1. Preparing your property for let
There are a number of issues to consider before you are able to put your property on the market for let. First impressions count for everything when it comes to property, so it's vital your home looks its best for potential tenants. Maintaining this condition for all your viewings will give you the best chance of letting your home and achieving the best possible price.
• Make sure the property presents well both internally and externally. Tidy up the gardens and overhaul any external/internal paintwork that looks shabby.• Smoke Detectors Act 1991 Electrical Equipment (Safety) Regulations 1994.
• As well as the physical standards of the property itself, there are numerous other standards that will need to be met, including safety standards for gas and furniture Before you let your property you must make sure by law that it and its contents comply with various safety regulations, including:
• Furniture and Furnishings (Fire) (Safety) Regulations 1988, as amended 1993
• Gas Safety (Installation and Use) Regulations 1998
• Smoke Detectors Act 1991 Electrical Equipment (Safety) Regulations 1994.
Landlords are required to produce certificates meeting these regulations where appropriate and should ensure that a Portable Appliance Testing (PAT) for all electrical appliances is undertaken. It is advised that, as a general guide, furniture made before 1988 is unlikely to meet the necessary standards and should be replaced before letting your property. Any items that contain upholstery, and could be used inside the property, should be checked, including:
• Beds, headboards, mattresses, futons and sofa beds Children's or nursery furniture Garden furniture that might be used within the property Cushions, pillows, etc.
Items that are exempt from this legislation include:
• Sleeping bags, duvets, pillow cases and blankets, carpets and curtains and furniture made before 1950.
In order to check items for the fire safety standards, look for a permanent label stating the regulation it conforms to. Bed bases and mattresses are not required to have this label attached, but they should have a label stating compliance with ignitability tests. Look for the compliance code BS 7177 on these items for confirmation.
If you're in any doubt that certain items may not meet the required standard, replace them. There are substantial fines and even prison sentences imposed for non-compliance should an accident occur.
If the property is to be occupied by more than one family or party, this constitutes a House in Multiple Occupation (HMO) and further regulations will need to be adhered to, as well as registering with your local authority. Landlords who own a property with five or more unrelated occupants, which is three or more storeys high, are subject to mandatory or additional licensing requirements by their local authority. Landlords should contact their local authority to find out if the property is subject to HMO licensing. For more details please visit the Department for Communities and Local Government website.
In addition to the above you will also need to make sure you have
• An agreed inventory of all items left in the property and a property condition report
• Obtained permission from your mortgage lender (if you have a mortgage on your property) or told your freeholder
• Advised your insurers and highlighted what items within the property you will be insuring and those that will fall to the tenants to insure.
What paperwork is required and when should I use it?
If the rent on the property is less than £25000 per year and you rent your property to private individuals, the tenancy automatically becomes an Assured Shorthold Tenancy (AST). An AST usually lasts for 6 to 12 months, unless you agree a fixed term for the tenancy in advance with your tenant.
• When the fixed term of the tenancy has expired the landlord is able to gain back possession of the property provided they give two months written notice to the tenant. In addition, if the tenant owes at least 2 months or 8 weeks rent on the property you can apply through the court to seek a possession order.
Taking a Deposit
From 6 April 2007 anyone holding a tenancy deposit (either as landlord or managing agent) must belong to an authorised scheme, which protects the deposit during the tenancy and deals quickly and independently with any dispute over its return at the end of the tenancy. You or your managing agent must tell your tenant within 14 days of them handing you their deposit which one of the three authorised schemes the deposit is protected by and provide details of the scheme
2. Choosing an agent (if applicable)
You can advertise and manage your property yourself, but it can be a lot of worry and hassle. Many landlords use an agent to market and/or manage their property. The vast majority of landlords prefer to hand over the responsibility for finding a tenant to a dedicated and qualified letting or estate agent. A local agent will have knowledge of your local area including the type of properties to rent in the area, the potential demand for them, the rental prices being achieved and the kind of tenants who might be interested in your property. Also an agent cuts out all of the necessary awkwardness of having to deal directly with viewings and negotiating with potential tenants.
