Mortgaged Property Information
If a property is mortgaged, the company providing the mortgage must be informed of your intention and give their consent. It is the Landlord’s duty to implement any special conditions required by the mortgage company when letting the property.
Leasehold Property Information
If the property you propose to let is subject to a leasehold, it will be necessary to get written consent from the leaseholder to let the property. Tenants should be made aware of the terms of the lease and agree to adhere to them.
Buildings and Contents Insurance
You should inform your building and contents insurance companies that you propose to let the property. They may need to amend or change your policy to cover letting the property. This is very important as failing to inform your insurance companies may invalidate your policies. Tenants should also be advised to take out their own contents insurance as your policy will not cover their belongings.
Council Tax and Utility Bills
When your property is occupied, the Tenant is responsible for payment of Council tax. The relevant authority should be informed when Tenants take up residence. If the property becomes vacant, the Landlord resumes responsibility for council tax. However unoccupied properties have a one month exemption in most areas (check with your local council as they may differ).
At the commencement of a tenancy meter readings should be taken for electricity, gas and water, as appropriate. The readings should be noted on the inventory, and the relevant utility supplier should be given the readings, together with the names of the new Tenants.
Inventory and Schedule of Condition
It is important to prepare a detailed and accurate Inventory and Schedule of Condition prior to the commencement of a tenancy. It is also highly advisable to take comprehensive photographs of each room of the property. If the Tenancy Deposit Scheme are asked to arbitrate on disagreements at the end of a tenancy, they will ask for photographs to back up the Landlord’s claim for damages to be deducted from the deposit held.
The Tenant should be given two copies of the Inventory and advised to check the contents carefully, noting any differences in the space provided on both copies. They should then sign and return the inventories to the Landlord within 7 days of the commencement of the tenancy. The Landlord should then sign both copies, retain one and return the second copy to the Tenant. If the Tenant fails to return a signed inventory within 7 days of the commencement of the tenancy, the inventory will be deemed to have been accepted by the Tenant in its original form.
The Tenancy Deposit Scheme came into force on the 6th April 2007. If you are not protecting a tenant’s deposit you will be ordered to repay three times the amount to the tenant so find out how you can protect deposits and resolve disputes.
Why protect deposits? – Deposits are protected to ensure tenants get all or part of their deposit back, when they are entitled to it and any disputes between tenants and landlords or agents will be easier to resolve.
Procedure – At the beginning of a new tenancy agreement, the tenant pays their deposit to their landlord or agent as usual. The landlord or agent must then ensure it is protected. Landlords and agents have a choice of three scheme providers, offering two types of scheme to protect the deposit.
Custodial Schemes – Money is held by the scheme until it is time for it to be repaid at the end of the tenancy. The custodial scheme is free to use. The landlord simply puts the deposit into the scheme at the beginning of the tenancy. There is one custodial scheme provider.
Insurance-based schemes – Under the insurance schemes the landlord keeps the deposit, and pays the insurance scheme to insure against the landlord failing to repay the tenant any money due to him. There is a choice of three insurance-based schemes.
Within 30 days of taking the deposit, you must provide your tenant with details and information of how the deposit is being protected including:
- the contact details of tenancy deposit scheme
- the contact details of the landlord
- 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
Moving out – At the end of a tenancy the condition and contents of the property should be checked against the Inventory and Schedule of Condition made at the start of the tenancy. The landlord or agent then agrees with the tenant how much of the deposit will be returned to them within 10 working days the agreed amount of the deposit will be returned to the tenant.
Resolving disputes – If no agreement can be reached about how much of the deposit should be returned, there will be a free service offered by the relevant tenancy deposit scheme to help resolve the dispute.
Non-Resident Landlord Income Tax
When Landlords are UK residents, it is the Landlord’s duty to declare rental income to the Inland Revenue and be taxed appropriately.
However, it is not so straightforward for Landlords who reside outside the UK. As from the introduction of legislation in April 1996, agents who manage or collect rent for non-resident Landlords are obliged to retain a proportion of all rent equivalent to the current rate of income tax. The agent is then obliged pay this tax provision to the Inland Revenue. Failure to retain and pay the appropriate tax could result in the agent being held responsible, should the Landlord fail to make payment.
Individual non-resident Landlords can complete a NRL1 form to apply to the Inland Revenue for an Exemption Certificate. If an Exemption Certificate is granted, the agent does not have to retain a tax provision as the Landlord will deal directly with the Inland Revenue. If this is the case, the agent should hold a copy of the Exemption Certificate.
