Guide to Successful Letting
What is my property worth?
Consents to let
As part of our service, we will provide you with a rental valuation for your property.
If your property is currently mortgaged or is held by you on a lease, you may be required to gain permission, in writing, from the lender or freeholder to let the property. It is a term of your buildings/contents insurance to advise the insurer of the intention to let the property. We can arrange for a quotation for both, to also include landlord public liability cover, should anything happen to your tenant whilst in situ.
Usually, the utility bills and council tax would be in addition to this figure and would be paid by the tenants. As a landlord, you are responsible for service charges and ground rent.
Preparing the property for rental As part of our service, we would draw to your attention any works which may be required to ensure that the property meets the required Health and Safety standards and recommend any work which may increase the rental income or the desirability of the property. Normally we would recommend a neutral décor throughout and usually ‘unfurnished’, although we would discuss the implications of furnished/unfurnished at our meeting. We would always recommend that the property be professionally cleaned prior to tenants moving in, and this would include, appliances, windows and carpets.
Marketing your property Before we can commence marketing the property, we will require a valid EPC (Energy Performance Certificate). Currently, you are not legally able to market a property with an EPC rating below an E. We will market your property on all major property portals, including Rightmove as well as calling our extensive database across 20 inter-linked offices. We would also recommend a ‘To Let’ board is erected at the property, where possible, for applicants to locate the property and for maximum exposure and awareness.
Licencing/planning permission requirements Licencing/planning permission requirements are unlikely for the letting of a standard residential property to one occupant or family but if you are in any doubt, you should seek professional advice. If you are letting the property as an HMO (House of Multiple Occupancy) then many local authorities will require the landlord to be registered and the property to be licenced. There are also other legislative and regulatory requirements, some with significant penalties, for landlords and it is important that you are aware of these. We will inform you of these during our meeting but they are also summarised in this guide.
How will I know if the tenant is the ‘right one’ for me? As part of our services, we will arrange for the prospective tenants to be fully referenced. This will include a Credit Check, employers’ reference and landlord reference, which is carried out by a third party company. Sometimes the tenant may be required to provide a guarantor, but this is something you will be made aware of by the referencing company. You will also be provided with a copy of the referencing report/s on a strictly confidential basis. We are not responsible for the accuracy of any information contained in the reference and will not make any recommendations. The decision as to whether to accept the tenants is ultimately that of yourself (the landlord). Unfortunately, a good reference report does not necessarily guarantee that a tenant will not default or damage the property but we can arrange for quotes for specific landlord contents and building insurance. Under the Immigration Act 2014, all landlords are responsible for carrying out ‘Right to Rent’ checks on their prospective tenants and permitted occupiers.
As part of our services, we will undertake the initial checks. On an ongoing basis, these checks will need to be undertaken again if the tenant right to rent expires, or when the tenancy is due for renewal, or becomes periodic. If we have been instructed on a Fully Managed basis, we will undertake these follow up checks on your behalf. Where you have selected the Tenant Find Only or Rent Collect service, you (the landlord) accept full responsibility for carrying out any further right to rent checks which may be required under the Immigration Acts 2014 and 2016 and for any prosecution, fines, potential prison sentence for failing to comply with the legislation. The Immigration Act 2016 introduced the obligation for landlords to evict any tenant whose time-limited Right to Rent has expired and not been renewed, and new rules have been introduced to facilitate this. Fees are payable for referencing and Right to Rent Checks which are set out in our ‘Agreement for Letting Services’.
Legal requirements Gas Safety Certificate It is a legal requirement for all properties connected to gas to have an annual gas safety check carried out on all gas appliances. The certificate will be provided by a registered Gas Safe engineer.
EICR (Electrical Installation Certificate) New legislation introduced in July 2020 made it a legal requirement for all properties with new or renewed tenancies to have a valid EICR (Electrical Installation Condition Report) and from April 2021 for all existing tenancies. Any repairs must be undertaken prior to new tenants moving in and with tenants already in situ, within 28 days unless it is an urgent notice. Failure to comply with this legislation can result in a fine of £30,000. An EICR is valid for five years.
EPC (Energy Performance Certificate) The requirement for an EPC was introduced in 2007. In April 2020, legislation was announced that landlords could not rent a property with an EPC rating of less than E, unless they had a valid exemption certificate. An EPC is valid for 10 years if it meets the current criteria.
