Residential Lettings & Management A Landlord s Guide

Transcription

1 Residential Lettings & Management A Landlord s Guide Letting Agents, Estate Agents & Chartered Surveyors

2 A Landlord s Guide If you are considering renting your property we recommend that you take professional advice. A letting expert will be able to provide you with: - 1. A thorough review of the market and how your property matches up to the competition. This will help you price the property appropriately to maximize its letting prospects. 2. Advice on any improvements necessary. 3. An overview of the statutory regulations landlords need to adhere to when letting out their property. It is important you understand what these are as there can be serious penalties if you get it wrong. It is well worth taking advice at the outset to ensure you present the property in the best light and do not waste time and money with unrealistic aspirations. Why Peter Clarke & Co? We understand the letting market and can guide you through the process. We can promote your property effectively to a wide audience and will negotiate the best terms possible. We screen prospective tenants carefully to reduce the risk of any issues arising during the tenancy. If you instruct us to fully manage the property we can help take the stress out of dealing with the day to day management of this yourself and help you realize the property s full potential. We are Letting Agents, Estate Agents, & Chartered Surveyors offering a wide range of Residential and Commercial Property Services. Our key attributes are: - We have been established for over 20 years and already successfully manage a sizeable portfolio of rental properties throughout South Warwickshire, the Cotswolds and beyond for private landlords, trusts, pension fund clients and corporate bodies. We are market leaders with dedicated well trained knowledgeable staff who are committed to serving your interests to best advantage. We operate from prominently located offices at Stratford upon Avon, Leamington Spa, Wellesbourne, Shipston on Stour, and Chipping Campden as well as having a commercial office in Birmingham. Being Chartered Surveyors we are regulated by the RICS (The Royal Institution of Chartered Surveyors). Consequently we abide by high standards of professionalism and integrity both in the way we conduct ourselves and deal with our clients and their money. We offer realistic & practical advice on letting your property with proactive marketing and subsequent management of properties if required. We have a steady stream of properties on the market at any one time for new Landlords or where properties are between tenancies. Consequently we receive regular enquiries from prospective tenants and have good contacts with key local employers and relocation agents. We are members of the Relocation Agent Network a group which brings together the best independent estate agents from across Great Britain to provide advice on relocating to new areas. It includes membership to Cartus the premier provider of global relocation. Applicants are logged on a computerised database and monitored and matched to properties that our Landlords have available to let. We advertise regularly in the local press and via the Internet on our website and various property portals including & Letting boards are used wherever possible and property particulars with good photography and salient information displayed at our offices. We have invested in modern computer software packages to ensure we have information on all our available or forthcoming stock at our finger tips to maximise letting prospects. Clients are kept updated with regular marketing reviews. Prospective Tenants are carefully screened before tenancies are entered into. We have robust yet practicable letting agreements. Comprehensive inventories of fixtures and fittings are taken including a photographic record / schedule of condition to give a clear indication of the state of the property and it s contents at the outset of any new tenancy. This helps avoid disputes during and at the end of the tenancy. Regular and thorough inspections are made during the tenancy on all fully managed properties to ensure tenants are adhering to the terms of the tenancy agreement and to highlight any areas of concern or Landlord repairs that may be necessary. We have an approved list of contractors who we regularly vet for quality, speed of service and value for money. We understand the everyday practical and legal matters involved in letting and managing rental properties and know how to promptly deal and pre-empt issues before they get out of control. We can prepare and serve S21 notices to regain possession of your property on the tenant and deal with extensions and renewals. We can deal with check out inspections and the negotiation of any deposit deductions at the end of tenancies. The support of stringent accountancy practices with RICS audits ensures client s interests are best served. Being multi-disciplined surveyors we offer a complete range of Residential & Commercial Property Services encompassing Sales and Acquisitions, Surveys and Valuations, Auctions, Development advice, as well as advice on Local Authority Rates and on other property related matters. 2

