LANDLORDS GUIDE TO LETTING A PROPERTY – What to do next?

Once you have decided to rent your property, we will ensure matters are as straightforward and stress free as possible.  Your property will be marketed through our database and any potential tenants will be telephoned, e-mailed or text messaged.  Prospective tenants will be accompanied to the property by a member of our viewings team and then asked to complete a detailed application form if they are interested in the property.

At this stage we would liaise directly with the landlord concerning suitability and interview the tenant.  If applicable, credit searches and references would be applied for via a referencing agency and once a satisfactory response to these received, a moving date suitable to both landlord and tenant would be arranged.

Prior to the tenant moving into the property a detailed schedule of condition would be prepared along with several photographs and services checked, meter readings taken and the service provider advised of the new tenants details.

We will then prepare the tenancy agreements whilst complying with Section 2 of the Housing Act 1996.  The tenant will be required to pay rent and a deposit, usually equivalent to one month for each.  The rent will be collected monthly and we account to our clients on a monthly or quarterly basis, as preferred.

Once the tenant has moved into the property, routine visits will be carried out as required.  Should a problem arise at the property, we would contact you immediately to obtain instructions regarding repairs.  In the event of an emergency requiring prompt attention we would request your authority to undertake the same.  Unless the landlord specifies a preferred company, professional contractors would be used.  All maintenance will be billed against your rental return and shown on your statement of account.

Should a problem arise that requires possession notices or court applications, these can also be dealt with by our office and standard fees apply. If you do not have a “Buy to Let” mortgage you must advise your mortgage lender and check that there is no objection or insurance restriction on letting.

• You must advise your buildings and contents insurer of your intentions. Many insurers do not cover let properties but we can arrange specialist policies to give you the protection you need.
• Refurbishments and safety checks must be made and you should be aware of the legislation that affects let property regarding furnishings, gas, electricity and smoke detectors.
• You are responsible for providing sufficient keys, installing smoke alarms, notifying your local council (for Council Tax), gas, electricity, oil suppliers and post office etc. of the changes.
• You are responsible for the general maintenance of the property and contents - the structure and condition of the property, decoration, installations and appliances.
• If there is a garden, you must provide tools and the tenant is obliged to use them! In a larger property with a special garden it is best to employ a gardener to ensure the best care of precious plants etc. The cost can be built in to the rent.

Where repairs are necessary the tenant will call us if we manage the property or, if you have chosen our Let Only option, they will call you.

Rental Guarantee
Tenants can fall into arrears for many reasons, even those with favourable references. Can you afford to lose monthly income? In an uncertain world, it's good practice to obtain protection. Tenant's circumstances can change for any number of reasons, so it's prudent to minimise the risk to your income. For managed properties, we are able to offer at a competitive cost, what is considered to be one of the best rental guarantee policies available.

Tenant Assessment
To assist in location the most suitable tenant we use Homelet referencing and Equifax credit reports, placing the highest importance on referencing potential tenants for your property to ensure their reliability gives you the greatest return on your investment.

Our Tenant Assessment Service will help you to have that vital information which can assist you to enjoy regular rental income. Our Tenant Assessment Service provides:

• 24-hour easy online access
• A simple online form to complete
• A speedy referencing system which enables you to make decisions fast
• Predictive credit score to indicate a tenants financial stability
• Online, financial report available within seconds, so you don’t lose potential tenants
• Sophisticated system to detect any fraud
• Details of adverse, undisclosed and withheld information

Additionally, Homelet Tenant Assessment Service satisfies the referencing requirements for Homelet rental guarantee products should you chose them.

Income Tax – UK Resident
Where the landlord is resident in the United Kingdom, the income received from letting is subject to taxation.  However, we would recommend that you obtain professional guidance from an accountant as there are several ways that expenses can offset this figure. These include management fees, property insurance premiums, maintenance (although not improvements) and a ‘wear and tear’ allowance. Please visit HM Customs & Excise web site:  www.hmrc.gov.uk

Income Tax – Non UK Resident
For Landlords who reside abroad and let their property through an agent then the agent must operate under the Non-Resident Landlord Scheme.  You will need to arrange to obtain from the Inland Revenue an exemption certificate allowing us to pay you the income without deductions.  Until this certificate is received, we have a statutory obligation to retain a proportion equivalent to the current basic rate of tax. If you are unsure about your tax liability at all we would recommend you speak to either your accountant or a tax specialist.  For further details, please visit HM Customs & Excise web site: www.hmrc.gov.uk

From 6 April 2007, all deposits taken by landlords or agents for Assured Shorthold Tenancies in England and Wales (this covers the vast majority of tenancies), must be protected by a tenancy deposit protection scheme. From this date, tenants should ask their landlord/agent about the details of the scheme when signing a new tenancy agreement. How does it work?

What are Tenancy Deposit Schemes?

There are two types of tenancy deposit protection scheme available for landlords and letting agents (insurance-based schemes and custodial schemes). All schemes provide a free dispute resolution service.

The schemes will allow tenants to get all or part of their deposit back when they are entitled to it and encourage tenants and landlords to make a clear agreement from the start on the condition of the property.

