A Guide for Landlords

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Erika Horn
5 years ago
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1 A Guide for Landlords

3 Letting a property can be stressful, but we re here to help. The rules and regulations landlords have to follow are constantly changing. We ve created this short guide to help you to understand what is expected of you as a landlord. It sets out best practices and gives practical advice on how to stay on the right side of the law. If there s something we don t cover you can always pick up the phone or call in to one of our offices. LPS SERVICES PROPERTY MANAGEMENT SERVICE LETTINGS ONLY SERVICE Comprehensive marketing to find a suitable tenant 4 4 Obtaining tenant references & identity verification 4 4 Preparation of tenancy agreement 4 4 Pre-tenancy safety checks 4 4 Pre-tenancy clean & inventory check-in 4 4 Collection of rent 4 4 InTheLoop available 24/7 4 4 Dedicated property manager 4 Proactive credit control 4 Transfer of utilities 4 Keyholding service 4 Arranging payment of outgoings 4 Arranging quotes, repairs & maintenance 4 Access to panel of vetted contractors 4 24-hour emergency contractors 4 Property inspections 4 Compliance advice 4 Managing the check-out process 4 Deposit claim negotiation, compilation & submission 4

By keeping you up to date Landlords can manage their rental properties securely online using InTheLoop. This means you have insight, information and control wherever you are.

4 By keeping you up to date Landlords can manage their rental properties securely online using InTheLoop. This means you have insight, information and control wherever you are. You can start using InTheLoop as soon as a valuation is booked. You can use it to check accounting statements, existing and upcoming tenancies, safety certificates and tenancy documents. You can also view valuation reports, track viewing activity and feedback. This is also available to tenants and over 75% of tenants opt to sign and pay online using InTheLoop. POWERFUL INSIGHT 24/7 ONLINE CONTROL SECURE ONLINE PAYMENTS SIGN DOCUMENTS ELECTRONICALLY

5 By managing your property Tenant expectations have increased over the years. They now expect a service in return for the rent they pay. Change the marked box to With over 15 years of experience, our letting departments work with one property landlords up to corporate PLC s to help place suitable individuals into professionally managed properties. Whilst an owner might be prepared to wait a few days for a plumber to repair the boiler, a tenant is unlikely to be as flexible. Additionally, asking a tenant to arrange a repair themselves can result in unnecessarily high bills. LPS is on hand to help. We can manage the tenancy from the outset and our contractors are available 24/7. We provide a dedicated property manager to deal with any day-to-day issues as well as repairs and emergencies. LPS books in excess of 5,000 jobs annually through vetted contractors with appropriate insurance and experience. This gives us buying power to demand excellent quality and priority appointments at competitive prices. We provide a bespoke service if you have a trusted plumber, builder or electrician that you would like us to call first then we are happy to accommodate this. We will also conduct regular inspections of the properties we manage, producing a detailed report with photographs and recommendations of any work we think is needed to maintain the condition of your investment property. With so many regulations to observe, landlords are increasingly handing their portfolio to professional property managers to oversee their assets and ensure compliance with an evergrowing legislative burden. By keeping you and your client protected LPS is a member of SAFEagent which is a kitemark system to communicate to consumers that they are dealing with an agent that protects landlord and tenant money through a Client Money Protection (CMP) scheme. If an agent does not display the SAFEagent logo then consumers are potentially at risk. LPS is also a member of the following industry bodies and these memberships provide landlords and tenants with an assurance that they will receive the highest level of customer service.

By keeping your tenants safe Gas Safety Certificate Any gas central heating system or appliance will need to be certified as safe to use under The Gas Safety Regulations 1998.

LPS can arrange for the inspection to be carried out by a Gas Safe registered engineer who will issue a Gas Safety Certificate.

6 By keeping your tenants safe Gas Safety Certificate Any gas central heating system or appliance will need to be certified as safe to use under The Gas Safety Regulations Inspections must be done prior to a tenant moving in and annually thereafter. LPS can arrange for the inspection to be carried out by a Gas Safe registered engineer who will issue a Gas Safety Certificate. It is also a legal requirement that a copy of the certificate is given to the tenant within 30 days. Smoke alarms Any property built after 1992 should be fitted with mains operated smoke detectors and alarms on each floor as required under building regulations. It is now also a legal requirement to install a smoke alarm on every floor of a rental property. These must be tested as in good working order at the start of every tenancy a professional inventory check-in report should record if smoke alarms were present and in working order at the start of the tenancy. Carbon monoxide alarms Carbon monoxide (CO) is a colourless, odourless and tasteless poisonous gas. Best practice is to install a carbon monoxide alarm but these must be installed in any room with a solid fuel installation e.g. a wood burning stove. They should also be tested to ensure they are in good working order at the start of every tenancy the check-in report should record this safety check. Electrical safety The Electrical Equipment (Safety) Regulations 1994 state that anything electrical within the property, or anything that you supply as part of the fixtures and fittings, should be up to current electrical safety standards and safe to use. Landlords must also make sure that the electrical system is safe e.g. sockets and light fittings. If you let your property as a HMO (three or more tenants who form two or more households) then you must also carry out safety checks on electrical installations every five years by a NICEIC accredited electrician. LPS can arrange for a qualified and vetted contractor to carry out a Portable Appliance Test (PAT) to ensure all appliances with plugs are safe to use. Furniture & furnishings Furniture manufactured today must have a safety label stating it meets the Furniture and Furnishings (Fire) (Safety) Regulations It is a good idea to check that sofas, beds, bedheads, cushions, pillows and furniture covers still have the relevant fire safety tag attached. Furniture manufactured prior to 1950 is exempt but it is best practice to remove vintage, antique or sentimental items from a property. Legionnaires & safety checks Under the Control of Substances Hazardous to Health Regulations 1989 landlords who provide residential accommodation have a legal duty to consider, assess and control the risks of exposure to Legionella to their tenants. All water systems require an assessment of the risk and landlords can carry out this assessment themselves if they are competent, or employ somebody who is. In most residential settings a simple assessment may show that the risks are low and no further action may be necessary. For more information visit htm#landlord

