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A Guide for Landlords
Condition of Property
The condition and presentation of the property you wish to let is of paramount importance. Properties that are decorated to a high standard and presented in a clean and tidy condition will attract good quality tenants and minimise potential void periods.
Preparing My House to Let
Firstly, it is essential for us to visit your property to assess the achievable rent and discuss a marketing strategy with you. We shall also assess the presentation of the property and make recommendations to you, which will assist in securing a tenant. This will include the décor, fixtures and fittings.
We feel it is essential to handover your property to a new tenant at a high standard as this sets a benchmark to how a property should be returned to you. We would suggest that ideally the property should be professionally cleaned, including carpets, soft furnishings and cooker. Lawns and flowerbeds should be mowed and weed free.
Prior to a tenancy commencing, you will need to ensure that all personal items should be removed from the property.
You will also need to ensure that, if applicable, the oil tank and any LPG bottles are full.
Who Will Rent My House?
As demand for rental property has increased, so has the type of tenants looking to rent. 20 years ago the majority of tenants were low income households unable to purchase a home. Over the last few years the overall quality of tenants has improved dramatically, this is mainly due to a more transient national workforce, rising house prices and a greater social acceptance to rent with the benefits it offers.
Marketing Your Property
Your property will be given extensive marketing coverage, including local press advertising, editorial features*, prominent window and office displays, and internet advertising on 16 web portals such as Rightmove and Primelocation.
We shall also use a good range of external and internal photographs, which will enhance the presentation of your property.
Our high profile ‘To Let’ board will also be put to good use and these are highly effective, particularly in popular town and village locations.
We currently have a good mailing list of potential tenants and they will receive details of your property through e-mail and text messaging.
* subject to availability
Selecting a Tenant
Finding the right tenant is fundamental. As a Landlord, you have to consider the type of tenant that you are willing to accept before marketing of your property commences. This will include tenants with pets or children, in receipt of housing benefits or employed applicants. You will also need to take into account the type of property and location of your property. We will be able to advise you, prior to marketing, the options available to you as the more restriction we make can have an effect on how quickly a property can let.
Once we have accepted an application from suitable tenant, it is essential that thorough and satisfactory references are taken to ensure that the applicant would be in a position to fulfil their tenancy obligations. All tenants are referenced, via an Independent Credit Referencing Agency. We ask for employment and bank details, as well as current/previous addresses and personal details. The Agency, once all checks have been completed, will provide us with a report.
Occasionally, a Guarantor is required, usually this is because a person may have started new employment but it could also be due to an adverse credit history. In such instances, the person standing as guarantor is also referenced and undertakes to enter into a legally binding agreement to be financially responsible for all aspects of the tenancy
Consents
MORTGAGE
If your property is mortgaged, as part of your mortgage contract, you will need to obtain consent to let from your provider. As each lender has different requirements and restrictions, we will need a copy of your letter granting consent to let so we do not breach your contract. Please be aware that most lenders will make a charge for you to obtain consent to let.
INSURANCE
You will need to check that your existing insurance policy covers letting your property. As landlord you are still responsible for insuring the buildings. We would also advise that even if you decide to let your property on an unfurnished basis, you consider taking out contents insurance to cover items that would not be covered under you buildings insurance.
It is also important to ensure that you have suitable liability coverage included within your Buildings and Contents Insurance.
We have access to various insurance policies specifically designed for residential lettings (including unfurnished ones to cover carpets, curtains and white goods) and we would be happy to supply you with details for buildings and contents at very competitive rates.
Leasehold Property
If you own an apartment or flat, you will own a leasehold property. You will need to check the terms of your lease carefully to ensure that you are able to let your property. You may be required to obtain consent to let from the freeholder who will expect your tenant to abide by the terms, clauses and restrictions of the lease. We shall require a copy of your lease to include any specific clauses within the tenancy agreement.
A Question of Safety
GAS SAFETY (INSTALLATION AND USE) REGULATIONS 1994
It is a legal requirement that every gas appliance and gas central heating system has to be inspected on an annual basis. They have to meet strict conditions and a safety Certificate must be issued by a GAS SAFE registered engineer every 12 months, a copy of which must be supplied to the tenant. We can arrange for the safety inspection to be carried out for you by a local gas engineer and we will remind you when the next one is due. Non compliance could result in a fine of up to £5000 and/or imprisonment.
ELECTRICAL SAFETY
PART ‘P’ BUILDING REGULATIONS (ELECTRICAL SAFETY IN DWELLINGS)
Since 1st January 2005, new regulations came into force controlling who could carry out certain works upon electrical installations within properties. In very general terms, these regulations require that works, repairs, maintenance etc., on electrical installations, in certain areas of the property, must be carried out by a registered Competent Person. Any electrical work carried out after January 2005, must have evidence that it has been completed under the scope of these regulations and in accordance with the scheme.
