Guidance Notes for Letting a Residential Property
Stones can help with all the legal aspects of letting a property, including the eviction of tenants and the recovery of rent arrears where necessary.
To maximise the chances of trouble free letting it is important to have a properly drafted and completed Tenancy Agreement and for other matters to be carefully considered.
We hope these guidance notes will help.
There are some specific matters that you should consider when letting a property:-
Landlord(s)
If the property is owned by more than one person (e.g. a husband and wife) it is important that all joint owners are named as the landlord.
Tenant(s)
The full names and current addresses of the tenant(s) should be provided. You should satisfy yourself as to the suitability of your proposed tenant by carrying out credit checks and taking up references. There are a number of tenant referencing websites which you may find useful including www.rentchecks.com;
www.tenant reference.co.uk and www.letsure.co.uk.
Contents
Even if the property is nominally let unfurnished it is still vital that you have an inventory of the contents, and a Schedule of Condition. It is unlikely that your property will have no contents at all because at the very least it is likely to have carpets, curtains, a central heating boiler, radiators etc, and all these should be comprehensively listed.
Obviously if the property is let fully furnished then the Inventory will have to include each and every item that is let with the property.
A Schedule of Condition is important indicating, e.g. that a room has been freshly painted or that the carpet or cooker etc is new, and identifying any existing defects such as stained carpets etc. It makes sense for you to have photographs of each room prior to the letting of the property, and in relation to the condition of the garden, if any.
If there is a dispute at the end of the Tenancy concerning damage and you are unable to establish with a high degree of certainty the condition of the property and its contents at the commencement of the letting it is likely that you will lose the dispute with the tenant, and will be unable to retain the deposit.
We recommend that the Inventory and Schedule of Condition is signed and dated by the tenants.
Utilities
Unless the rent is all inclusive, utility accounts, including things like broadband, should be transferred into the names of the tenants. You should take meter readings at the beginning and the end of the letting.
The Deposit
It is a legal requirement that any deposit is, within 14 days of receipt by you, protected under one of the three Government approved schemes. Once protected you have to provide statutory information to the tenant regarding its protection.
The rules of the three deposit schemes differ, and you must choose which deposit scheme you are going to use and follow the rules of the scheme carefully.
In broad terms there are two types of scheme. The custodial type is where you pay the amount of the deposit over to an organisation which holds onto it. The second type is an insurance backed system where you retain the deposit but pay an insurance premium to guard against you defaulting on your obligation to the return the deposit. Both types of scheme have procedures for resolving disputes concerning deposits.
You may find the Government website www.direct.gov.uk/en/tenancydeposit useful for providing information on the various schemes.
IMPORTANT NOTE
Failure to comply with the legislation on registering the deposit has two main consequences:-
1. Until such time as the deposit has been properly protected it is not possible to recover possession of the property on the basis of arrears of rent.
2. The tenant can sue the landlord for failure to register the deposit and obtain, as damages, a sum equal to 3 times the amount of deposit.
It is therefore vital that you register the deposit and provide details of the registration to the tenant in accordance with the rules of the scheme you have chosen.
We recommend that you hold a deposit at least equal to one month’s rent, and possibly more if you allow the tenants to have pets.
Insurance
It is very important that as a landlord you insure against certain perils.
You should ensure that the structure of the property is fully insured against the costs of rebuilding etc, and you should also ensure that your contents are adequately insured. You will need to disclose to the insurance company the fact that the property is let.
You may wish to insure against loss of rent.
You should also make it clear to the tenant that it is the tenant’s responsibility to insure their own belongings.
Consult your insurance company or broker if you are in any doubt about the insurance arrangements.
Mortgage
If you have a mortgage on the property it is likely that you will need to obtain the consent of the Bank or Building Society to let the property.
Houses in multiple occupation (HMOs)
The precise distinction between what is and what is not an HMO can be complicated, but an HMO is broadly defined as a building or part of a building which is occupied by more than one household and in which more than one household shares an amenity. It seems generally accepted (certainly in Exeter) that a group of students sharing does create an HMO.
If your property is an HMO then it needs to be registered, and if it falls within certain other criteria it needs to be licensed. Details of the licensing requirements vary from Council to Council but for the Exeter area details can be found at www.exeter.gov.uk.
If your property is not situated in the Exeter area then you should make enquiries of the relevant Council.
Authorised occupiers
In normal circumstances any adults who are to occupy the property who are aged over 18 should be named as tenants. You may however be prepared to allow the property to be shared by others e.g. the tenant’s children. To avoid future misunderstandings any authorised occupiers should be specifically named as ‘authorised occupiers’ in the tenancy agreement.
