LEASING AND FACTORING SERVICES

Transcription

1 LEASING AND FACTORING SERVICES Please find enclosed information on residential leasing and details of our leasing and factoring services. Please note that before you can lease out your property you will require to be registered as a landlord and the property registered with the local authority To allow us to proceed and market your property we require the following: Evidence of your registration as a landlord(s) Energy Performance Certificate Gas Safety Certificate if the property is served by mains or LPG gas EICR in respect of the electrical installation and PAT testing certificate in respect of portable appliances Legionella Risk Assessment Evidence of your lender's consent, if you have a mortgage over the property Confirmation that you have appropriate landlord insurance cover in place A completed landlord information form - obtainable from any of our offices Please note that we will require to carry out an initial inspection of your property to ensure that it meets the appropriate standards and complete with statutory requirements. 1

2 LEASING AND FACTORING SERVICES Stewart & Watson is a long established legal firm with many years of experience and expertise in the leasing market. This experience and expertise ensures our clients obtain a comprehensive and efficient service. At all of our offices throughout the North East we offer property leasing services. Our property leasing service is invaluable to landlords wishing to protect their investment. We offer to find a suitable tenant and set up the lease in appropriate Scottish legal form, and thereafter to factor the property. We can also draw up lease documentation for you if you have found your own tenant. Our leasing and factoring services comprise: - Option 1 Contract of Lease only This includes: - preparation of the contract - having tenant sign contract - serving all appropriate statutory information - providing copy of lease to tenant Option 2 Marketing and Contract of Lease This includes: - advising on a suitable market rent - preparing particulars of lease with photographs where appropriate - insertion in our leasing list - uploading on to our website - mailing details to prospective tenants - arranging viewings - considering applications from prospective tenants - taking up references - preparation of the contract - having tenant sign contract - collection of first month s rent and the deposit. The deposit will be forwarded to the landlord for lodging in a Tenancy Deposit Scheme - providing copy of lease to tenant - advising Council of tenancy for Council Tax purposes Not included: - preparation of inventory of contents - carrying out inventory check or handing over property to tenant at commencement of tenancy - advising utility service providers of tenancy or taking opening or closing readings - lodging the deposit in a Tenancy Deposit Scheme or sending out statutory notices relating to lodging of the deposit - carrying out any inspections during the lease or a final inspection or inventory check at termination of lease - any correspondence or work which may be required during the period of lease on account or non-payment of rent or difficulties with a tenant 2

3 Option 3 Factoring This includes: - Option 2 services (as detailed above) - management from our dedicated factoring department - handing over keys to tenant and carrying out check of inventory of contents - submitting opening readings to utility service providers - submission of the deposit to Tenancy Deposit Scheme and serving deposit notices on tenants - collection of rents and remitting to landlord - instructing routine repairs and maintenance notified to us within office hours - regular quarterly property checks to check on cleanliness and any obvious damage or defects and note any faults reported by tenant - inventory and property check at termination of lease (n.b. this check will be restricted to a visual inspection to note obvious damage or defects to the property or its contents without moving furniture or floor coverings and will not cover testing appliances of an electrical or mechanical nature, the plumbing or central heating systems or the working condition of windows and doors) - submission of utility service readings at termination of tenancies - dealing with release of deposit from Rent Deposit Scheme - monthly statement of income and expenditure - Discounted legal fees on debt collection for outstanding rent and for court work requiring to be raised against your tenant, including raising eviction actions. Not included - dealing with urgent repairs and maintenance issues arising outwith office hours. An emergency contact telephone number will be provided to tenants to report issues occurring over the festive period within defined times. Routine repairs and maintenance will be instructed by us when appropriate up to the value of 200 without reference to the landlord. If any repairs or works are to exceed that figure we will obtain estimates and seek approval from the landlord in advance to incur such expense. Urgent repairs involving immediate risk to the property, the tenants or tenants property will be instructed without reference to the landlord if in our reasonable opinion that is necessary in the circumstances. Such repairs will be instructed via reputable tradesmen of our choice. Our target response time in respect of non urgent routine repairs as are follows:- We will acknowledge and take steps to establish the scope of routine repairs within a period of 3 working days from them being identified to us and would aim to have appropriate tradesmen instructed to investigate and report or to make the appropriate repairs within a period of 5 working days, however, we agree with landlords at the commencement of our service if they have preferred tradesmen with whom they would prefer to deal. As these are local tradesmen to the landlord s property we can instruct the repairs and regularly chase for progress of these works, however, we cannot guarantee their response times. We will recommend alterative tradesmen in the event that, in our opinion, the response time is unreasonable. We are legally bound to notify the local authority and other statutory bodies where we believe a landlord is refusing or unreasonably delaying complying with their legal obligations. LATE PAYMENT OF RENT In the event of a rental payment being outstanding for a period of 7 days tenants will be contacted either in person or in writing and landlords will be advised of the outcome of such enquiries. A course of action will then be agreed with the landlord according to circumstances. CHARGES 1. Fee for preparation of contract of lease only available from your local office 2. Fee for marketing and preparation of contract of lease one month's rent 3. Fee for factoring service 10% of rent due to be paid (invoiced monthly) V.A.T will be charged in addition at the standard rate Payment of our fees in respect of Option 1, Contract of Lease will be due within 14 days of the date of our invoice. Payment in respect of Option 2, the marketing and the contract of lease would ordinarily be made from the first rent received with any balance payable due within 14 days of the date of our invoice. Payment for the factoring service will be made monthly and will be deducted from rent received. Interest will be charged at the rate of 2% per month on outstanding amounts from the due date until payment is made in full. 3