Furniture and Furnishing (Fire) (Safety) Regulations 1988 These regulations apply to all soft furnishings such as mattresses, fabric headboards, bed bases, sofas, armchairs, fitted or loose covers etc… The only exemption to the rule is furniture or furnishings manufactured before 1950 and after 1989. When we are instructed to market your property to let, you authorise us to remove (at your expense) any furniture which is not compliant or does not have the approved fire label attached.
Carbon Monoxide detectors
Legionella
Landlords are advised that any wood burning or solid fuel appliances installed in the property after October 2010 must comply with the appropriate Building Regulations.
The Health and Safety Executives have issued a new Code of Practice for assessing the risks of Legionella in residential properties.
This means that the appliance must have been installed by a HETAS approved engineer, who can then self-certificate, or have specific Building Regulation Consent. For appliances installed prior to this date there is no specific requirement for certification, but we strongly advise the installation of a carbon monoxide alarm and for chimneys to be periodically swept.
It is recommended that, as a landlord, you should carry out risk assessment of your property prior to letting. This includes any open water tanks, redundant pipes, cooling systems or swimming pools.
It is also strongly recommended that a carbon monoxide detector is supplied in any room where a gas appliance is installed.
Smoke alarms A mains powered alarm is not required in older properties but it is now mandatory to have at least one alarm installed on each floor where a room is wholly or partially used as living accommodation. All residential properties built after June 1992, are required to have hard wired alarms. The smoke alarms will need to be tested to ensure that they are fully functioning before the start of any tenancy.
By signing our Agreement for Letting Services’ you acknowledge that you are aware of your responsibility for the safety of the tenant/s and confirm that any solid burning appliance installed in the property is safe.
By signing our ‘Agreement for Letting Services’ you acknowledge that you are aware of your responsibility for the safety of the tenant/s at the property and have considered all risks regarding Legionnaires disease. Further information is available at http:/www.hse.gov.uk/Legionnaires/ symptoms.htm
What about the tenancy agreement?
The agreement for a residential letting is usually an AST (Assured Shorthold Tenancy). The tenancy agreement is a legally binding contract between the Landlord and/or Landlord Agent and the Tenant/s. It is important to ensure that the agreement is relevant to your particular let. For instance, the Mortgagee, superior lessor, or landlord may require certain terms to be inserted. If you are in any doubt, please refer to your solicitor for advice. The cost for preparing the agreement is set out in our ‘Agreement for Letting Services’. The term of the agreement is a minimum of six months, although we would usually advise that the first agreement be for a twelve-month term, with a six-month break clause. This means that, if for any reason you needed the
property back, you could issue the tenants notice to vacate at the six-month break or with two months’ notice thereafter. Our ‘Agreement for Letting Services’ authorises us to sign the contract on your behalf, but we will not do so until we have confirmation in writing from you that you are happy to proceed. You must also inform us immediately of any change of address if you are on our Fully Managed or Rent Collect service so that we may inform the tenant as required under the ‘Landlord and Tenant act 1987’.
Tenant security deposit Due to the ‘Tenant Fees Act 2019’, the maximum security deposit which can be taken is equivalent to 5 weeks rent (6 weeks if the rent exceeds £50,000 per annum). We are registered under the Government approved Tenancy Deposit Scheme (TDS) operated by The Dispute Service Ltd for the lawful holding of the tenant deposit. The responsibility for raising a dispute under the TDS rests with the tenant. When we receive a tenants’ deposit on your behalf, we will serve the Prescribed Information Notice and comply with the initial requirements of the TDS on your behalf (see ‘Additional Charges’), unless you provide us with written instructions prior to us receiving the deposit. If you do not want us to protect the deposit, it will be your responsibility to protect it as required by law.
Please be aware that failure to protect the deposit would mean that a valid notice seeking possession under a Section 21 of the Housing Act 1988 could not be served and any tenant and certain other persons affected may apply through the courts for compensation of a least the deposit amount and up to three times the deposit if the landlord (or anyone acting on the landlord behalf); 1.
Fails to give prescribed information within the statutory time limit.
2. Fails to comply with the initial requirements of an authorised scheme within the statutory time limit. 3. Notifies the tenant or certain other persons affected that the deposit has been protected in a scheme, but that they cannot obtain confirmation that the deposit is protected. The scheme rules can be found at www.tenancydepositscheme.com
Returning the deposit
Rental payments
Once the tenant has vacated, they can request the return of their deposit via their TDS login. If you are in agreement you, or the Agent if you have the full management service, can approve the release and the deposit will be refunded within a few working days.