Pets
It is usual for the Tenancy Agreement not to permit the tenant to have pets at the property. You can waive this requirement by way of a side letter but if you do allow pets you may wish to consider increasing the amount of the deposit to guard against the possibility of increased damage by a pet.
Your repairing obligations
Under the Landlord & Tenant Act 1985 the landlord is, broadly, responsible for maintaining the fabric of the building including roofs, gutters, windows, doors and drains and for basic heating of the premises which would include maintenance of the central heating system if there is one.
Gas safety
If there are any gas appliances in the property you must obtain a Landlord’s Safety Certificate from a Gas Safe registered contractor on an annual basis, and provide a copy to the tenant.
Failure to do so is a criminal offence which could render you liable to prosecution. You may also find that your insurance is invalidated.
Electrical safety
Anyone who lets residential accommodation as a business activity is required to ensure that the equipment they supply as part of the tenancy is safe.
The Electrical Equipment (Safety) Regulations 1994 require that all mains electrical equipment (cookers, washing machines, kettles, toasters etc) new or second hand supplied with the accommodation must be safe. Landlords therefore need to regularly maintain and inspect the electrical equipment they supply to ensure that it is safe. You are strongly advised to have the equipment checked before the start of each tenancy, by a duly qualified electrician. More information can be found at www.pat-testing.info/landlords.htm.
Fire Safety
You are strongly recommended to ensure that the property is fitted with working “hard wired” (as opposed to battery operated) smoke/heat detectors and you should also ensure that there are adequate means of controlling a small kitchen fire e.g. by the provision of a fire blanket in the kitchen. If you are in doubt you should take specialist advice concerning this. There are specific requirements in relation to HMOs.
Furniture
The Furniture and Furnishings (Fire Safety) Regulations 1988 provide that where furniture or furnishings are supplied in the course of business the landlord must ensure that such furniture and furnishings comply with the Regulations as to fire retardant materials. The Regulations cover things like beds, mattresses, sofas, chairs, cushions, carpets and curtains etc.
Rent arrears
The most common problem that arises from a landlord’s perspective is non payment of the rent by the tenant. Prompt action is necessary because the longer the matter drifts on and the greater the amount of arrears that build up the more difficult it is likely to be to recover them.
You need to keep detailed records of the amount of rent received so that the arrears can easily be established.
In some cases a short letter from us may suffice to bring the rent up to date or it may be necessary to commence proceedings for recovery of the arrears or for possession of the property. Stones can help with any of these procedures.
Eviction of tenants
It is unlawful to evict a tenant without a Court Order, and if you do so you could be prosecuted as well as being ordered to pay the tenant damages for unlawful eviction.
In broad terms you can obtain an Order for Possession of an Assured Shorthold Tenancy during the fixed term only if significant rent arrears have arisen or if there has been significant damage to the property. Once the fixed term has ended there are more options available to you to recover possession.
In ALL cases possession proceedings can only be commenced after the service and expiry of an appropriate Notice. The form of Notice varies according to the circumstances, and we strongly recommend you to contact us as soon as you decide you want to get the tenant out, so we can properly advise you as to the steps that need to be taken, thus avoiding potentially costly mistakes.
Renewal of the Tenancy
It is usual for an Assured Shorthold Tenancy to be granted for a fixed period of six or twelve months. During the fixed period the ability of the landlord or the tenant to bring the Tenancy to an end is limited and as far as the landlord is concerned this would have to be based on default by the tenant - usually non payment of rent. Once the fixed term has come to an end the Tenancy usually runs on, on a Statutory Periodic basis which can be terminated by the landlord giving two months’ notice to the tenant and by the tenant giving one month’s notice to the landlord. These Notices have to be in a specific form so again you should contact us for advice.
If the tenant plans to stay on at the end of the fixed term the Tenancy Agreement can be renewed, with the minimum of formality, for another fixed period and you should contact us regarding the appropriate documentation.
Remember that no Tenancy Agreement can cover every eventuality and the best way of avoiding problems is to carefully select your tenant in the first place and promptly address any issues that arise during the tenancy – ie do not ignore the Tenant’s reasonable requests to fix things that go wrong!
If you have any queries relating to the letting of residential property please contact Paul Keeling at paulkeeling@stones-solicitors.co.uk or David Paull at davidpaull@stones-solicitors.co.uk or by telephoning 01392 666777. We have the practical experience and expertise to help.