An Introductory guide for New Landlords.

Investing in rental properties can be a great way to boost your income, and provide a long term investment.  Property prices have increased by over 700% in the last 30 years!  With an average monthly rent of £653 in the North West. 

After recent tax and regulation changes investors could be forgiven for thinking twice before investing in the buy-to-let market, however market sources suggest continued strong growth in the sector for the foreseeable future, helped by low interest rates a good choice of buy to let mortgages.

There are a number of legal and best practice requirements that should be understood by potential investors, which is why Jump-Pad has created this high level guide to help raise awareness of some of a Landlord’s responsibilities. 

Expenditure

It’s easy to underestimate potential outgoings including ongoing repairs, decoration and insurance. Rental income is also taxable so accurate records of all income and expenditure need to be maintained for tax purposes. If required, an accountant can help advise on the expenditures that can be offset against income.

Stamp Duty

Changes to Stamp Duty came into effect in April 2016.  Attracting a sliding scale of duty based on property value, starting from 3% of the property purchase price. Currently for example, a £130,000 buy to let investment would incur a stamp duty of £4000.  Please review published government information for the latest scaled charges and associated rules for individuals and companies.  

Checklist (legal requirement)

Electrical Inspection Condition Report (EICR) - as from July 2020 all new tenancy rental properties, must have had an EICR report with any remedial work completed. These reports last for a 5 year period.

Gas Safety certificate – All properties (with a Gas supply) require a new Gas Safety certificate every 12 months, and must be completed by a suitable qualified engineer.  New tenants must be given a copy before they move in.

Energy Performance Certificate – It is a legal requirement that all rental properties must have a current EPC (valid for 10 years), a copy of which must be made available to potential tenants when viewing the property.

Smoke Alarms – Need to be fitted to each floor, if battery operated it must Landlords must make sure the alarms are in working order at the start of each new tenancy, and make clear within the tenancy agreement that it is the tenant’s responsibility to maintain thereafter.

Carbon Monoxide Detectors - On 1 Oct 2015 the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 came into force. A carbon monoxide alarm must be provided in any room where solid fuel is used.  After that, the landlord must make sure the alarms are in working order at the start of each new tenancy, and make clear within the tenancy agreement that it is the tenant’s responsibility to maintain thereafter.

DCLG How to rent guide – Must be provided by the landlord or agent to every tenant.

Fire Safety – Where furniture is provided within a property. It is the Landlords responsibility to prove all items comply with the latest fire safety regulations. Best practice requires all furniture receipts to be retained, and all items fire resistant labels to be checked.

Right to Rent – It is the landlord/Agents legal obligation to check potential tenant’s right to live and work in the UK, and to ensure their processes are compliant with the latest regulations. 

Tenancy Deposit Scheme – All deposits need to be lodged in either a custodial or insurance scheme, and details provided to the tenant within 30 days. Tenant deposits must not exceed 5 weeks rent.

Property standard of repair – landlords have an obligation to keep the property in a good state of repair and deal with health and safety issues quickly.      This means that problems with the roof, chimneys, walls, guttering and drains are the responsibility of the landlord. Landlords are also responsible for keeping the equipment for supplying water, gas and electricity in safe working order.

Contact Details – a Landlords contact details should be written into the tenancy agreement, if not it is a legal requirement to provide the information via your agent if requested within 21 days 

Legally Binding Tenancy Agreement – There are two main types AST (most common) and assured Tenancy, both can be tailored to the individual agreement but must not include unfair terms.

Correct Eviction Process – If the letting agreement is an AST, and it is at the end of the agreement then a Section 21 notice can be served.  If the landlord wants to end the tenancy before the end of the agreement, then a section 8 notice needs to be served stipulating the grounds for eviction.  If it is an Assured Tenancy, then only a section 8 notice can be used.  A section 21 cannot be served within 4 months of a tenancy

The government has introduced restrictions on evections during the COVID-19 pandemic, please check government guidance for latest information.  As this document printed an evict ban is enforce until March 2021.

Rules for Rent - Landlords must tell tenants when their rent is to b paid and how it should be paid for example by cash or cheque or into a bank account. Landlords can't refuse to accept a tenants rent. Rent ca be increased but only at certian times during the tanancy and only in certain circumstances. These depend on the type of tenancy you have provided and what, if anything, you have included within the agreement regarding when the rent can be increased. If a tenants pay rent weekly,landlord must provide a rent book.

Rules for Access to Property  -  Landlords have the right to access a property to inspect it and do repairs, but they must let the tenant live in the property without unnecessary interference. You should always give reasonable notice and arrange a suitable time if you need to visit, unless there's an emergency. The amount of notice landlords have to give can be set out in the tenancy agreement.

Check in/Check out inventory – A detailed inventory signed by both you and the tenant is advised to avoid and resolve potential tenancy deposit disputes.

Rent Guarantee – for a monthly fee, landlords can take out a policy protecting their income should a tenant stop paying the rent.  Various policy options are available with varying rates.

Letting Agent – some landlords prefer to do everything themselves, other prefer trusting a local expert, if you fall into the latter camp, make sure the agents provide quarterly property inspections on your behalf.

Hybrid Agents – are increasing in popularity and can offer fantastic savings on property management and tenant find services.  They offer both local expertise and online services, stay open longer and use technology such as online portals to give landlords instant access to their account information.

This guide is NOT intended to be used as a definitive sources of information for Landlords, but rather as a high level overview of the obligations. Regulations and best practices change over time, so it is essential you maintain a good understanding of the current legislative landlord obligations.  Lots of responsibility! For further information, please don’t hesitate to get in touch 01925 351 871 or email info@jump-pad.co.uk