3 Comprehensive Lettings & Management Service We offer three distinct service levels to cater for varying Landlords requirements: - Full Management Service Rent Collection Service Introductory Service Generally we recommend our Full Management Service to most of our Landlords so that we can help them manage their property to best advantage. A summary table showing the extent of the service we provide in each instance is set out below: Summary of Services Market appraisal and advice Full Management Rent Collection Introductory Marketing the property to include a To Let board, selected web advertising and adverts in local papers as deemed appropriate by us. Promotion by our relevant office/s Arrange for Gas, Electrical Safety Tests, Legionella Risk Assessment and Energy Performance Certificates at your cost if required Accompanied viewings to source a good quality tenant Negotiating letting terms Processing the tenant application including taking up references Preparing tenancy agreements and arranging for these to be signed Collecting the 1st month s rent and the initial deposit Arranging for an inventory of the fixtures and fittings and a photographic record / schedule of condition of the property to be prepared Accounting to you with a statement of monies received and any legitimate deductions made Collect subsequent monthly rent payments Notifying the Local Authority of a change of occupier for Council Tax Notify utility companies of a change of occupier and meter reads provided we have been given details of the current service suppliers Paying from rent received specific outgoings agreed such as ground rent, service charges, or authorized repairs Carry out routine inspections to advise on any breaches of tenant obligations and the general condition of the property Arrange for minor repairs and provide Landlords with access to our approved contractors Negotiate and agree tenancy extensions, rent reviews and tenancy renewals Prepare and serve S21 notices to regain possession of the property on the tenant Dealing with tenancy check out inspections and advising and negotiating deposit deductions at the end of tenancies Our Terms of Business provide full details of our services and fees. 3

4 Preparing your Property for Letting We offer free informal advice to all new landlords considering letting out their property. Our free lettings / management review will provide an opportunity to consider: - How to present the property in the best light What items of furniture and appliances to provide or take out Pricing strategy Specific marketing approach Your requirements / aspirations The letting process and the responsibilities of Landlords and Tenants depending on the letting route / service adopted The pitfalls of being a Landlord and how you can minimize these Advice on Buy to Let If you are thinking of buying a property to let we will be happy to advise you about its suitability. Energy Performance Certificate All properties available To Let must have an Energy Performance Certificate available for prospective tenants to review prior to marketing. The EPC is valid for a period of 10 years (unless there are material changes to the property). There are substantial penalties for non-compliance. We can arrange for one to be commissioned if required. Landlord Health & Safety Obligations It is essential that any property which is let complies with health and safety regulations. We can guide you through these to ensure you meet the necessary requirements. For instance: - Furniture & Furnishings Fire Safety Regulations 1988 (as amended) All furniture and furnishings supplied in let accommodation must comply with these regulations. In essence they sought to phase out materials used to fill or cover furniture that may be a fire risk, and might produce poisonous gases. All furnishings such as beds, head boards, mattresses, sofas, chairs, loose stretch covers, scatter cushions, pillows etc (but it does not comply to curtains, carpets and bed clothes including duvets and mattress covers) must comply with the regulations. Generally domestic furniture manufactured after March 1990 should comply. Normally any unlabeled furniture is deemed non-compliant. The regulations make it clear there should be no non-compliant furniture on any part of the property including the garage and attic. Gas Safety (Installation and Use) Regulations 1998 These regulations place a legal duty on all domestic Landlords to make sure gas appliances, fittings and flues provided for tenants are safe. The Landlords duty involves: - Maintaining and repairing appliances, flues and pipework. Any works must be undertaken by a Gas Safe registered engineer. Ensuring a Gas Safe Check is carried out at least every 12 months on all new gas appliances or flues and annually thereafter. Making sure that a record of the safety check is kept for 2 years and a copy of the safety check provided to each existing tenant within 28 days of the check being completed. A copy must also be issued to any new tenants before they move in. Electrical Safety a) The Electrical Equipment (Safety) Regulations 1994 If a landlord provides any electrical appliances as part of a tenancy, the Electrical Equipment (Safety) Regulations require them to ensure that the appliances are safe when first supplied. There is no specific requirement for portable appliance testing to be carried out although the Landlord is required to take reasonable steps to ensure that appliances such as kettles, fridges and washing machines provided as part of the tenancy are safe. Where electrical appliances are included you are obliged to supply safety instructions. b) The Landlord & Tenant Act 1985 This requires that electrical installations in rented property are safe when the tenancy begins and are maintained in safe condition throughout the tenancy. We advise fixed wiring tests are carried out every 5 years by a qualified electrician. Smoke & Carbon Monoxide Alarms Landlords of private rented accommodation have to adhere to new regulations following the introduction of The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 which came into effect on 1st October A smoke alarm must be fitted on each storey of the premises on which there is a room used wholly or partly as living accommodation. A bathroom or lavatory is treated as a room used as living accommodation. A carbon monoxide alarm is required in any room of the premises which is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance (i.e. log burners and open fires. Not where Gas boilers are fitted although we recommend they are. There may also be instances where a Gas Safe Engineer specifically recommends that one is fitted). A room includes a hall or landing. Alarms can be battery operated they do not have to be mains wired. In respect of individual flats located on one floor it is understood that there will need to be at least one smoke alarm within the flat itself or alternatively outside the flat on the same floor. Checks must be made by or on behalf of the Landlord to ensure that each prescribed alarm is in proper working order on the day the tenancy begins if it is a new tenancy. Legionella Risk Assessment Following amendments to the Control of Substances Hazardous to Health Regulations 2002 (COSHH) it is now a legal requirement for Landlords providing residential accommodation to let to carry out a risk assessment to identify and assess potential sources of exposure to Legionella. Where a risk is 4