We request that all our residential letting property have been subjected to a valid Periodic Inspection Report which will cover this.
Electrical Appliances
All mains operated electrical equipment supplied in a property must comply with the Electrical Equipment (Safety) Regulations 1994 these include fridges, freezers, kettles, table lamps and lawn mowers.
SMOKE DETECTORS ACT 1991
Any new building built after June 1992 must have smoke detectors installed and maintained. We recommend that all properties whatever their age should be fitted with at least 2 smoke alarms conforming to BS5446 Part 1. Under the tenancy agreement, the tenant is obliged to check that the alarms are working properly.
If your property has gas appliances, you may wish to consider the installation of a carbon monoxide detector, which detects the build up of dangerous gases. These units cost little more than smoke alarms but do serve a useful purpose.
FURNISHINGS
If any furniture is left in the property you must ensure it is in safe working order. Note:
The Fire and Furnishings (Fire Safety) Regulations 1988
The Fire and Furnishings (Fire) (Safety) (Amendment) Regulations 1993
These make it an offence to let out a property containing furniture and furnishings that do not comply with the Regulations. Failure to do so could result in up to 6 months imprisonment and/or fines up to £5000. The Regulations apply to furniture made and imported from 1st November 1988; retailed as new from1st March1990 and retailed as second hand after 1st March 1993 and state that the offence is committed when the furniture is supplied “in the course of a business”. This means professional investment landlords are clearly covered by the Regulations. The situation is less certain regarding an owner/occupier letting their own home but for the avoidance of doubt it is a sensible precaution for any owner/occupier to heed and comply with them. It is recommended that second-hand furniture is not purchased and if it is, that the appropriate label is attached or original receipts are obtained showing original date of purchase. If your furniture was manufactured or imported new since 1st November 1988 it will almost certainly comply and should bear a green edged label with a picture of a cigarette and match to confirm its fire resistance.
The correct method of displaying compliance is to check that a permanent label is present on all items of furniture N.B. mattresses, divans and bed bases are not required to bear a permanent label, however compliance with the ignitability tests may be understood if there is a label on the item stating that it meets the standard BS7177.
Should you decide to include any furnishings in your property, we will advise you of the suitability and compliance of these furnishings.
The correct method of displaying compliance is to check that a permanent label is present on all items of furniture N.B. mattresses, divans and bed bases are not required to bear a permanent label, however compliance with the ignitability tests may be understood if there is a label on the item stating that it meets the standard BS7177.
Should you decide to include any furnishings in your property, we will advise you of the suitability and compliance of these furnishings
Energy Performance Certificates
From 1st October 2008, all rental properties with a new tenancy in England and Wales will be required to have an Energy Performance certificate (EPC). These are mandatory and the responsibility of the Landlord and must be provided free to a prospective tenant PRIOR to them viewing a property. If you wish, we can arrange for one of these to be obtained from a registered Domestic Energy Assessor.
Types of Tenancies
ASSURED SHORTHOLD TENANCIES
New tenancies usually commence on a fixed term of 6 months under an Assured Shorthold Tenancy contract. The Assured Shorthold Tenancy under the Housing Act 1988 is the standard and most popular method of letting residential property. The Tenant has very little security of tenure and a court must make a possession order if the tenant refuses to leave. The landlord cannot end the tenancy during the first 6 month period unless there have been arrears of rent or some other serious breach of the tenant’s obligations.
After the expiry of the initial 6-month period, the parties can agree to enter in to another fixed term contract. Alternatively, the contract can become a “Statutory Periodic Tenancy” whereby it lapses and the tenants hold over under the terms of the original agreement.
ASSURED TENANCIES
The assured tenancy gives the Tenant considerable security of tenure even after the fixed period has expired until either the Landlord obtains a possession order using one of the 17 grounds in the Housing Act 1988 or the Tenant gives one month’s notice terminating the tenancy. The Tenant has little power to contest the rent level once it has been set. This type of tenancy is principally used by housing associations or other long term tenants and we would not recommend this type of tenancy to a private landlord.
COMPANY LETS
These do not come within the scope of the Housing Act 1988 and would therefore be a contractual tenancy. Particular procedures apply for regaining possession and enforcing contractual terms. We would be pleased to advise further as necessary. (Rent Guarantee and Legal Expenses insurance is also available on these types of agreements).
Inventory & Condition Report
It is vital that one of these is prepared prior to the commencement of the tenancy. It is checked and agreed with the tenants at the commencement of the Tenancy and forms the basis of the assessment of dilapidations when they move out.
Whilst checking the Inventory, we also take the meter readings to ensure correct billing by the Utility Companies. We will notify the Utility Companies of the transfer of the service contracts to the tenant (except for B.T. whom you should contact direct and inform them that you no longer require a service at the property. The tenants will then have to contact B.T. direct should they wish to be re-connected). At the termination of the tenancy, the Utilities will usually be disconnected unless you have made special arrangements with the relevant Boards. Final accounts will be forwarded to the tenant’s new address.