Where we are contracted to collect the rent on your behalf, we process the rents received from the tenant throughout the tenancy. Any fees or expenses due will be deducted and the balance made by direct payment to your nominated UK bank account.
advising the tenant/s that legal action may be taken. At this time, we will contact you and ask for further instructions, but will not actively continue chasing for rent after this point. You may wish to deal with the matter directly or via your solicitor.
Payments will be made within two working days of the rent clearing into our account (please make allowances for bank holidays and weekends). We are unable to make payments into a non-UK bank account. A full statement of account will be sent via email shortly after the payments are received.
Please be aware that it will always be your responsibility to take legal action, instruct a solicitor or protect your position. We can suggest a suitable solicitor on request but once a solicitor has been instructed, we will take no further action other than assist where appropriate.
If rent payments from the tenant/s are delayed, we will endeavour to contact the tenant/s via the contact number we have on file, via email and will also send letters after the first 7-9 days and again at 14-16 working days after the rent due date. After 28-30 working days, a final reminder will be sent
Please note that we will not be held responsible if your tenant fails to pay the contractual rent.
If there is to be a deduction, so long as the tenant and landlord/agent can agree to a figure, the remaining amount can be released. The deposit return must be agreed within 10 working days. If an agreement cannot be made, the TDS will provide impartial adjudication free of charge. The time limit for sending a dispute is 3 months from the end date of the tenancy.
What about tax? Under current UK tax legislation, you have an obligation to declare all rental income received on any property in the UK to HMRC.
If you have taken our Rent and Legal insurance, we will initiate the claim in accordance with the terms and conditions on your behalf.
Resident Landlords
Online non-resident landlord forms
Under the Finance Act 2011, paragraph 18 of schedule 2, we have a legal obligation to inform HMRC of all rent collected on behalf of landlords by tax year. (see’ Additional Charges’).
Under the Non-Resident Landlords Scheme (NRL), landlords can apply directly to HMRC-Charity, Assets & Residence-Residency Department- for approval to receive rent without deduction of tax. They must complete an NRL form online. NRL1 for individuals (separate form per landlord), NRL2i for companies, NRL3i for trustees. These are available on the HMRC website.
Non-resident landlords A letting agent for non-UK resident landlord (or the tenant where there is no lettings agent and the rent exceeds £100 per week) must deduct tax at the basic rate from the landlord’s rental income unless HMRC permits payment without deduction (NRL1).
Once approval has been granted, HMRC will write to us and issue us with an approval number for you. Where approval is granted, this does not mean that the income is exempt from UK tax, only that tax does not have to be deducted prior to payment. Where we are processing the rent on your behalf, and are required to deduct tax, we will submit quarterly and annual returns on your behalf and prepare the final certificate.
We will make a quarterly charge for this service (see ‘Additional charges’). Although you may give a ‘C/O address for correspondence’ we are required by HMRC to hold your actual residential address on file. Where HMRC has issued an Approval to a Non-Resident Landlord, we are required to submit an annual return to them, and make an annual charge for this service (see ‘Additional charges’). Our ‘Agreement for Letting Services’ explains what requirements must be met before we are permitted to account for rent to landlords’ resident overseas without deduction of tax. For further information relating to the Non-Residents Landlord’s Scheme (NRL) speak to us or your accountant.
Inventory/check in/check out procedures and cleaning It is strongly recommended that an inventory of contents and schedule of condition is prepared prior to the commencement of any tenancy. This provides vital evidence in the event that the tenant damages or removes any items from the property. It is best to employ a professional inventory clerk to conduct this service. Without this, it may be difficult to make any claim against the tenant deposit as any such claim may be rejected. The inventory does not usually include the testing of appliances or moving furniture. This is something which we can arrange on your behalf and the cost depends on the number of bedrooms and whether the property is furnished or unfurnished (see ‘Additional fees’). It is also strongly recommended that the property is professionally cleaned prior to the commencement of the tenancy, and a receipt is retained, as it is becoming increasingly difficult to claim against a tenant deposit for cleaning at the end of the tenancy. This will also help to set the standard of cleanliness expected during the tenancy and at the end of the agreement, subject to the usual allowance for wear and tear.