5 identified they must take steps to remove or minimise the risk. The risk assessment can be carried out by a third party but the ultimate responsibility is the Landlords. The Health & Safety Executive (HSE) can prosecute you if you do not comply with the requirements. Depending on the results of the assessment it may then be necessary to introduce a course of action to prevent or control risks identified. The Legionella Risk Assessment should be reviewed at regular intervals. Statutory Consents & Houses in Multiple Occupation (HMO s) There are numerous statutory requirements which Landlords need to adhere to such as Planning Acts, Buildings Regulations, Housing Acts, rules governing holding tenancy deposits. We can help offer guidance on these. There are specific rules governing letting Houses in Multiple Occupation. These rules can be applicable where a property is let to separate households who are not related and share facilities. Council Authorities can have different rules and regulations concerning how they deal with HMO s so it is important you check and understand what they are. This can include requiring Planning Consent to be secured even if an HMO Licence is not required. Restrictions Affecting Your Property Whether your property is freehold or leasehold there may be special rights or restrictions affecting it (for example, a prohibition on more than one family or the parking of a caravan on the drive). We will need to have details of these to include in the Tenancy Agreement. Leasehold Flat and Other Property If your property is leasehold, you may require the consent of the freeholder for your proposed letting. Mortgaged Property It may be that your property is mortgaged to a building society, bank or other lender. If so, the mortgage deed will almost certainly require the written consent of the lender to be obtained before you let the property. If your property is mortgaged you should apply for consent. Occasionally it will be a condition of consent to the proposed letting that your mortgage interest rate is increased and it is therefore advisable for you to approach your mortgagee at an early stage to see what the financial consequences are likely to be. Insurance Landlords are responsible for insuring their property and any of their contents. We advise that you obtain detailed advice from your insurer as to the nature and extent of insurance coverage required. It is extremely important that you advise your insurance company that you are proposing to let your property and that you confirm this to them once this has been done. Failure to do so could result in you losing insurance cover. Some insurers impose letting conditions and we would require details as this may affect the choice of tenant. Tenants are responsible for insuring their own possessions. Attic, Cellar and Excluded Areas We do not inspect the above areas but we may ask you to confirm the contents of these areas (if any) as this may affect safety issues. During our routine visits to managed properties we will not visit these areas unless requested to do so. It is strongly recommended that you do not store items on the property once let. The Tenancy Agreement We will discuss with you the best terms and conditions and then prepare the appropriate legal agreement. In most cases we recommend an Assured Shorthold Tenancy Agreement, usually for a minimum term of six months. If you require the property back at the end of this period, notice must be served two months before the expiry date. On request, we will deal with this and also the necessary procedures should you decide with the tenant that the term might be extended. Tenant s Deposits & Inventories Under the Housing Act 2004, Tenants Deposits for Assured Shorthold Tenancies need to be registered with an approved scheme. There are strict timetables and procedures as to how this must be done with severe penalties if it is not dealt with correctly. We understand the necessary requirements that have to be adhered to and under our Full Management Service will hold the deposit for Landlords in accordance with the terms of the relevant Deposit Protection Scheme. The preparation of a comprehensive inventory of Landlords fixtures and fittings including a photographic record / schedule of condition of the property is essential to adequately document the extent and condition of the property at the commencement of the tenancy. This needs to be agreed with the tenant and a thorough check out report completed at the end of the tenancy. This will ensure you have a full record of how the property was let at the outset and any changes at the end of the tenancy to help with the negotiation and agreement of any claim against the tenant. If you do not have a good before and after record of the condition of the property it will severely limit your ability to make a successful claim against the tenant if the matter has to be referred to dispute resolution. Income Tax Income received from letting your property will be subject to UK income tax and you will need to include details of the income and allowable expenses when completing your income tax return. The Inland Revenue may ask us directly for details of any income we pay you and we are obliged to supply these details. If you live abroad we, as your agents, will be required by the Inland Revenue to pay any tax liability that arises on rents collected by us on your behalf unless we receive a notice from the Inland Revenue. We will therefore deduct income tax at the basic rate from rent payments received and these monies will be held to your credit and are paid across to the Inland Revenue on a quarterly basis. You may be entitled to receive rent without deductions of tax and we strongly recommend you consider this. If you live abroad we will be happy to advise you about this and supply the necessary application form. Landlord s Protection Insurance & Rent Guarantee No matter how well prospective tenants are vetted, there is always the risk that a tenant will prove to be unsatisfactory, sometimes due to unforeseen changes in their own circumstances. Whilst court proceedings can be taken to enforce the terms of the tenancy agreement this is often expensive and it is unlikely that you will be able to recover the full costs involved from the tenant. Depending on your circumstances you might wish to consider taking out legal protection insurance to guard against the risks involved. Similarly insurance is available so that your income from rent is not lost in the event the tenant stops paying. 5

