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Agreements
It is advisable to always have a Tenancy arranged on the basis of an Assured Shorthold Tenancy.
Since the 1st of March 1997 agreements can be entered into for short periods but it is our recommendation to always have a fixed initial period of six months, in every case.
After this time, the timing can be established on a month to month basis if this suits both the Landlord and the Tenant. This is then called a Statutory Periodic Assured Shorthold tenancy. This ensures the Landlord can give two months notice to quit and at the same time the Tenant can give only one month’s notice.
In the latter case where the agreement is for six months and the Landlord wishes to take possession at the end of this period, he/she must give the Tenant two complete months’ notice, taken from the start date of the initial six month fixed term.
Property preparation
Always prepare a property to the standard at which you would live in yourself.
It really is that simple.
Always bear in mind that potential tenants will view a number of properties before selecting, and yours has to look better, feel better, and at the same time, be less expensive. However there are tenants who are prepared to pay a bit more for the better home, location, accessibility etc.
At the start
When letting a property for the first time it goes without saying that you will prepare it to a standard you would be happy to move into yourself. This applies at the end of a tenancy as well. After the previous Tenant has moved on, regardless of how it has been left, you need to ensure it is back to the standard it was when the previous tenancy began. Bear in mind that any irregularities should be paid for from the Bond paid by the tenant at the start of the term.
Remember, first impressions are always lasting.
Keep the property maintained, inside and outside
Furnished or unfurnished, some points need to be addressed both inside and outside the home.
The greatest priority is on safety in the home and this applies to all electrical and gas appliances. Wherever fitted they must be tested by an authorised and certified tradesman possessing the necessary certificates of competence, and gas appliances in particular must be tested annually, and a certificate to this effect held by the landlord/agent with a copy placed in the property for the tenant.
Inside
- Overall general decoration must be clean, attractive, and calm, with natural soft colouring.
- Switch on central heating on any viewings, it makes the property inviting and proves it works.
- Make sure the windows are clean, inside and out.
- Make sure curtains are hanging properly.
- Make sure all the locks work and doors do not stick or jam.
- Make sure all lights work and there are bulbs in sockets where necessary.
- Make sure all the kitchen work surfaces, cupboards and floors are clean and that all appliances are in working order (with safety certificates where necessary).
- Make sure the toilet is working, the bathroom is scented and there is a toilet roll available.
Outside
The overall picture as you approach the property has to be inviting and if the garden is unkempt with discarded items of furniture or toys spread around it you can be sure your prospective tenant will walk away.
- If there is a lawn, make sure it is recently mowed and trimmed at the edges.
- Make sure window frames are clean, neatly painted and free from rot.
- Make sure any outside lights are in working order.
- Make sure the rear garden area is tidy, readily cultivatable and there are no broken fences or garden implements lying around.
- Make sure the driveway is clear of weeds, the garage door operates and the inside is neat and tidy, clear of oil patches or loose tools.
- If there is a shed make sure it can be locked and is clear of any rubbish, particularly if any items could be dangerous to children.
- Finally make sure all gutters are clear and all drains are free of leaves etc.
Furnished/unfurnished
You need to make a decision and stick to it. Although there is a market for both furnished and unfurnished, you need to decide which way you prefer, and there are some good points and bad points on both counts.
Furnished
Letting a property furnished means you need to replace items on a regular basis and also keep them up to standard throughout the term of the Tenancy. It also means deeper inspections and more supervision needed to make sure any items damaged by Tenants are noted and responsibility placed firmly in the right direction.
On the plus side, furnished lets attract a more nomadic and short term tenant who can be moved on quickly if or when the need arises.
Some Tenants will have a few furnishings of their own and ask that you remove part of your inventory to make way for theirs. This of course means you need to have some form of storage facility available. In addition there is always the possibility of small items being removed in error at the end of a Tenancy and all the hassle such an event can cause.
Unfurnished
Letting a property unfurnished attracts the longer term tenant who wants to settle in one area for a longer period of time, hence they want their own possessions and furnishings in place from the outset. However, in the event of you requiring possession of the property it is always more difficult to move them on regardless of the terms of the tenancy agreement. There is a need to be more humane in such situations and remember the tenant’s conduct throughout the tenancy term.
This will obviously influence the manner in which the home reverts to you.
What does furnished or unfurnished mean or entail?
Furnished means:
Carpets, curtains/blinds in all rooms, light fittings with bulbs (preferably long lasting), double bed in double room and single beds in single rooms, wardrobes, dining table and at least four chairs in dining area or kitchen, settee and at least one easy chair in the lounge, occasional table,
Gas or electric cooker as necessary, fridge, (fridge freezer and washing machine are optional)
dustbin, garden tools as required (lawn mower if there is a lawn).