4 WITHDRAWAL If you withdraw your property from the market there will be a fee of 100 plus VAT to cover our initial marketing costs and you will require to pay for any press adverts instructed by you. The above fees are payable to Stewart & Watson and do not include third party outlays such as: Press advertising in connection with the marketing Any fee payable to a lender for consent to the lease The cost of obtaining a Landlords Gas Safety Certificate The cost of obtaining an Energy Performance Certificate The cost of Landlord registration with the local authority The cost of obtaining an Electrical Installation Condition Report and PAT testing The cost of a Legionella Risk Assessment In addition, the fees payable do not cover: Serving any Notice to Quit or related statutory notices required for raising eviction proceedings (including payment to Sheriff Officers for service of such documents) Court expenses incurred with any action raised for eviction or payment of outstanding rent (including any fee payable to Stewart & Watson for the raising of such actions ) LANDLORD REGISTRATION Landlords will require to register themselves and their property with the appropriate local authority such registration should be made on-line. The local authority will require payment by debit or credit card at the time of submitting the application. We are not able to register landlords. 4

5 Guidance notes on Leasing a Residential Property These notes are designed as guidance when considering letting out a residential property. They are not exhaustive but provide a list of the main points which require to be addressed before letting out a property. Further guidance can be sought from our property staff at any of our eleven outlets. New Landlord Checklist What you need to consider when preparing to lease out your property 1 Register as a Landlord with Council in the area of the property 2 Seek consent to lease from your mortgage lender and inform insurance company 3 Tenant Deposit to be lodged in Rent Deposit Scheme 4 5 Check tax implications with HMRC rental income and non-resident Landlords Property meets Repairing and Tolerable standards 6 Property Safety Gas Safety Certificate Energy Performance Certificate Electrical Equipment Furniture Smoke and carbon monoxide alarms Electrical installation certificate & PAT testing Legionella Risk Assessment For further details on these points refer to the following pages 5