The schemes will :

• allow tenants to get all or part of their deposit back when they are entitled to it
• make any disputes easier to resolve
• encourage tenants and landlords to make a clear agreement from the start on the condition of the property

There are two types of tenancy deposit protection scheme available for landlords and letting agents. All schemes provide a free dispute resolution service.

Insurance-based schemes

• the tenant pays the deposit to the landlord
• the landlord retains the deposit and pays a premium to the insurer - the key difference to the custodial scheme

Within 14 days of receiving a deposit

The landlord or agent must give the tenant the details about how their deposit is protected including:

• the contact details of the tenancy deposit scheme selected
• the landlord or agent’s contact details
• how to apply for the release of the deposit
• information explaining the purpose of the deposit
• what to do if there is a dispute about the deposit

At the end of the tenancy:

• if an agreement is reached about how the deposit should be divided, the landlord or agent returns all or some of the deposit
• if there is a dispute, the landlord must hand over the disputed amount to the scheme for safekeeping until the dispute is resolved
• if for any reason the landlord fails to comply, the insurance arrangements will ensure the return of the deposit to the tenant if they are entitled to it

Custodial schemes

• the tenant pays the deposit to the landlord or agent
• the landlord or agent then pays the deposit into the scheme

Within 14 days of receiving a deposit
The landlord or agent must give the tenant the details about how their deposit is protected including:

• the contact details of the tenancy deposit scheme selected
• the landlord or agent’s contact details
• how to apply for the release of the deposit
• information explaining the purpose of the deposit
• what to do if there is a dispute about the deposit

At the end of the tenancy:
if an agreement is reached about how the deposit should be divided, the scheme will return the deposit, divided in the way agreed by both parties

• if there is a dispute, the scheme will hold the deposit until the dispute resolution service or courts decide what is fair
• The interest accrued by deposits in the scheme will be used to pay for the running of the scheme and any surplus will be used to offer interest to the tenant, or landlord if the tenant isn’t entitled to it.

Safety Regulations - Letting property demands knowledge of your obligations.

There are some very compelling reasons why landlords should make absolutely sure that their properties are entirely safe for tenants. They should also be aware of all the safety issues and the legal requirements surrounding the letting of property.  Manage your property well and the risks to you as landlord can be minimal, but manage the property badly and your risks are high.

Safety aspects come under criminal law - if a criminal offence is committed landlords can face a term in jail, a heavy fine, or both. In addition, there could be a liability to the tenant for civil damages. The main areas you need to be concerned about are:

• Gas safety and annual Gas Safety checks.
• Fire safety - escape routes, alarms, fire fighting equipment and fire doors (when supplied or fitted).
• Electrical safety - wiring and appliances.
• Operating instructions and user warnings provided for all appliances and equipment.
• Furniture and furnishings - meet the regulations.
• General internal and external building safety for tenants, visitors and the general public.
• Landlord and Public Liability insurance.
• Houses in Multiple Occupation (HMO) - special legal regulations apply -

In addition to the statutory annual Gas Checks, you have a duty of care to ensure the property is safe from obvious safety hazards, i.e.

• Fittings and appliances for loose or dangerous parts.
• Wiring/plug sockets, and fuses for correct size.
• Doors, entrances and free exit escape routes.
• Upper floor windows for safety bars/catches.
• Fire doors (when fitted) their seals & closers.
• Smoke alarms & fire equipment (if provided).
• Stairs and stairways, handrails and carpets for the possibility of causing trips and falls.
• Roofs, chimneys, guttering and down spouts for possibility of falling objects.
• Paths, driveways, stairways and fire escape surfaces for possibility of trips and falls.
• Gardens, walls, gates and fences, outhouses, garages, and any tools provided, for general safety. 

Duty to Manage Asbestos - from May 2004 landlords and property managers of non-domestic properties must take active steps to identify, record and manage the risks from any asbestos present. 

Finance Act 2003 - this provided for the introduction of Stamp Duty Land Tax (SDLT) from 1 December 2003. It largely replaces stamp duty on UK land and buildings. It covers residential and commercial property freeholds and leaseholds over seven years in length as well as other transactions. 

Housing Acts 1988 and 1996 - the 1988 legislation introduced assured and assured shorthold tenancies. Before that date most lettings were regulated tenancies under the Rents Act 1977. Under the provisions of the Housing Act 1996, tenancies that started on or after 28 February 1997 are automatically shorthold tenancies unless special steps are taken to set up an assured tenancy. The Housing Act 2004 introduces a number of measures that affect residential landlords, including mandatory licensing of a house in multiple occupation and selective licensing of privately rented properties in some areas. The HMO and selective licensing provisions are expected to come into force in October 2005.

Furniture and Furnishings (Fire) (Safety) Regulations 1988 - landlords must make sure that any furnishings and furniture provided comply with fire resistance requirements. Upholstered furniture included in lettings must comply. These Regulations impose the same stringent standards as apply to new and second-hand furniture in the shops. The Regulations are applicable to the following:

• All types of upholstered seating. This includes chairs, settees, padded stools, sofa beds, and padded headboards.
• Children’s furniture, cots, carrycots, playpens, prams, pushchairs, high chairs.
• Garden furniture suitable for indoor use.
• Furniture in caravans.
• Mattresses and padded bed bases.

Please contact us for more information on any of the above.