Tenants Deposits
With effect from 6 April 2007 the government has made it compulsory for those receiving tenancy deposits to join a scheme that safeguards deposits for the duration of a tenancy and offers resolutions should disputes arise.
To protect the interests of our Landlord clients, Wisemove can arrange for deposits to be held by an authorised tenancy deposit scheme. A tenancy deposit scheme means that in the event of an unresolved dispute or stalemate over the allocation of the deposit, it can be referred to the scheme for a prompt, independent, third party adjudication - so providing a resolution which is fair to both landlord and tenant.
On all tenancies a dilapidations or surety deposit is paid equivalent to 4-6 weeks rent. This helps to ensure that the tenant looks after the property and acts as a safeguard against unpaid rent.
Rent and Rent Payments
Upon signing the tenancy agreement we will ask the tenant to pay in cleared funds one month’s rent, a dilapidations deposit equivalent to 6 week’s rent and an administration fee which is their contribution towards the tenancy agreement preparation, the reference checks and the check-in /out procedure. They will not be allowed into occupation until such monies are received.
The tenant will be asked to pay rent via a standing order into our bank account in advance every calendar month. We will deduct our fees and any expenses arising that month (e.g. repair bills) and then pass the balance on by direct bank transfer. We aim to do this as quickly as possible but delays may occur if the tenant is a day or so late paying the rent into the account and the bank does not send it immediately. Full statements itemising all transactions will be provided on a monthly basis.
Rent Guarantee & Legal Expenses Insurance
(Only available with Fully Managed Service)
Rent Guarantee and Legal Expenses insurance is available through our Agency for all types of applicant (including unemployed, self-employed, retired, students).
If you decide to take out the Legal & Rental Insurance, our Accounts Department will deduct from the rental a slightly increased commission charge to cover the insurance. This insurance is extra security for our Landlords who need to plan their finances and who want to be covered for the unexpected. However carefully we vet our Tenants, there are some cases where the Tenants' circumstances may change and they are unable to pay the rent. The advantage of this service is that it provides a mechanism to pay rental due and cover any legal costs involved where a Tenant defaults. Added security and added peace of mind.
Repairs & Ongoing Maintenance
The tenant should report to us any problems arising with the property and we will organise any minor repairs and obtain estimates for more serious work. Work required owing to the negligence or misuse by the tenant is payable by the tenant. In all other cases the Landlord is responsible.
Under the FULL MANAGEMENT service Wisemove will effect general and essential repairs and maintenance, and make such purchases and instruct contractors after obtaining prior consent from the Landlord. Wisemove endeavour to employ only known, reliable and proficient contractors and workmen, but no warranty is given, or liability assumed, for loss or damage that might occur.
Under s.11 Landlord and Tenant Act 1985 the Landlord is obliged to repair and maintain the structure and exterior of the property and maintain in working order the installations in the property for the supply of water, gas, electricity, heating and hot water. The tenant should look after the property in a “tenant-like manner”.
Inspections
We will carry out quarterly inspections on your property and you will receive details of the inspection. This is not a full inventory check but a general overall check to see that it is being properly looked after.
Re-Letting
Should the property become vacant, we will of course, upon your instructions organise the re-letting of the property. We will always try to ensure the Property is unoccupied for the shortest time. Please note the recent changes brought about by the unfair contract Terms Act mean that Tenants can now assign their tenancy (with your approval) and if this is not forthcoming, they can serve one months Notice and end the tenancy early only having to pay your re-letting costs and not lost rent. This hardly seems fair to the Landlord but appears to be the current legal position.
Taxation
INCOME TAX
We strongly recommend that a qualified accountant should be consulted since each individual’s circumstances are different .A landlord will be taxed on rental income. The taxable income is arrived at by calculating the rent received during the tax year, and then deducting allowable expenses. Allowable expenses include such items as interest on mortgage payments, insurance premiums, professional fees. A detailed list is available of the HM Revenue & Customs website –www.hmrc.gov.uk
CAPITAL GAINS TAX
Professional advice should be taken. In general, property that is used for letting will become liable to CGT when sold. On the whole, the following Landlord groups are unlikely to incur this tax:
Non-resident landlords. Those letting a former home for no more than 3 years Those letting a former home when forced to work elsewhere in the U.K
OVERSEAS LANDLORDS
Until April 1996 Landlords who moved out of the U.K had to have tax deducted by their agents. Now however, a Landlord can apply for an exemption certificate from the Inland Revenue (we can supply the forms and a leaflet with further information).
If you are awarded an exemption we can send all the rent money to you without deduction of tax. (We must retain a copy of the Certificate).