Unfurnished means:
Carpets, curtains/blinds, light fittings with bulbs, gas or electric cooker as required, (fridge/ freezer and washing machine optional and not recommended.)
In both instances it is recommended to fit a shower over a bath if no shower cubicle is fitted, however a bath is not necessary where only a shower cubicle exists.
Whichever you choose always remember that the market is wide and varied. There are professional people from the corporate market on short term contracts looking for fully furnished, no hassle, ready-to-move-into properties, students looking for basic furnishings and low rents, and families looking for unfurnished homes.
The Big Issues - The administration of a rental property involves more than finding a suitable tenant and collecting the rent.
Mortgage
If you have a normal residency mortgage and you wish to rent out what is your main home, you must obtain permission from the lender to do so. In most cases there will be some conditions attached and you may even have to pay a small fee. Most lenders ask to see the Tenancy agreement and insist on a Mortgage clause being included which effectively gives them overriding rights to repossess the property and evict the tenant if you default on payments. This is only when the defaults reach the stage whereby you personally would be given a repossession notice.
Leasehold Properties
In this case permission must be obtained from the head lessee and Tenants need to be made aware of any conditions which may affect their tenancy.
Insurance
Insuring the building remains the responsibility of the Landlord and can cover contents as well, how ever it is still the Tenant’s own responsibility to insure their own personal effects.
Rent guarantee insurance
Guaranteeing the rental payments is possible with a rent guarantee insurance policy, and in addition the Legal Indemnity insurance included covers the cost of legal expenses when it becomes necessary to take such legal action in proceedings against a tenant to recover the rent.
Overseas Landlords
Special tax rules apply to owners living abroad who are given the title of “Non Resident Landlords”.
If it is possible you may live abroad please ask for details.
It is required by law for agents to deduct the required amount of tax from the rental income which is usually 22% but this can be avoided if you are registered with the Inland Revenue Financial Services Intermediaries & Claims Office and you have completed and submitted an NRLI form.
Your agent can help you with this.
Matters of safety
Gas safety(Installation and use) Regulations 1994, and amendment 1996 states - all gas appliances, associated pipe work and flues must be maintained in a safe condition and checked for safety at least every twelve months by a qualified gas CORGI engineer.
Low voltage Electrical equipment Regs 1989 states - all supplied equipment must be safe.
Furniture & fittings (fire safety) Regs 1988 states - soft furnishings must comply with the match test and cigarette test. Soft furniture manufactured before 1st March 1989 is unlikely to comply.
Smoke alarms
All buildings erected after 1992 should have hard wired smoke alarms fitted as standard.
It is recommended that all others be fitted in a similar way.
Useful information
The Tax man cometh
Rent income is treated as unearned by the Inland Revenue and is liable to standard rates of tax.
Bearing in mind normal allowances, expenses for repairs etc, Landlords are asked to be aware of the self assessment rules which came into effect on 6th April 1996 which requires all landlords to retain all records regarding income and expenses on all rented properties.
Energy Performance Certificates (EPCs)
As of the 1st October 2008, it is a requirement by law that all rented properties provide an Energy Performance Certificate (EPCs) to be available on letting. The purpose of the EPC is to show prospective tenants the energy performance of the building they are planning to occupy. The EPC shows the energy efficiency rating (relating to running costs) and the Environmental Impact rating (relating to C02 emissions) of the property. They are shown on an A – G rating scale similar to those used for fridges and other electrical appliances.
The certificate will be accompanied by a recommendation report that contains suggestions on how to improve the building’s energy efficiency. However, there is no statutory requirement to carry out any of these measures.
Bonds (Deposit Protection Scheme)
With effect from 6th April 2007 all bonds taken from tenants must be deposited in a government authorised tenancy deposit scheme.
The requirements are as follows:
- The Tenancy is an Assured Shorthold tenancy
- Monies must be deposited within 14 days of receipt
- Tenant must be given details of the Deposit scheme being used
- Tenant must be given contact details of the landlord
- Tenant must be told how to apply for release of the deposit
- Tenant must be given information explaining the purpose of the deposit
- Tenant must be told what to do if there is a dispute about the deposit
There are three deposit schemes as follows;
Deposit Protection Service - www.depositprotection.com (0870 707 1 707)
The Dispute Service Ltd - www.thedisputeservice.co.uk (0845 226 7837)
Tenancy deposit solutions Ltd - www.mydeposits.co.uk (0871 703 0552) |
