INFORMATION FOR LANDLORDS

Transcription

1 INFORMATION FOR LANDLORDS CONTENTS 1. Consent To Let 2. Insurance 3. Energy Performance Certificate 4. HMRC Non-Resident Landlords (NRL) Scheme 5. Immigration Act Health & Safety a) Fire Risk Assessment Overview b) Furniture and Furnishings Regulations c) Electrical Safety Regulations d) Gas Safety Regulations e) Legionnaires Disease Legislation f) Smoke and Carbon Monoxide Alarms 7. Inventory, Check-In and Check-Out Reports 8. Property Repairs 9. Sources & Further References

2 1. CONSENT TO LET If you have a residential mortgage on your property, you must obtain consent from your mortgage lender before you can market your property for rental. Be aware that your lender may transfer your mortgage to a Buy-To-Let package or similar and arrangement fees, higher interest rates may then apply. It is also worth checking with your local authority as certain councils are beginning to introduce a registration scheme for residential landlords. Currently the Royal Borough of Kensington and Chelsea does not operate such as scheme. This may be subject to change. If your property is a House in Multiple Occupancy, a license is required from your local authority. If the property meets the criteria of a HMO, then a license MUST be obtained. The property must adhere to certain standards in order to operate as a licensed HMO. If your interest in the property is leasehold, your lease may also require you to obtain the consent of your landlord / freeholder prior to sub-letting. 2. INSURANCE As a landlord, you will need a particular type of insurance for properties you rent out to tenants. This cover usually includes the same type of protection as your usual house insurance, such as cover for buildings and contents in the event of a range of circumstances. However, you may decide you need certain extra cover as a landlord, including for: Non payment of rent Damage to your property (by the tenant) Loss of earnings/re-housing costs if the tenants have to move out (following an insured event) Liability for accidents in your property causing injury If you re the owner of a property that you want to rent out there s currently no legal requirement which states that you must have insurance. However, if you have a buy-to-let mortgage on your property, your lender may specify that you must have insurance in place. We recommend that you consider a policy which has been designed for landlords. A standard home buildings or contents policy won t consider the potential risks that landlords face, such as loss of rent and accommodation costs, should your tenants have to move out after an insured event, or cover for your liability as a landlord. Should you decide not to obtain specific landlord s insurance, your insurer should be informed that the property insured is being let. Failure to inform your insurer that you are letting a property could invalidate any subsequent claim. It is illegal for a letting agent or anyone else to advise on or sell insurance products unless they are authorised by the Financial Services Authority (FSA).

3 3. ENERGY PERFORMANCE CERTIFICATE Energy Performance Certificates (EPCs) are needed whenever a property is: built sold rented You must order an EPC for potential buyers and tenants before you market your property to sell or rent. An EPC contains: information about a property s energy use and typical energy costs recommendations about how to reduce energy use and save money An EPC gives a property an energy efficiency rating from A (most efficient) to G (least efficient) and is valid for 10 years. fiveseventen are able to arrange for an EPC to be produced, as required. A copy of the EPC is supplied with the property details at initial enquiry stage. We may then supply the tenants with an additional copy at a later stage. It is not currently necessary to display a copy of the EPC in properties in England. As a matter of good practice, we would recommend this is done however. 4. HMRC NON-RESIDENT LANDLORDS (NRL) SCHEME A non-resident landlord is essentially any person, company, trustee, joint owner or partner of a partnership who receives UK rental income and whose usual place of abode is outside the UK. If you are a non-resident landlord and you let your property through an agent, the agent must operate the NRL scheme and deduct basic rate tax (currently 20%) from your gross rental income. If there is no agent, the tenant will only have an obligation to deduct tax in the event that they make payments directly to the non-resident landlord, or to a non-uk letting agent, and their rent exceeds 100 a week. However, agents and obliged tenants are not required to deduct tax from the rental income of the non-resident landlord upon successful application to HMRC to receive their rental income gross with no tax deducted. To apply to receive your rental income with no tax deducted visit H M Revenue & Customs website and complete form NRL1i. HMRC will issue an exemption notice in the form of a letter directly to your agent. If you are unable to complete the online form or require further information contact HMRC Personal Tax International Operations on or or by post to: HMRC Personal Tax International Operations S0708, PO Box 203, Bootle L69 9AP, United Kingdom.

