- Are there any necessary preliminaries?
- What will be my responsibilies?
- What type of Tenancy Agreement is used?
- What about a Deposit?
- Who pays the Outgoings?
- Will I pay tax?
- Can a Guarantor underwrite the rent?
- Fees and Charges
1. Are there any necessary preliminaries?
Yes! First, Mortgages. If a property is subject to mortgage, the owner should contact the Bank/Building Society and notify it of his/her intention to let. The Bank/ Building Society may stipulate conditions under which the property may be let and will probably charge for its consent. Prior Notice of the existence of a mortgage may have to be served on the intending Tenant. A higher rate of interest may also be charged.
Secondly, insurance. Insurance companies also ought be notified of an intention to let. They may ask for an increase in premium payments or offer different terms.
Energy Performance Certificates - since October 2008, all property advertised To Let must be provided with an Energy Performance Certificate (EPC). These can only be prepared by qualified Energy Assessors. Since April 2018, it has been illegal to let property in EPC Bands F & G and substantial fines can result. Landlords should first check their EPC rating. We can obtain EPCs for clients if required at reasonable costs.
From the 1st July 2020, the The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 come into effect for all new lettings and will effect all exsting tenancies from 1st April 2021. All fixed wiring installations must be tested at intervals of not more than 5 years by a suitably qualified person and certification must be provied to the Tenant to confirm that the installation is at least Satisfactory.
2. What will be my responsibilies?
Landlords are responsible for ensuring that their properties comply with the Gas Safety (Installation and Use) Regulations, 1994 (updated October, 1998) and the Electrical Equipment (Safety) Regulations, 1994 and European Commission Directives 73/23/EEC (the Low Voltage Directive) and the The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 . All relevant equipment must be checked regularly and records of the checks must be maintained. Copies of the records must be made available to the Tenant. A s.21 Notice to Quit cannot be effective if the necessary papers have not been given. EL&M can arrange on clients' behalf for the necessary tests to be carried out.
If a property is let furnished, the Furnishings (Fire) (Safety) Regulations 1988 (as amended) apply. Any relevant furniture in a let property has to comply with the legislation, which applies primarily to soft furnishings but the definition is wide in its scope. There are exceptions.
All let property must be fitted with operational smoke detectors/alarms and should have least one on each floor. Properties built since 1991 should have mains powered smoke detectors installed. Carbon monoxide detectors are required in rooms with solid fuel appliances and we recommend them in all rooms with a fossil fuel appliance. The rules are contained in the Smoke and Carbon Monoxide Alarm (England) Regulations 2015 and apply in England.
In general terms, the Landlord is responsible for the maintenance of the property and should also deal with the insurance of the fabric (and the contents if let furnished).
3. What type of Tenancy Agreement is used?
The majority of residential tenancies now granted are Assured Shorthold Tenancies. The Housing Act ensures that any new assured tenancy will automatically be an Assured Shorthold Tenancy unless it falls within one of the exceptions. It is no longer necessary to give notice to create an Assured Shorthold Tenancy prior to its commencement. There are exceptions to this general rule, such as in the instance of tenancies being granted to agricultural workers where specific procedures have to be followed if the new tenancy is to be an Assured Shorthold Tenancy.
There is no longer a minimum period to the term of an Assured Shorthold Tenancy. It is usual for the initial term to be for six months, since a Landlord cannot recover possession in under six months except in limited circumstances or unless the Tenant is in breach of the terms of the Agreement. After six months, the tenancy can be allowed to run on as a statutory periodic tenancy (known as a replacement tenancy). To terminate the replacement tenancy, the Tenant has to give one month's notice from a rent-due date or the Landlord has to give two months' notice. Alternatively, Landlord and Tenant can enter into a new written agreement.
4. What about a Deposit?
We recommend that a deposit at least equivalent to one month's rent be taken from the Tenant before the start of a new letting. The amount of the de[posit is not restricted to no more than 5 weeks rent. This should be returned to the Tenant at the end of the tenancy if the property and its contents are surrendered undamaged and if the rent is paid in full. The deposit can be held by either the Landlord or through EL&M as Agent.
NOTE:- All Tenants' Deposits are now protected by law. Within 30 days of taking a deposit, Landlords must either surrender the money to a government agency or enter it into one of two insurance backed schemes. EL&M uses the Government-sponsored Deposit Protection Service, which holds the deposit money. EL & M and can see to the administration of the deposit and the necessary legal paperwork associated with it, if asked to do so.
5. Who pays the Outgoings?
The Tenant pays for the water, gas, fuel and electricity consumed within the premises, the sewage and heating charges and also for the telephone, if connected. Where properties are not metered separately, some of the charges can be incorporated within the rent or made the subject of a separate service charge. Such arrangements ought to be identified in advance of a letting, so that potential Tenants know the basis on which the property is being offered.
It is usual for the Tenant to be responsible for the payment of the Council Tax.
6. Will I pay tax?
Rental income from property is taxable. Landlords are able to set off some expenses against their tax liability provided that they relate directly to the letting of the property. These include:-
- Agents' fees and commission
- Repair and maintenance expenditure
- Insurance premiums
- An allowance for wear and tear on furniture
- Outgoings paid by the Landlord e.g. Council Tax, Ground Rents, Service Charges, Accountancy and other professional fees.
If a Landlord is not resident in the UK, the Agent that manages the property has to deduct tax at source and account for it to H.M. Revenue & Customs. There are instances where this will not be necessary, such as when a Landlord is a diplomat, a member of the Armed Services or an employee of an Overseas Development Agency, but an exemption has to be obtained.
7. Can a Guarantor underwrite the rent?
In certain instances, the circumstances of the applicant may require that a Guarantor is needed to ensure that the rent is paid and that the Tenant performs his/her obligations under the terms of the agreement. Care should be exercised in assessing the Guarantor. We require prospective guarantors to undergo the same referencing procedures as applicants.
8. Fees and Charges?
Our charges can be tailored to the requirements of the Client. A full list of our fees and charges is set out within "Services". Our standard fee for letting a property only is £300 + VAT (£360)
Our standard charge of our Managed Property Service is 10% + VAT of rents received (not rents receivable) (12%): Discounts can be negotiated for multiple instructions. There is a standard charge for setting up a tenancy of £275 + VAT (£330). Please enquire for further details.