6 Landlords Check List Tick (when done) As an aide memoire we have produced this simple check list to identify some of the main issues Landlords will need to address Get Advice Arrange for Peter Clarke to visit your property to provide you with an initial free advice session. Check on any requirements which your Mortgage Company or Long leaseholder will impose if applicable Will they allow you to let, if so on what basis. Get consents before letting From your mortgage lender, superior Landlord or freeholder. Contact your Insurer for details of their requirements Make sure this covers insurance for both Buildings & Contents. Ensure that your property and it s contents are adequately insured Be clear on exactly what you are going to let out Provide your agent with full details of the extent of the property to be let. For instance are there any shared facilities, is there a garage, what are the access arrangements. Are there any restrictions affecting the use of the property? Is it to be let furnished or unfurnished? Be clear on what items (if any) are to be left at the property. Generally it is recommended that you leave key items only and they are in a good state of repair. Our experience has shown that most tenants will use their own crockery and bedding. If the property is furnished ensure the furnishings comply with fire regulations Make sure you remove all valuables and antiques Make sure the Property is in good condition inside and out including any fixtures and fittings Amongst other things Landlords are responsible for maintaining electrical, gas, plumbing, water, central heating and hot water systems during the tenancy. Where appliances are left ensure that they are all in good working order and instruction manuals are provided This should include providing details on any alarm systems. Where burglar alarm systems are present if they are not in use make sure they are fully decommissioned. Health & Safety Arrange for Gas, Electrical Safety Checks, Legionella Risk Assessments or ask us to arrange them on your behalf. Statutory Consents & Houses in Multiple Occupation Does the property have appropriate planning & building regulations approval and meet relevant health and safety / fire regulations? Have you considered if an HMO licence or planning consent is necessary where it is proposed to let to separate households who share facilities? Order an Energy Performance Certificate if you do not have an up to date one Are there enough smoke alarms and or carbon monoxide alarms? There are now strict regulations requiring Landlords to supply a minimum number of these at the outset of any new tenancy which must be in working order on the day the tenancy starts. Is the Property clean? Arrange for the property to be thoroughly cleaned and presented for letting. This should include ovens, kitchen worktops, cupboards, wardrobes, carpet cleaning etc. Is the garden in good condition? Gardens should be left neat and tidy and free from rubbish with lawns cut, edges trimmed and trees / hedges pruned. Do you have adequate keys and remote controls? Adequate keys will need to be provided including any remote controls for car parks or alarms. Normally you need to supply one set for each tenant and then a set for your managing agents. Provide the tenant / managing agent with details of all your current utility suppliers Be clear on any Tax issues particularly if you live abroad 6