4 5. IMMIGRATION ACT The Government is making it harder for illegal immigrants to rent accommodation. The Immigration Act 2014 introduced a requirement for landlords of private rental accommodation to conduct checks to establish that new tenants have the right to rent in the UK. Landlords who rent to illegal migrants without conducting these checks will be liable for a civil penalty. fiveseventen carry out residency checks as part of the applicant checking process. 6. HEALTH & SAFETY a) Fire Risk Assessment Overview From 1st October 2006 The Regulatory Reform (Fire Safety) Order 2005 requires the Responsible Person (RP) of any non domestic premises to carry out a fire risk assessment, including measures to reduce or eliminate the risk of fire, and identify persons at risk. Domestic property is exempt from The Regulatory Reform (Fire Safety) Order 2005 and consequently existing housing is therefore not subject to this legislation. However a landlord may wish to rent their property as an HMO and consequently the premises needs a license which requires the premises to be safe in the event of a fire or they may wish to bring their property up to an acceptable fire safety standard. One could use Approved Document Part B Fire Safety but this could be too onerous but the Local Authorities Coordinators of Regulatory Services (LACoRS) with the Chartered Institute of Environmental Health, the Chief Fire Officers Association, the National HMO Network, the National Landlord Association, and Communities and Local Government has produced a guide Guidance on fire safety provisions for certain types of existing housing. The Building Regulations 1991 require that all properties built since 1992 must have mains operated and interlinked smoke alarms fitted on every floor, but it does not cover most tenanted properties. However, it is generally agreed the common law duty of care means that Landlords and their Agents could be liable should a fire cause injury or damage in a tenanted property that is not suitably fitted with smoke alarms. It is recommended that a smoke alarm be fitted to each floor (hallway and landing areas). fiveseventen recommend the fitting of smoke alarms and carbon monoxide detectors in every property and will instruct our contractors to do this in every rental property unless otherwise advised by the landlord. Smoke alarms and carbon monoxide detectors are tested at the start of every new tenancy and at six monthly inspections. Tenants are advised to test and maintain the alarms (change batteries as required) throughout the duration of their tenancy.

5 b) Furniture and Furnishings Regulations The Furniture and Furnishings (Fire Safety) Regulations 1988 (amended 1989, 1993 & 2010) are UK law and are designed to ensure that upholstery components and composites used for furniture supplied in the UK meet specified ignition resistance levels and are suitably labeled. There are six main elements contained within the Regulations: 1. Filling materials must meet specified ignition requirements 2. Upholstery composites must be cigarette resistant 3. Covers must be match resistant (with certain exceptions as outlined in Section 8.2 and Appendix A5) 4. A permanent label must be fitted to every item of new furniture (with the exception of mattresses and bedbases) 5. A display label must be fitted to every item of new furniture at the point of sale (with the exception of mattresses, bed-bases, pillows, scatter cushions, seat pads, loose covers sold separately from the furniture and stretch covers) 6. The first supplier of domestic upholstered furniture in the UK must maintain records for five years to prove compliance. The Regulations apply to persons who hire out furniture in the course of a business. This embraces furniture included in accommodation let in the course of business, such as holiday homes and residential furnished letting s (including houses, flats and bed-sits). As such, the Regulations apply to landlords, estate agents and letting agents who let such accommodation. The first supplier of domestic upholstered furniture in the UK is the person responsible for ensuring that the Regulations are met. In this context, the definition of the first supplier in the UK with respect to manufacturers, importers and retailers is important. c) Electrical Safety Regulations The Electrical Safety Council has recently published a Landlord s Guide to Electrical Safety. There is a distinction so far as electrical safety is concerned between the fixed installations (i.e. wiring circuits, switches, sockets, light fittings and circuit boards on the one hand and appliances which can be plugged in and which will often be portable (e.g. refrigerators, electric cookers, kettles, toasters etc on the other). With rented residential accommodation it is the Landlord s responsibility to ensure that the electrical installation and appliances provided by the landlord are safe when the tenancy begins and are in proper working order throughout the tenancy. At the start of the tenancy and throughout both must be free of risk of injury to tenants and residents. The local authority can take action to enforce electrical safety in residential accommodation under the Housing Health and Safety Rating System (HHSRS). There is no legislation in place at the present time to say that landlords should carry out electrical safety checks. It is advisable to have a check carried out by a NICEIC qualified electrician who is able to issue a report however as this can

