr/nr_landlords.htm. Until that approval number is provided to us by HMRC directly, we are legally obliged to deduct tax from your rental income at the prevailing rate (currently 20%). This money is forwarded to HMRC on a quarterly basis. If the tenant pays the rent directly to you and you are non-resident in this country and an approval number has not been provided to the tenant by HMRC, the tenant must deduct tax from the rent and forward to HMRC on your behalf.
Types of Tenancy Agreements
In many cases the type of tenancy created is an Assured Shorthold Tenancy in accordance with the Housing Act 1988. Where the tenancy does not fall within the scope of the 1988 Housing Act, a Company or Contractual/Common Law Tenancy will normally be arranged. Generally properties are rented on an annual basis, but the tenancy can be for any term agreed between the Landlord and Tenant. However under the provisions of the Housing Act 1988 repossession cannot be granted by the courts from a Tenant unwilling to vacate a property in the first six months of a tenancy, therefore we prefer wherever possible to arrange tenancies with a minimum term of six months. If required, a release clause to end the tenancy before the expiry of the agreed fixed term, or an option to renew for a further term can be inserted into the contract, however, this is subject to negotiation. Once the tenancy has commenced the Tenant has security of tenure for the fixed period, provided they are not in breach of the terms of the Tenancy Agreement.
At the expiry of a fixed term tenancy the Landlord can take possession of the property. In the case of an Assured Shorthold Tenancy the Landlord must first serve a minimum of two months notice of his intention to do so. We will do this on your behalf only if instructed to do so in writing unless it is agreed between the Landlord and Tenant to renew the tenancy for a further term.
Under the Finance Act 2003, the Landlord no longer has any liability for Stamp Duty on any lease created for a residential letting after that date. Where applicable, the sole responsibility for the payment of the Stamp Duty Land Tax is placed on the Tenant.
Unless otherwise stated, rent is exclusive of telephone, water, gas, electricity and Council Tax.
At the commencement of the tenancy, the tenant is required to lodge an amount usually equivalent to six weeks of the agreed rent, as security against any damage or loss at the property not reasonably considered to be due to fair wear and tear. Unless otherwise agreed, the deposit will be held by Robert Irving Burns as stakeholder and registered with the government approved deposit scheme, TDS. At the end of the tenancy the deposit will be returned to the tenant, less any agreed deductions. We will require all parties to confirm in writing before we can release the deposit.
RIB is a member of the NFOPP Client Money Protection scheme and The Property Ombudsmen redress scheme.
Utilities & Council Tax
It is the tenant’s responsibility to contact the electricity, gas, water services and telephone companies to notify them of the change of user at the commencement and termination of the tenancy. The landlord and tenant must sign for the supplies with the utility companies. It is the tenant’s responsibility to write to the local Council Tax office and notify them of the change of occupier at the commencement and termination of the tenancy. If we manage the property, we will be able to notify utility providers where we have been furnished with the appropriate information to do so.
The tenant is also responsible for paying the TV licence fee in respect of the use of any television in the property during the tenancy.
“The quality of tenants RIB have found for us have been excellent. We have never had any problems with either the payment of rent or in respect of the care of the fabric and furnishings of the property. We could not wish for any better service from a letting agent and would highly recommend RIB to any fellow landlords.”