6 1. Landlord Registration Since April 2006 all private landlords in Scotland must be registered. Each individual property to be leased must also be registered. It there are two owners of a property both have to be registered as landlords. Registration as a landlord and of a property are with the Council for the area in which the let property is located. A fee is payable for each landlord and for each individual property registered. On registration, you will be allocated a landlord reference number and you must give that to us as evidence that both you and your property are registered. Registration can be done on line at When applying for registration you will need to enter our firm s agent registration number: 16692/100/31170 for Aberdeen City, 16692/110/31170 for Aberdeenshire and 16692/300/31170 for Moray. If you have properties in more than one Council area you will need to use one of our reference numbers only. 2. Permission from Lenders/Insurance Company If you have a mortgage over your property it is your responsibility to obtain written permission from your lender before you lease it out. An administration fee may be payable for obtaining this permission. Responsibility for insuring both the building and contents will remain with you and you should contact your insurers to advise them that the property is to be leased out. This may result in a change in the terms of your policy, including an increase in the premium. The insurers may restrict who you have as tenants. Some insurers may decline to continue to provide insurance if the property is to be leased out. You may wish to organise a specific landlord insurance policy which would provide for cover for loss of rent in the event that the property becomes uninhabitable for any reason and the tenant has to move out. 3. Tenancy Deposit Schemes From 2 nd July 2012 Landlords are no longer permitted by law to retain a tenant s deposit for the duration of the lease but require to lodge any deposits with one of the government approved Tenancy Deposit Schemes of which there are currently three in Scotland. Notices containing prescribed information have to be sent to the tenant once the deposit is lodged. These notices are provided by the schemes administrators. If there is any dispute at the end of the tenancy as to whether or not the deposit should be returned to the tenant the schemes will offer a dispute resolution process in order that a fair decision regarding the deposit is made by an independent third party. This means that it is essential for a landlord to have a full inventory and record of the condition of the property at the start of the lease to ensure that he can prove at the end that he is entitled to receive the deposit or part of it if there is anything wrong with the property or its contents or there is outstanding rent. The contract of lease must provide all reasons for the landlord being entitled to receive the deposit. There is no charge either on the landlord or the tenant for this process. Landlords must be aware that there is a heavy penalty equal to three times the amount of the deposit for failure to lodge the deposit in a scheme in accordance with the regulations. We recommend that landlords consider having a professional inventory and report on the condition of property compiled by one of the companies offering such a service. Most will offer to move the tenant in and check the property at the termination of the lease. The charges for this service are usually based on the size of the property and the amount of contents. In this way you can be assured a better chance of claiming the deposit or a part of it at the end of the lease should the property and its contents not be returned to you in the same state as at the beginning of the tenancy. 4. Tax Implications Income Tax You should bear in mind that any rent received is a taxable form of income which will need to be accounted for to the Inland Revenue on an annual basis in your tax return. There are taxable allowances which will reduce your total liability. 6

7 Going Abroad If you are going to be resident abroad while your property is let out you will need to obtain clearance from the Inland Revenue to receive your rent gross (ie without deduction of income tax at the basic rate). If you do not have this clearance either the tenant or ourselves, as letting agents, will require to deduct tax from the rental income and pay it across to the Inland Revenue. If you require such clearance please ask us for the contact details of the appropriate department of the Inland Revenue 5. Repairing Standards It is a Landlord s duty to make sure a property meets the Repairing Standard at the start of the lease and at all times during it. The Landlord must inspect the house before the tenancy starts, in order to identify the work necessary to meet the Standard and then notify the tenant of the work required. Once the tenancy starts, the duty only applies where the Landlord is aware of work requiring to be done, for example, because the tenant has advised him. The Landlord must then carry out the work within a reasonable time. This applies to almost all private sector tenancies and applies to existing tenancies as well as new ones. The Standard extends previous obligations on private Landlords to repair and maintain a property. A property meets the Repairing Standard where the property - Is Wind and water tight - and reasonably fit for human habitation (taking account of the extent to which the property falls short of any building regulations, because of disrepair or sanitary defects) Structure and exterior - (including drains, gutters and external pipes) are in reasonable repair and proper working order (having regard to the property s age, character and prospective life and locality.) Where the property forms part of a premises eg a flat this criteria includes any part of the premises that the owner is responsible for maintaining, solely or communally, but the Repairing Standard only applies if any part of, or anything in the premises that the tenant is entitled to use is adversely affected. Installations - for the supply of water, gas and electricity and for sanitation, space heating and heating water are in reasonable repair and working order including installations outside the property but serving it, which the Landlord is responsible for maintaining, solely or communally. Fixtures, fittings and appliances - provided under the tenancy are in reasonable repair and proper working order. Furnishings - provided under the tenancy are capable of being used safely for the purpose for which they are designed Smoke alarms - satisfactory provision of smoke alarms. Hard wired interlinked smoke alarms are now mandatory as is a carbon monoxide alarm and a heat detector in the kitchen. 6. Property Safety To ensure the safety of your tenant and to avoid any claims being made against you, you should ensure compliance with the following: Gas Safety: all gas appliances, including central heating, must be safe and serviced in accordance with Landlords Gas Safety Regulations. A Landlord s Gas Safety Certificate must be obtained on an annual basis from a Gas Safe registered plumber or engineer. One copy should be kept in the property. We will require a copy for our own files before we are able to lease out the property for you. Energy Performance Certificates: all properties being leased out require to have an Energy Performance Certificate. The certificate requires to be updated every ten years. A copy of the certificate must be kept in the rented property. We can put you in touch with appropriate providers of these certificates. Electrical equipment: Electrical equipment in privately rented houses in now subject to the Electrical Equipment (Safety) Regulations 1994" and all equipment should bear a British Safety Standard mark (CE mark) to show compliance with the regulations. 7