6 then stay on file for reference purposes, in the event of an electrical fault or problem arising. It is recommended that an electrical safety report be carried out every 5 years. A Portable Appliance Test (PAT) is recommended to be carried out on every portable appliance i.e. kettle, toaster, coffee machine, heaters, vacuum cleaner, etc, on an annual basis or certainly at the start of each tenancy. d) Gas Safety Regulations The Gas Safety (Installation and Use) Regulations 1998 deal with landlords duties to make sure gas appliances, fittings and flues provided for tenants are safe. If you let a property equipped with gas appliances you have three main responsibilities: Maintenance: pipe work, appliances and flues must be maintained in a safe condition. Gas appliances should be serviced in accordance with the manufacturer s instructions. If these are not available it is recommended that they are serviced annually unless advised otherwise by a Gas Safe registered engineer. Gas safety checks: a 12 monthly gas safety check must be carried out on every gas appliance/flue. A gas safety check will make sure gas fittings and appliances are safe to use. Record: a record of the annual gas safety check must be provided to your tenant within 28 days of the check being completed or to new tenants before they move in. Landlords must keep copies of the gas safety record for two years. fiveseventen will routinely carry out gas safety checks and issue the gas safety record to tenants of all fully managed properties. Where we collect the rent only, and in some instances where we have sourced the tenant only, we will prompt the managing agent or landlord when the gas safety check is due. This is at our discretion however. It remains the landlords responsibility to ensure gas safety checks are carried out and records are kept and issued accordingly. e) Legionnaires Disease Legislation Letting agents and landlords are obliged by law to carry out risk assessments for legionnaire s disease, and if necessary, take action. The Health and Safety Executive have produced two guides following an Approved Code of Practice: 1 Legionnaires disease: a brief guide for duty holders 2 Legionnaires disease: The control of legionella bacteria in water systems. These documents spell out the legal requirements for landlords and managing agents to help them ensure that the tenant s risk from exposure to legionella from water systems in residential rental property is safely controlled. Who is responsible?

7 Where a property is under full management by a professional agent, then clearly the agent has responsibility for meeting these legal requirements. However, where the landlords is managing the property him or herself, then the landlords takes on that responsibility along with all the other legal requirements such as annual gas checks etc. Clearly, Houses in Multiple Occupation (HMOs) pose a greater risk here and the responsible person the person who has the duty to manage the property is obliged to carry out a risk assessment for this risk as well as for general and fire safety under The Management of Houses in Multiple Occupation (England) Regulations f) Smoke and Carbon Monoxide Alarms Letting agents and landlords are obliged by law to carry out risk assessments for legionnaire s disease, and if necessary, take action. The Health and Safety Executive have produced two guides following an Approved Code of Practice: 1 Legionnaires disease: a brief guide for duty holders 2 Legionnaires disease: The control of legionella bacteria in water systems. These documents spell out the legal requirements for landlords and managing agents to help them ensure that the tenant s risk from exposure to legionella from water systems in residential rental property is safely controlled. Who is responsible? Where a property is under full management by a professional agent, then clearly the agent has responsibility for meeting these legal requirements. However, where the landlords is managing the property him or herself, then the landlords takes on that responsibility along with all the other legal requirements such as annual gas checks etc. Clearly, Houses in Multiple Occupation (HMOs) pose a greater risk here and the responsible person the person who has the duty to manage the property is obliged to carry out a risk assessment for this risk as well as for general and fire safety under The Management of Houses in Multiple Occupation (England) Regulations INVENTORY, CHECK-IN AND CHECK-OUT REPORTS Tenancy deposit protection does not make inventories compulsory. However, in practice, they are essential... There have been a number of decisions by adjudicators under existing voluntary schemes which show that unless you follow (these) rules there is little or no chance of you recovering anything out of the deposit for damage. In any case, you must remember that a deposit will not cover fair wear and tear. It is common for a tenant to claim that the damage already existed when the tenancy started. Unless you have proof of the state of the furniture/property at the beginning in the form of a properly prepared and agreed inventory/condition schedule you are unlikely to succeed. If, following the end of the tenancy you have to make good any damage you will need to have proper receipts/estimates/invoices. You should obtain at least two estimates for the cost of making good the damage; otherwise the tenant can challenge the cost.