3. Marketing your Property
A letting agent will discuss the best way to let your property and the rental income to expect from the let. If you employ an agent to undertake the letting, you will need to sign an agreement with them, which outlines their charges and the length of the contract. It is important that you understand the contract before you sign it as you don’t want to sign into a lengthy tie-in.
4.EPC’c
From 1 October 2008 all homes being let will be required to have an Energy Performance Certificate (EPC).
The Energy Performance Certificate (EPC) is broadly similar to the labels now provided with domestic appliances such as refrigerators and washing machines.
Its purpose is to record how energy efficient a property is as a building.
The certificate will provide a rating of the energy efficiency and carbon emissions of a building from A to G, where A is very efficient and G is very inefficient.
EPCs are produced using standard methods with standard assumptions about energy usage so that the energy efficiency of one building can easily be compared with another building of the same type.
This allows prospective tenants to see information on the energy efficiency and carbon emissions so they can consider energy efficiency and fuel costs as part of their investment.
An EPC is always accompanied by a recommendation report that lists cost effective and other measures to improve the energy rating of the home.
The certificate is also accompanied by information about the rating that could be achieved if all the recommendations were implemented.
5. Agreeing the let
After you've found suitable tenants for your property, you have the option of either managing the let yourself, or hiring the services of a managing agent to work on your behalf. Much will depend on your circumstances. If you are living abroad, for example, you may want to employ a managing agent to make sure your tenants and the property are sufficiently looked after while you're away.
The majority of letting agents also offer property management services. If this is an option you're interested in, consult the letting agent first to make sure they can offer this service. A managing agent will:
• Provide professional advice and guidance throughout the duration of your relationship
• Vet potential tenants by sourcing references from previous landlords, conducting credit checks and obtaining bank details
• Organise tenancy agreements and inventories
• Organise the collection of rent from the tenants and arrange for repairs during the tenancy
• Manage the start and end to the tenancy based on your instructions
• Inspect the property periodically on your behalf for its condition and state
6. Costs that will be incurred as a Landlord
Here’s a brief summary of the various costs to consider when letting your property:
Gas and electrical testing You will need to ensure that you have tested all gas and electrical appliances to ensure they comply with current safety standards. This will need to be undertaken by a qualified professional and there will be charges made for this service.
Insurance You need to ensure that you have insurance on your property and make sure you know exactly what’s covered in the policy. You will need to advise the insurers that the property is being let.
Letting agent’s fees There are likely to be fees incurred for employing an agent to undertake the administration and management of your property. Charges vary from one agent to another, so it’s worth checking on fees in your area.
Repairs and maintenance Any repairs or maintenance that is required on the property will need to be paid for by the landlord.
Storage You may have to put some of your furniture and furnishings in storage if the tenant brings his/her own belongings. The costs of storage will need to be covered by the landlord.
Tax Landlords are liable to pay tax on gross income received from rent. Further information can be obtained from the Tax Office.
Tenancy Deposit Protection You will need to ensure that you or your agent belongs to a scheme to protect tenants’ deposits
7. Final Checklist
• Get the requisite permission from your mortgage lender
• Obtain approval from the council's planning office (if you plan to make structural alterations to the property or change the property's use)
• Inform the council's Environmental Health Department if you plan on letting as a House in Multiple Occupation (HMO)
• Make sure all furniture and furnishings comply with the latest fire regulations • Ensure that all gas appliances and equipment has been serviced by someone from The Gas Safety Register (formally CORGI), and that safety records are kept in a safe place
• Make sure that all electrical wiring has been checked and safety approved by a qualified electrician
• Inform the Council Tax department and utility suppliers that the property will be let (relevant if you plan on being a non-resident of a self-contained property).