Property visits If you have selected our Full Management Service, we will arrange for property visits to be conducted, the purpose of which is to check the general and decorative condition of the property (this excludes lofts, garages, outbuildings and basements-unless these are classed as living accommodation under Building Regulations). These are not surveys and do not include structural problems. Visits will normally be conducted at least once per year or more often, as required, but will always be subject to the tenant/s allowing access. It is important to be aware that we cannot gain access with keys without the tenant prior approval, and we are unable to force entry.
Council tax and utilities Council tax is usually paid by the tenant/s unless part of the property is retained for the landlord use, or the property is categorised as an HMO. Landlords will also be liable for council tax if the initial tenancy is for less than six months’ or if the agreement is allowed to continue on a month by month rolling basis, although some councils do not enforce this rule. Lawfully, a landlord cannot request that a tenant use a particular utility supplier. We will provide meter readings prior to the commencement of the tenancy, providing the inventory clerk has been able to gain access to the meters. Under the Water Act 2003, landlords cannot refuse a tenant/s request to install a water meter. Section 45 of The Flood and Water Management Act 2010 places an obligation on the landlord to provide the tenant/s contact details to the relevant water company. We will only do this when the landlord has opted for our Full Management service.
Energy suppliers The landlord authorises the Letting Agent, as their agent, to allow the Agent preferred supplier to supply the gas and electric. The landlord can change supplier if required.
Tenancy expiry
Repairs and maintenance
Despite the clause stated in the tenancy agreement, a tenant can leave the property on expiry of the agreement without having given prior notice, although normally we would expect notice to be properly served.
If you have opted for our Full Management service, then we will instruct contractors on your behalf. As we act as agents, the contract will be directly between yourself and the contractor/s and any recourse in relation to the works or payment for the works will be between you and the contractor. We cannot be responsible for commissioning repairs or maintenance if we are not holding sufficient funds on account.
The law states that, even when the term of a tenancy has expired, the tenant may remain in the property on the same terms unless a notice to terminate is served on behalf of the landlord. Such notice would take effect on a date not less than two months’ after it has been served and not before the expiry of the tenancy. This is known as a Section 21 notice and must be in writing in a prescribed form. If the tenant fails to leave at the end of the notice, legal possession proceedings can commence. The tenant may not be evicted without a Court order and any form of physical interference with the tenant or with the tenant’s peaceful occupation of the property is unlawful. In such circumstances, it is strongly recommended that you take specialist legal advice. Where the tenant vacates the property by agreement or by a court order, it will be necessary for the deposit to be returned to the tenant unless the landlord files a claim for damages or outstanding rent. Where the tenants are not looking to vacate or the landlord does not wish to claim possession of the property, we will negotiate renewal for a further term with a suitable rent review which will incur a charge (see Additional charges).
Any major works will not be instructed until we have your authority in writing approving the estimate, and we will require funds in advance. For any minor works we are authorised on your behalf to instruct contractors to carry out repairs and/or maintenance up to the float amount of £200, provided there are sufficient funds on account. Any works exceeding this figure will require
your authorisation except in extreme emergencies, and where we have been unable to contact you. As with any repairs/maintenance, we cannot accept responsibility for the quality of the works or any other default of the contractor. Any appliances using solid fuel, gas or oil should be serviced annually by a qualified contractor. Should you require us to arrange this on your behalf, we would require your authority in writing. Where there is a warranty/repair/maintenance or service agreement on any new build property, boiler or other goods, then we must be advised if these are required to be carried out by a specified contractor. If we are not made aware then we cannot accept liability if the agreement or warranty is invalidated.
Deregulation Act 2015
Sale of the property
Under this act, since October 2015, if a tenant has reported a repair, this needs to be addressed and responded to within 14 days. Failure to do so means that the tenant can escalate this to the local authority who can then take action and serve a Relevant Notice, which would prevent a Section 21 notice being served for 6 months.
Should you wish to sell the property whilst it is tenanted, you will need to instruct your solicitor to deal with any apportionment of rent between you and the purchaser, bearing in mind that the rent may already have been paid to you.
Insurance Our ‘Agreement for Letting Services’ gives you the option to select a request for a landlord building/contents quote and to select our Rent and Legal Protection. Protection is available subject to the conditions and information provided and to the terms of the policy in each case.
BILLINGSHURST
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