8 If you want to claim the cost of damage to an item of furniture, you should retain proof of purchase to show the cost at the time of purchase. You must make sure that you carefully preserve all of these records. The tip is to keep a proper tenancy file containing all of this information. Each scheme has different rules in relation to inventories......dispute arbitration will be evidence based, inventories and schedules of condition will play a far greater role at the end of tenancy period. It is strongly suggested that you introduce an inventory and get your tenant to agree it at the start of the tenancy period. fiveseventen use independent inventory clerks to produce inventories for the properties we manage. The DPS recommend landlords obtain an independent Inventory because one conducted by a landlord or agent would not be considered independent in the event of a dispute. We would recommend landlords have a complete inventory carried out at the start of each tenancy. However, this can prove costly. Where there is no damage or deterioration at the end of one tenancy, and no changes to content or condition have taken place between that and the next tenancy, it is possible to use the same inventory and carry out Check-Out/Check-In reports between tenancies. It is not advisable to use the same Inventory across a number of tenancies and long tenancies may also require an updated Inventory. Where changes take place during a tenancy i.e. redecoration, change of furnishings, making good following a leak or general maintenance issue, it is advisable to have the Inventory amended or reissued if the changes are extensive. 8. PROPERTY REPAIRS The House of Lords has recently approved an amendment to the Deregulation Bill that in broad terms, means that a landlord will not be able to validly serve a S(ection) 21 Notice to regain possession of their property if: their tenant has made a complaint about the condition of their property; and the landlord or their agent has not provided an adequate response within 14 days; and the local authority serves an improvement notice (Cat 1 or 2 Hazard) or an emergency remedial action notice. in order to benefit from protection from retaliatory eviction a tenant must submit their complaint about the condition of their property in writing unless they do not have their landlord s (or the landlord s appointed agent s) address or postal address. Having a complaint in writing is of benefit to both the tenant and whoever manages their property as it provides a clear record of the exact complaint and the trigger point for providing an adequate response. This means that it is in your interest your tenant knows how to contact you in writing.

9 From a business perspective it s worth noting that TPOS and ARLA both already consider that it is best practice to have written communications with tenants. 9. SOURCES, FURTHER READING & REFERENCES H M Revenue & Customs Government Services & Information see especially Housing and local services and Money and tax. This website also provides information on benefits and immigration. Health & Safety Executive National Landlords Association Residential Landlords Association LandlordZone Association of Residential Letting Agencies The Deposit Protection Service (DPS) GasSafe - NICEIC House in Multiple Occupation (HMO) The Telegraph article - Lenders crack down on 'accidental' landlords Money Saving Forum - Discussion on consent from lender to rent property Energy Performance Certicate Guidelines Non-Resident Landlords (NRL) scheme Tax on your UK income if you live abroad Tackling illegal immigration in privately rented accommodation (Government Factsheet) Non-resident landlord (Information) Health and Safety Executive - Assessing Legionnaires Disease Risk Landlord Zone - Landlord Checks for Legionella Disclaimer Where possible, fiveseventen have copied information from the websites listed and cannot accept responsibility for the content contained within this document. Other sources of information are available and we recommend you make your own enquiries via a reputable organisation should you be unsure of any information contained within this document. This information is designed as a guide. Please check the source websites for up-to-date information.