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With many homeowners struggling to sell their properties due to the difficult economic climate, many are letting out their homes to enable them to move to a property that suits their needs.
The credit crunch has put the dampeners on buy-to-let, but it has now been replaced with the term 'let-to-buy'. This is where people who are desperate to move, but can't sell their home, are simply letting out their houses and renting elsewhere, while they pursue a new place to buy.
But if you're thinking about becoming a landlord for the first time, what rules and regulations do you need to think about? Lawpack, the leading provider of tenancy forms, gives you their 10 top tips on what you need to do to become a landlord.
1. Get permission.
Make sure that you’re legally allowed to let the property. You may need written permission from your mortgage company, your landlord (if you're letting a leasehold flat) and your insurance company, to check that renting is permitted.Also, check that planning permission isn't required (this is particularly important if the property can be classed as a House in Multiple Occupation (HMO). If any building works have been completed, you may need building regulations approval.
2. Get a licence, if necessary.
If your property has five or more unrelated tenants and is three or more storeys high, then it will almost certainly be a House in Multiple Occupation (HMO) and you will probably have to obtain a licence from your local authority.
Find out if an HMO licence applies to your property here.
3. Get an EPC.
Any landlord who is marketing a self-contained property to new tenants must legally provide an Energy Performance Certificate (EPC) - which gives details of the property's energy efficiency and environmental impact - to those tenants considering entering into a tenancy agreement.
Find out more on what an EPC does, what it contains and when you need one here.
4. Get the property in good condition.
A property must not have any 'category 1' hazards at the time that it's let. These all relate to health and safety; for example, damp and mould, excess cold (i.e. insufficient heating) and the tenant being in danger of having a fall. This is a complex subject, but you can find out more in Lawpack's books The Complete Guide to Residential Letting and Renting: The Essential Guide to Tenants' Rights.
Do note that during the tenancy, you, as the landlord, will be responsible for the maintenance of the structure and exterior of the property and for the installations for the supply of water, gas, electricity and for sanitation, and for the installations for the supply of space and water heating. So make sure that all of these are in good repair at the time of letting, to minimise any repair works during the tenancy.
5. Check that the gas installations and electricity supply are safe.
If there are any gas installations at the property, you must have an inspection carried out by a CORGI-registered gas installer, and then annually thereafter. The installer will provide a certificate and you must give a copy to the tenant. For more information, speak to your local Heath and Safety Executive which administers these regulations.
Regarding the electricity supply, there is no requirement for regular inspections (as there are for gas appliances) unless the property is an HMO, where it will need to be inspected every five years. But landlords are responsible for maintaining the condition of the installations for the supply of electricity.
6. Check that the furniture is fire resistant.
All furniture must comply with the furniture regulations, be fire retardant, and carry the proper labels. If you have furnished your property with new furniture, you should be all right, particularly if you use one of the companies which specialises in providing 'packs' of furniture for landlords. Further guidance on the regulations can be obtained from your local Trading Standards Office.
7. Check out your tenants thoroughly.
When you're looking for the ideal tenant, the internet is a great and cheap resource. Many websites, such as findaflat.com and spareroom.co.uk, will market the property for you, often for little or no cost.
Once you have found your tenant you should take details from them and it's particularly important that you have full details of their employment history because if they have had frequent job changes in the past, they're not likely to stay in the property for a great length of time. Lawpack's Tenant Application Form can help you to do this.
References should include an employer's, bank, previous landlords' and character reference. Remember that the applicant's current landlord’s reference may not tell you the whole story as the landlord may be anxious to get rid of the tenant.
Doing a complete and thorough credit check is the most important thing you can do and companies, such as rentchecks.com, provide a tenant referencing service which covers CCJs, bankruptcies, defaults and a guarantor suitability check.
If the tenant is using a gauarantor, do make sure that you check them out too. Find out more about how landlords can use guarantors as back up for rental payment here.
Read more on how to vet your prospective tenants here.
Read an eviction expert's 'top tips' on tenant referencing here.
8. Draw up a tenancy agreement.
When you, as a landlord, first rent out your property, the most important thing that you can do to protect yourself, your home and your financial position is to create a tenancy agreement when the tenancy starts.
A tenancy agreement sets out the landlord's and tenant's obligations to each other and it prevents disputes between you and the tenant in future. It sets out when the tenancy starts, the amount of rent and the length of the tenancy.
Tenancy agreements can be simple to draw up and you can download a tenancy agreement cheaply online.
9. Protect the tenant's deposit in a tenancy deposit scheme.
If you're letting out your property in England and Wales and you want to take damage deposits from your tenants in case they wreck the rental property, then you legally must protect your tenants' deposits using a tenancy deposit protection scheme.
There are two types of tenancy deposit scheme you can use - either a custodial scheme or an insurance-based scheme. With a custodial scheme - which is free to use - the deposit is held by the scheme until the time it's repaid at the end of the tenancy.
With the insurance-based scheme, you, as the landlord, keep the tenant's deposit, but you pay the scheme to insure against you failing to repay the tenant any money due to him. There is a choice of two insurance-based schemes.
Find out more information on tenancy deposit schemes here.
When you're dealing with tenants' deposits, make sure that the tenant deposit and all advance rent payments have cleared before you hand over the keys to the property. You can ensure that all rent payments are on time by setting up a direct debit. Lawpack's Tenant's Bank Standing Order Mandate can help.
10. Make a property inventory.
One of the most common 'flashpoints' between landlord and tenant is arguments about the condition of the property and its contents, and deductions from the damage deposit. Most of these arguments can be prevented by drawing up a detailed property inventory form.
Since the introduction of the tenancy deposit scheme, too, landlords who want to claim money from their tenants' deposits now have to prove that damage has been caused. So if you're a landlord and you don't keep an accurate property inventory, you'll find it difficult to justify deductions to a tenant's deposit.
Read Top Tips to making a property inventory here.
Download a property inventory now and start using it today.
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