A guide to letting for landlords
Advice for tenants
A guide to letting for landlords
Obtain the relevant consent before letting a property
If you have a mortgage or loan on the property you must inform your lender in advance of any letting and get their consent. If you do not do this you may breach your mortgage conditions and could have potentially serious consequences.
If the tenure of the property is leasehold – for instance, a flat in a block or converted house, you may need to obtain consent of the freeholder or the Management Company for the building.
Make sure the property is adequately insured
You must inform your insurance company of your plans to let a property as your cover and premiums may be affected. Failure to do so may result in refusal to pay any subsequent claim. You will need to ensure that you are covered for third party/public liability so that you are covered against any accidents. Other insurance products worth considering may include protection against rent arrears and legal costs.
Comply with the safety regulations
As a landlord you have a legal obligation to provide a safe property for your tenants to live in. All gas equipment must be serviced annually by a suitable qualified engineer and the relevant safety certificates issued before a tenant can occupy the property. You should also ensure that all equipment is serviced regularly and provide instructions/user manuals so tenants know how to safely operate appliances and equipment. Further information about safety can be found on the Health and Safety Web site at www.hse.org.uk.
The consequences of endangering the health and safety of tenants are very serious for landlords can result in fines or a prison sentence.
The condition of the property
We have found from experience that a clean tidy property attracts good quality tenants. A property that has been maintained to be a reasonable standard of decoration should achieve a good level of rent.
Try to keep the interior decoration plain, light and neutral. This will appeal to a broader range of tenants and maximises the chances of finding tenants.
Decide whether to let the property furnished or unfurnished?
You have the option of letting your property fully furnished, part furnished, or unfurnished. What is most appropriate will depend on the type of property, the type of tenant you are trying to attract and the standards expected in your area.
Furnishing a property does not guarantee that you will be able to charge more rent on it. In most cases you will be able to, but the difference is relatively small when looked at on a monthly basis. Having said that, some exclusive properties will almost be required to be furnished to an exceptional standard.
As a guide, tenants usually prefer smaller properties such as one and two bedroom flats to be furnished, whilst larger houses, which attract families who probably have their own furniture, are in greater demand when let unfurnished. However, as with everything in life you will always get exceptions to the norm.
What is the definition of an unfurnished property?
An unfurnished property will have only the bare minimum. This must as a minimum include carpets, or other floor coverings, curtains and white goods such as a fridge and freezer, oven, and possibly a washing machine. With an unfurnished property, you will not be eligible for the 10% wear and taxation allowance.
What is the definition of a furnished property?
Furnished means different things to different people, with some properties that are let as furnished but have little more than those items found in an unfurnished property. Most letting agents will indicate that furnishings are somewhat sparse, by advertising the property as partly furnished.
The minimum requirements of a furnished property must include kitchen appliances, fixtures and fittings, curtains, carpets, beds and other lounger furniture. Then there are some landlords that will provide absolutely everything, from kitchen utensils to bed linen.
The crucial thing is that a fully furnished property should be ready for immediate occupation.
One of the major downsides to letting a furnished property is the increased cost of equipping the property in the first place. This can add a substantial amount to the overall cost of letting the property. Items will get damaged and become dirty after heavy use. So as a rule of thumb use durable items that can be easily replaced and are relatively inexpensive. In addition to supplying and replacing the items in a furnished property, you are also required to ensure that all furnishings are compliant with safety regulations.
Who is responsible for Council Tax, Ground Rent and Service Charges?
Whilst the property is let (for a period longer than 6 months), the tenant is responsible for paying the Council Tax directly to the local authority. If the property is not occupied, the landlord is acable for the council tax on the property. It is in your best interest to let the council know when there is a change in occupancy, as you will be held responsible until they are informed of the change in occupancy status of the property.
As the landlord you will usually be responsible for maintaining the property. It is also normal for the landlord to pay the Ground Rent or any other service charge on the property.
You should agree who is responsible for the payment of other bills (gas, electricity, telephone) with the tenant and have this stated this is clearly tin the tenancy agreement.
The tenancy agreement
The housing act (1998) has resulted in greater protection for the landlord. If you have any questions and would like more information, we can advise you on the most appropriate letting agreement to suit your circumstances.
You should provide one set of keys for each tenant. For properties that are managed by us, we will arrange to have duplicates cut as required.
What is an inventory check?
As the landlord, you must provide an inventory for the property that can be signed and agreed upon both by tenant and yourself at the start and end of the tenancy. The letting agent will draw up an inventory and guide the tenant through signing. An inventory can help clarify and settle any disputes that may arise through the signing. An inventory can help clarify and settle and disputes that may arise due to loss or damage during the tenancy period.
How will I receive my rental income?
You will need to discuss with us how you will receive your rental income. Do not be afraid to ask your letting agent questions. They are there to help you with the letting process and will be able to advise you if you are unsure of anything.
Will I have to pay tax on rental income?
You will normally be charged tax if you receive rent from letting property. The amount will depend on whether you are classed as a UK resident or not. For tax purposes most business expenses arising from renting your property such as:
· Legal and professional fees.
· The cost of renewing fixtures and fittings.
· The cost of replacing fixtures and fittings (if the property is let as furnished).
Your local tax office or in house acs team can give you detailed advice on your tax position. The Inland Revenue also publishes a series of leaflets (IR150 and IR87) which provide more detail and these can be obtained directly from you local tax office or their website at www.inlandrevenue.gov.uk.
Following these simple guidelines should help make the letting experience trouble free and financially rewarding.
