Anyone tempted to dip their toes into the buy-to-let sector, has probably been even more inclined to do so this summer than for years. Even after the cut in mortgage interest relief on buy-to-let homes announced in the Budget, the financial equation looks enticing. House prices continue to rise. Interest rates remain at an all-time low. Inflation has fallen from 0.1 per cent to 0 per cent. And the rent caps proposed by Labour in the lead-up to the General Election were quashed by a Conservative majority. On top of everything, people over 55 can now free up great chunks of capital from their pension pots and invest it how they please. But it is more important than ever to ensure that if you are becoming a landlord for the first time to ensure you know what is expected of you for every step of the tenancy. There's lots to do, so whether you decide to take this on yourself or get a letting and property management company to help, here's a helpful check list of things to complete throughout the tenancy.
Anyone tempted to dip their toes into the buy-to-let sector, has probably been even more inclined to do so this summer than for years. Even after the cut in mortgage interest relief on buy-to-let homes announced in the Budget, the financial equation looks enticing.
House prices continue to rise. Interest rates remain at an all-time low. Inflation has fallen from 0.1 per cent to 0 per cent. And the rent caps proposed by Labour in the lead-up to the General Election were quashed by a Conservative majority. On top of everything, people over 55 can now free up great chunks of capital from their pension pots and invest it how they please.
But it is more important than ever to ensure that if you are becoming a landlord for the first time to ensure you know what is expected of you for every step of the tenancy. There's lots to do, so whether you decide to take this on yourself or get a letting and property management company to help, here's a helpful check list of things to complete throughout the tenancy.
Energy Performance Certificate (EPC) - Before you consider marketing your property for rentals you will need to have a valid EPC for it, which will need to be available for any prospective tenant.
Permissions to let - Before marketing your property for lettings you should also ensure that you have permission from your freeholder and mortgage company if required.
Tenancy agreement - Ensure that you have a comprehensive tenancy agreement that outlines the terms and what is expected of the tenant including costs. If you use a letting Agent they will provide you and the tenant with one that is the most up to date with the most recent legislative changes.
References - Make sure you have reference-checked the tenants, however you must have their consent before doing this. From October it will be mandatory for all landlords to ensure that their tenants are legally allowed to live in the UK, so you will need to carry out thorough checks. Again if you are using a letting Agent, they will be able to do these for you.
Inventory - Before your tenants move in complete a comprehensive inventory, which can be carried out by an independent company as this can help with any disputes at a later stage. The inventory is then used as the basis of the check in and check out reports. It is strongly recommended that you use an external party to complete the check in and check out reports and that the tenants attend both. At check in not only is the condition of the property checked but landlords from October will need to physically check all smoke detectors and carbon monoxide detectors before a tenant moves in. This should be noted on the check in report. Your Agent should be able to recommend an inventory clerk.
Deposit - You must organise a government approved tenancy deposit scheme to hold the deposit for the duration of the tenancy agreement. You must note the details of where the deposit is being held and the circumstances of how it will be released, both in whole and in part, in the tenancy agreement. You must provide your tenant with the prescribed information relating to the scheme. For further information click here or speak to your Agent.
Utility companies - You should inform your local authority and utility companies of the tenancy and the date it begins so they can bill the correct persons. By not informing the utility companies of your tenant's details could leave you liable for the bills after the tenants move out. In particular, the Floor and Water Management Act 2010 requires a landlord to give information about their tenants to the relevant water company and a failure to do so will leave you jointly and severally liable for the water bill alongside the tenants.
Gas Safe - If you have gas in a property, then you must have a valid Gas Safe certificate for the property prior to the tenant moving in. A gas-safe check must be carried out by a Gas-Safe registered engineer every 12 months and the record kept for two years. Ensure the latest gas safety certificate is valid and provide the tenant with a copy. You must also provide carbon monoxide detectors where there is a gas or solid fuel appliance.
Fire safety - You should carry out a fire-risk assessment of your property and ensure that all escape routes are clear and fire safe and signage, if needed, is present. You should also ensure that all soft furnishings in the property are fire safety approved. From October it will also be a legal requirement for all rental properties to be fitted with working smoke detectors on every floor of the property and carbon monoxide detectors to be placed near gas appliances or solid fuel for all new tenancies. Various fire services are providing them for free of charge. It is worth contacting your local station about this.
Electric check - You should check the electric wiring throughout the property for any defects that are visually obvious including plugs and leads. We also strongly advise that you carry out a portable appliance test annually.
ï¿½ Record keeping - Throughout the tenancy it is advisable to keep good records and accounts to be able to demonstrate all dealings with the tenants and their money. If you use a property management company they should provide such service.
Health and safety - It is your duty to provide a safe and healthy environment for your tenant, so if something needs to be repaired then this should be dealt with quickly. However, if it is an emergency it must be sorted immediately. Make sure you tenants are aware at the start of the agreement of how they can report any issues to you or during out of hours. It is also important to note:
-You should carry out works with minimum disruption to your tenants.
-Works should be carried out to a standard so they will not need to be repaired again within a short period of time.
-Tenants are required to look after some maintenance including light bulbs and clearing drains.
-Tenants cannot be evicted simply for requesting repairs. New rules are expected to come in this year in regards to Retaliatory Evictions this year.
Inspections - Carry out regular inspections of the property to ensure that the tenants are taking reasonable care of the property and furnishing and to note any maintenance issues not picked up by the tenant. It is standard for inspections to be carried out every six months. If you use a property management company they will be able to carry this out on your behalf and will be able to take note of repairs or problems there may be.
Property access - Tenants should be given notice (usually 24 hours) if you want to access the property unless there is an emergency. Access rights and procedures should be in your tenancy agreement so make sure these are adhered to.
Viewings - Tenants should be made aware of any viewings on the property and given reasonable notice (at least 24 hours is standard).
Preparation for move out - Manage your expectations with the tenant in regards to the check out, the clean, move out time, closure of utilities, forwarding address, return of keys and so forth.
ï¿½ Arrange a check out - It is strongly advised that you hire a third party to carry out the check out and that tenants attend. The report should be issued to the tenants promptly for them to review so that the deposit release process can commence. If possible you should inspect the property within 24 hours of the check out or the next working day to determine whether or not it has been left in the condition stipulated in the tenancy agreement. You should make allowances for 'wear and tear' however any other problems should be noted and, where possible, photographed. You should also check for any maintenance required to prepare it for the next tenancy.
Return of the deposit - The deposit shouldn't be returned to the tenant until after the inspection so that it can be determined if the full amount should be refunded. However, once this is done, you should not delay in returning the monies to the tenants. If there are any reasons you are holding some or all of the deposit back, you must inform the tenants in writing and in compliance with your tenancy deposit protection scheme.
Useful links: General Lettings info: https://www.gov.uk/private-renting-tenancy-agreements/tenancy-types https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/341876/Factsheet_Landlords_Aug_14.pdf ARLA http://www.arla.co.uk/info-guides/info-for-landlords/landlord-faqs.aspx#q3 Tenancy Deposit Protection https://www.gov.uk/tenancy-deposit-protection/overview Safety https://www.gov.uk/government/news/tenants-safer-under-new-government-measures https://www.gov.uk/private-renting/your-landlords-safety-responsibilities Gas Safe http://www.gassaferegister.co.uk/advice/renting_a_property/for_landlords.aspx