Energy Performance Certificates
The Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 states that all properties must have a valid EPC prior to being offered for rent. An EPC is required before advertising a property for rent, not simply by the time a tenant takes up residence. This is a certificate detailing the energy performance of a property and is valid for 10 years. Properties that were let prior to the implementation of the law are not obliged to obtain an EPC until such time as the tenancy ends and the property is to be offered for rent to new tenants.
There are many companies offering to carry out EPC’s and it should be possible to obtain a certificate for as little as £35, though many companies will quote a higher figure. It is well worth shopping around to get the best quote.
Gas Safety Certificates
Under the Gas Safety (Installation and Use) Regulations 1998, Landlords of properties with a gas supply must obtain a Gas Safety Certificate prior to placing tenants in a property. The property must be inspected by a Gas Safe registered engineer to obtain a Gas Safety Certificate. The certificate is valid for 12 months and a new certificate must be obtained each year before or by the anniversary of the previous certificate.
A copy of the certificate must be given to each tenant at the commencement of the tenancy and within 28 days each time a new certificate is obtained. The landlord or agent must retain each certificate for a minimum of two years.
The tenant must allow access to the engineer to carry out the safety check and this should be stated in the terms of the Tenancy Agreement.
Again there are many companies offering this service and it is the responsibility of the landlord/agent to ensure they instruct a registered Gas Safe engineer. Prices vary considerably and it is again well worth shopping around to get the best quote.
It is our experience that all works orders should request the work to be carried out at least two weeks prior to the expiry date of the certificate. Inevitably, there will be occasions where the engineer fails to carry out the inspection in the time specified. Requesting two weeks early allows for urgent follow up action to be taken should it be necessary.
Although not currently legislation, it is highly recommended that all properties with a gas supply are fitted with an audible carbon monoxide alarm.
Electrical Safety Certificates
There is currently no legislation requiring an annual Electrical Safety Test. However, it is advisable to obtain a certificate and it is highly likely that legislation will be introduced in the future in line with the Gas Safety Regulations.
However, the Consumer Protection Act 1987 states that ‘anything supplied or hired to the consumer must be safe’. Therefore landlords who supply electrical goods may be well advised to have their appliances tested (PAT Test). This can normally be carried out at the same time as the Gas Safety inspection annually.
Landlords should also be aware of the Plugs and Sockets Regulations 1994 which state that plugs must be sleeved and sockets must comply.
The Building Regulations (Electrical Safety in Dwellings) require that works, repairs and maintenance on electrical installations in certain areas of a property be carried out by a competent person. Prior to arranging electrical works on their property, landlords should visit the regulations to ensure they understand and comply with the requirements of this legislation.
Legionella Risk Assessments
Landlords who provide residential accommodation, as the person in control of the premises or responsible for the water systems in their premises, have a legal duty to ensure that the risk of exposure of tenants to legionella is properly assessed and controlled. This duty extends to residents, guests, tenants and customers. The first step is a Risk Assessment.
Structural Work and Utilities
The Landlord and Tenants Act 1985 states that the Landlord is responsible for:-
- Any required structural repairs.
- Maintaining and keeping in good working order the supply of gas, water, electricity, sanitation and heating as appropriate to each property.
Landlords should bear in mind that if a property becomes deemed unfit to live in, ie. no water supply, no hot water supply, no heating in winter, etc. the landlord is obliged to place the tenants in alternative accommodation, at the landlord’s expense, until such time as the property is deemed suitable to live in. It is therefore important to deal with any structural repairs or maintenance of essential services as quickly and effectively as possible.
Furniture and Soft Furnishings
The legislation relating to furniture and furnishings is particularly relevant to landlords offering furnished property for rental.
The Furniture and Furnishings (Fire) (Safety) Regulations 1988 relates to upholstered furniture and the danger of toxic fumes and fire hazards. Any upholstered furniture manufactured after 1950 (or re-upholstered after 1950) must have a relevant safety label if it is to remain in a property when offered for rental. Carpets, curtains and bedding (other than mattresses and upholstered headboards) are not regulated.
Landlords letting furnished properties should carefully read the relevant regulations and check all upholstered furniture to ensure that it complies with those regulations.
Building Regulations state that all properties constructed after June 1992 must be fitted with a mains operated smoke detector on each floor of the building.
Properties built prior to 1992 are not currently required to have a mains smoke detector system fitted. However, it is a legal requirement that, as a minimum, battery operated smoke detectors are installed on each floor of the property. The Agreement would indicate that tenants will be responsible for testing and maintaining smoke detector during the term of the tenancy, replacing batteries as required.