8 Furniture: all furniture and furnishings should comply with The Furniture and Furnishings (Fire Safety) Regulations 1988", as amended. All settees, armchairs mattresses and any other upholstered items should carry a label displaying a match and lighted cigarette symbol or reference to the regulations. Smoke alarms: these should be mains wired and interlinked and sufficient to comply with the guidelines on smoke detectors. Electrical Installation Condition Report and Portable Appliance Test Certificate: it is now a requirement since December 2015 for each rented property to have this report and to have portable appliances tested. Evidence of the report and such testing requires to be exhibited to the tenants before the lease commences. Legionella Risk Assessment: all properties require to be risk assessed for legionnaires disease. This can be carried out by a landlord themselves or by a person qualified to carry out such an assessment. 7. Multiple Occupancy You will require a House In Multiple Occupancy Licence (HMO) if you are to let your property to three or more unrelated persons. This may require you to carry out modifications to the property. You can contact your local Council direct to obtain further information and details of costs. In any event, you should note that it is an offence to allow your property to be occupied by three or more unrelated persons without having the appropriate HMO Licence and committing this offence can result in a large fine. 8

9 Frequently Asked Questions about Leasing Residential Property How do I know how much rent I can expect? Ask us and we will give you a recommended monthly rental figure taking in to account the property and current market circumstances. What does a tenant have to pay? Before the start of the lease the tenant will pay one month s rent in advance and a security deposit equivalent to one month s rent Can I charge a deposit? Yes, you can take a deposit but you will have to lodge it with one of the government approved Rent Deposit Schemes for the duration of the lease. You can apply to have all of the deposit or part of it to be paid to you at the end of the lease to cover outstanding rent, damage, breakages, cleaning etc, however, you will may have to justify your claim if the tenant does not agree. Who is responsible for payment of the Council Tax? The tenant will be responsible. We will advise the Council of the tenancy so they can collect the Council Tax direct from the tenant. This way the tenant will be able to claim any available reliefs or discounts applicable to his or her circumstances. You will be responsible for payment during any void periods between tenancies. Is it better to lease furnished or unfurnished? That depends on market demand and the type of property you have or the type of tenant you might be looking for. Ask us for advice on your individual case. Do I need to provide a list of contents? Yes, we need an itemised list of all contents. This forms part of the lease agreement, We recommend that landlords consider having a professional inventory and report on the condition of property compiled by one of the companies offering such a service. In this way you can be assured a better chance of claiming the deposit or a part of it at the end of the lease should the property and its contents not be returned to you in the same state as at the beginning of the tenancy. What sort of furniture and contents do I need to make available? That is entirely up to you. Imagine that you were going to live temporarily for a few months in a rented property and think about what you might need to be made available if you did not take anything other than clothes and personal belongings with you. That would be a good starting point. And bear in mind that the better equipped the property is the more likely you are to get a better rent. However, better equipped does not mean filling the property with unnecessary accessories and ornaments! Who makes the final decision as to whether or not to accept an application from a prospective tenant? You do! It is your property after all. Can I specify what the tenant can and cannot do in the property? Yes, you can provide that there is to be no smoking in the property or that there are to be no pets. Can I specify what kind of tenant I am prepared to have? Yes, to a certain extent, but you must bear in mind that you cannot be unlawfully discriminatory ie, refuse any potential tenant on account of their race, religion, gender or any protected characteristic. 9

10 Do I have to make adaptations to my property for access and use by a disabled person? If you have a tenant who becomes disabled he or she may be able to ask for adaptations to be carried out. In such circumstances it is envisaged that there may be grant assistance available. You cannot without consent unreasonably. Am I allowed to inspect my property? Yes, but subject to giving appropriate notice to the tenant in accordance with the terns of the tenancy agreement What happens if the tenant stops paying the rent? This is always a difficulty. There is provision for terminating a lease and having a tenant removed for nonpayment of rent. If you are unlucky to experience non-payment of rent we can guide you on what steps to take. Can I be held responsible for anything done by my tenants? Unfortunately yes. If the tenant is deemed to behave in a way which is deemed anti-social you can be asked by the local authority to take appropriate action to have your tenant stop behaving in an anti-social way or to terminate the tenancy and there will be sanctions on you if you as a landlord do not co-operate. Do I have to pay tax on the rent? Yes! It is a form of income but there are allowances which you can set off against the income before calculating the tax due. If you are going to be non-resident in the UK, then special rules apply we will be pleased to provide you with further details should you so wish. 10