Advice for tenants
1. The type of Tenancy will usually be an Assured Shorthold for a minimum contract of 6 calendar months.
2. During the term of the Tenancy, unless specifically agreed otherwise in writing, the Tenant will be responsible for all services including Gas, Electric, Oil, Water, Sewerage, Telephone, Television License and Council Tax.
3. Rent is payable in advance per calendar month from the date of the Tenancy agreement. It is to be paid by the way of Standing Order mandate unless otherwise agreed in writing before the commencement of the tenancy.
4. The Agents will accompany viewing of properties by prospective Tenants unless agreed differently; properties cannot be viewed without making prior arrangements. Please note that you must have a viewed property before submitting an application to rent it.
5. When you have found a suitable property you will be asked to complete an application form and return to the agent together with an administration fee of £150.00. This fee is non-returnable in the event of you withdrawing your application for any reason. It will be refunded in full, however, if the Landlord withdraws the property from the market or decides not to proceed for any reason. Total Property Management accepts no liability or responsibility for any costs or inconvenience suffered by applicants when an application is withdrawn. If you have any doubts please ask us for clarification of the administration fee.
6. An individual application form must usually be submitted for each party signing the Tenancy Agreement. We always take up references on applicants. These will comprise of Bank or Building Society status enquiry, employer’s reference, character reference, previous Landlord or Agent reference, or any other source we may deem necessary. We will also carry out a Credit check and will need to take copies of proof of residence and a proof of identity.
7. We do no charge a commission; the administration fee meets all the costs. This includes costs in respect of references, preparation and execution of the Tenancy Agreement, inventories and necessary paperwork. However, if a Tenant falls into arrears, a charge will be made for the recovery of such arrears of any sums outstanding to the landlord.
8. A deposit equal to a months rent will be required from the Tenant to be held against dilapidation, damage or non-payment of rent. If we are providing a fully managed service for our landlord this deposit will be held in an Interest Bearing ac (interest will be calculated at Natwest Bank prevailing base rate).
9. In some instances the Tenant is liable to make a payment to the Inland Revenue in respect of Stamp Duty on signing a Tenancy Agreement. When Stamp Duty applies we will calculate the duty payable and advice of the costs will before you make a commitment to a property. If no stamp duty is due, as is usually the case, we will not ask you to pay, it is that simple.
10. A Tenancy cannot be finally confirmed until satisfactory references have been obtained, consent of the landlord has been given, a Tenancy Agreement has been signed and all monies due have been paid in full. An application for Tenancy can be rejected at any time and no correspondence regarding the rejection will be entered into.
11. All monies in respect of the months rent in advance, the deposit, the administration fee and the Stamp Duty must be paid in full before signing of the Tenancy Agreement and occupancy of the property. This money should be paid by way of cash, banker’s draft or building society cheque. Personal and Company cheque’s are not acceptable without prior agreement and will require at least 7 working days for clearance. You will also be required to complete and sign a Standing Order Mandate for subsequent rental Payments before signing a Tenancy Agreement.
12. Once you have moved into your new home, our involvement does not end. In the majority of cases whether we are fully managing the property, or not, we will continue to be your first point of contact in the event of any problems. Unlike other letting agents in the area we will not only be available to answer your queries but also to give advice to sort out any problems that might arise – in most cases we can help you find a solution, so if you are in difficulty get in contact before a situation becomes a major problem, we do not shout!
13. Maintenance, most major areas of maintenance are the landlord’s responsibility and if a fault arises, please contact us immediately. For instance, a leak if ignored could result in further damage and if we are unaware then the problem will not be rectified in time. In extreme cases this could affect the return of your deposit so please remember to keep us advised of any significant problems but please do not do what a tenant did once and call us at 2:00am to tell us a light bulb had blown, since, sorry, light bulbs are the tenants responsibility.
For obvious reasons we must reserve the right to charge you for unwarranted call outs. Similarly, the landlord for trades, services, or good supplied will meet no third party invoices unless Total Property Management has approved the contractor.
14. Because of high numbers of properties that we Let each year we are able to hold our charges on a lower level than our competitors. We are also very open about out charges. All costs to a tenant are detailed in advance so that there are no unbudgeted surprises in the future. Apart from the charges mentioned above there is normally one additional cost item to be considered. That is, when a tenancy is due for renewal, you have two options. You can if you wish renew the tenancy for a month at a time (provided that the landlord is agreeable) our administration fee for doing this is £20.00 per month over and above the rent and any other additional costs. Realistically this is cost effective if you need say a one or two month extension. Most tenants opt for a full term (6 months or more, again by agreement) renewal in this instance the charge is £55.00 per term irrespective in taking a full term (6 months or more) renewal tenancy. With a full tenancy, you have the security of a “term certain”. That mean that excepting in exceptional circumstances the landlord is granting you a fixed minimum period of occupancy together with rent held at whatever figures are agreed whereas, with short renewals the landlord only has to give you 28 days notice and he/she can ask for a higher rent at any time.
We will of course be please to advise you and answer any questions that you may have with regard to charges and renewals.
15. While most of the specific obligations of tenancy are confirmed in the individual tenancy agreement the onus is with you as a tenant to ensure that you understand those terms and that all relevant paperwork is in your possession. As in usually the case in law ignorance is no defence and if your documentation is not up-to-date your rights may be compromised so make a diary note of important dates e.g. Rent day, notice to quit dates, renewal dates, inventory dates, meter readings (only when you move in and out) and if you do not receive any notices (sent by post) contact us immediately because items can be lost in the post and if you do not hear from you at the end say four months (if the initial length of the tenancy is 6 months) we will assume you are moving out and make arrangements accordingly without further notice. We really want to be as helpful as possible but we need to be kept as informed as you do.