7 When do you anticipate the property will realistically be available for letting? Be clear on when you will have the property available for letting and for how long you want to let it for. Will you consider sharers, tenants who have pets or smokers? Inventory / Schedule of condition Make sure that prior to letting a comprehensive inventory of the fixtures and fittings and photographic record / schedule of condition has been prepared and is subsequently agreed with the tenant. We can arrange for one to be prepared on your behalf. Tenant Referencing Discuss with your agent how they screen / reference potential tenants as part of the letting process. When prospective tenants are identified ensure that you are fully briefed on who they are and what the prospective tenant s reasons are for renting? How well does your property potentially suit their needs? It is important you understand your tenant s employment history, income, credit status and if they can provide an adequate previous Landlords reference. Tenant/s Deposit Agree the extent of deposit required at the start of the tenancy. Any tenants deposits must be registered with an approved government scheme and the relevant processes and procedures adopted. Are you happy with the Tenancy Agreement that is going to be used? Make sure the tenancy agreement proposed is suitably robust to cover a wide range of eventualities. Ask to see what your agent is proposing. If you do propose to use an Agent do you fully understand what they charge and the extent of their service? Read their Terms of Business and be clear on their charges. Look closely at the small print so you understand what additional charges they raise and also on charges raised on your tenants. High charges to tenants at the outset or at renewal could be off putting to tenants reducing market appeal and the rent achievable. What do you know about the Agent you are considering appointing? What are their credentials and track record? Are they a member of a professional body? If so they will have to abide by set rules and regulations. How do they operate day to day? Will you receive prompt service from experienced knowledgeable local staff, with a dedicated property management department, that know your property and the market? Or will your property be managed by a distant management centre whose staff are unfamiliar with your property and not able to offer the personal and professional attention you require? How do they look after their client s money? Are they members of the Royal Institute of Chartered Surveyors (RICS) whose members are regularly audited and offer additional protection to client s funds under the Client Money Protection Scheme? Do they have a rounded business with additional services which will give them a wider insight into the market and thus are better able to serve your needs? Are they interested in building a long term relationship with you on a fair and realistic basis? Consider whether you require the property Fully Managed or if you are prepared to deal with the tenant directly during the tenancy yourself on any matters that may arise Which service best suits your needs Full Management, Rent Collection or Introductory Service? Generally we recommend Full Management Service to most of our Landlords so that we can help them manage their property effectively. Landlords who choose to manage their property/s themselves will amongst other things have to organise and co -ordinate minor repairs, oversee rent payments, (unless they use our rent collection service), deal with deposit disputes, and have a full understanding of the regulations applicable to rental properties. They will need to constantly ensure they are up to speed with changes in legislation. There is a lot to contend with when fully considered and thus the support of a good Managing Agent can help make the role of being a Landlord less stressful and more rewarding. Let Peter Clarke help you with the day to day management of your property/s by using our Full Management Service. Put us to the test and reap the benefits of the full extent of our service and expertise. Redirect your Mail Make sure you arrange for any mail to be redirected. For further information and advice please contact one of our offices. 7

8 Peter Clarke & Co LLP Offices at: Stratford upon Avon Leamington Spa Wellesbourne Shipston on Stour Chipping Campden Birmingham Services: Residential Land & New Homes Commercial Lettings Management Auction Survey & Professional