9 At the start of a tenancy Keys When instructing LPS you will benefit from marketing across our entire network of offices, so we recommend providing us with two sets of keys so that neighbouring branches can show your property to potential tenants. On move-in day there must be enough sets of keys for the number of tenants. During a tenancy LPS usually retains keys for clients using our comprehensive property management service. These are made available to our carefully vetted contractors when access is required, and naturally our key holding service facilitates regular inspections. If you choose to self-manage you must retain keys to the property for repairs and inspections. Cleaning, inventory & check-in Tenants expect a property to be professionally cleaned at the outset, therefore this requires the tenant to return the property cleaned to the same standard at the end of the tenancy. An independent inventory check-in report will serve as a record of the condition of the property at the outset and will be used to re-assess the condition at the end of the tenancy. Wear and tear is to be expected during the course of a tenancy. The check-in report also records meter readings when accessible. The entry costs of cleaning and inventory check-in are usually paid by the landlord, and at the end of the tenancy these are normally paid by the tenant. Utility accounts The tenancy agreement states which utility bills the tenant is responsible for. For short lets all the bills remain in the landlord s name as these are included in the rent, save for telecommunications. For long lets it is normally the tenant s responsibility to pay utilities, council tax and TV licence. If you are using a managing agent then they should assist with the transfer of utilities but the tenant should provide opening and closing meter readings directly to the utility provider. A landlord is liable for bills during vacant periods. Utilities are separate to ground rent, service charges, buildings and contents insurance, which remain the landlord s responsibility to pay. Tenants are entitled to change utility supplier and all households are encouraged to switch regularly for the best deal. For more information visit

10 At the end of a tenancy Renewals LPS will endeavour to contact both landlord and tenant before the end of the tenancy agreement to negotiate an extension of the tenancy, if so required. We will also prepare and execute all necessary paperwork for a renewal. If a renewal is not required we will notify you to remarket to help minimise void periods between lets. Check-out The check-out inspection should be conducted by an independent professional inventory clerk and should consist of high quality colour photos. This dated report will be evidence of the condition and cleanliness of the property at the end of the tenancy, which is critical if a landlord subsequently makes a claim against the tenant s deposit. Deposit deductions At the end of the tenancy the tenant is required to request the return of the deposit. Within 10 days of this request the landlord must return any amount from the deposit which the landlord is not intending to withhold. The landlord must also inform the tenant of any proposed deductions. If there is a dispute on proposed deductions then the amount in dispute is transferred to the deposit scheme being used ( and their alternative dispute resolution service will determine the outcome. This is an evidence-based process decided by an impartial qualified adjudicator. Remember that wear and tear will occur especially if a tenant has been in occupation for a number of years. A landlord is entitled to charge deductions for dilapidations and damages, but cannot claim for betterment. Landlords cannot use the tenant s deposit as a redecorating budget to improve the property condition, only to restore it to the same condition as the start of the tenancy, save for fair wear and tear. Discussing deposit deductions can be the most difficult part of being a landlord. Clients using our management service benefit from LPS conducting all deposit negotiations and evidence submissions on their behalf in the event of a dispute.

12 Your legal requirements Energy Performance Certificate (EPC) It is a legal requirement to have a valid EPC when marketing your property and a copy must be made available to prospective tenants free of charge. LPS can arrange this for you and they are valid for up to 10 years. From 1st April 2018 all rented properties must have a minimum energy performance rating of E or above. Consents to let Please remember to obtain permission to rent the property from any co-owner(s) as well as permission from any mortgage provider or freeholder, if applicable. Ensure all property owners are named as the Landlord on the lettings paperwork. Local authority licensing & Houses of Multiple Occupation (HMOs) Check with the local council whether you need to apply for a licence when letting your property. The costs and scheme rules vary significantly between local authorities. Liverpool is currently 400 per property. LPS can get a discount due to our professional memberships. Please ask us for more information on this. In most cases, a HMO is a property in which three or more people who form two or more households share basic facilities, such as a kitchen, a toilet or a bathroom. A household is either a single person or members of the same family who live together. This includes people who are married or living together as married. Mandatory licensing applies within England and Wales to HMOs where there are five or more occupants in a property of three or more storeys and the tenants comprise two or more households. A number of councils have extended licensing to entire wards, or to all private residential lettings within a borough. It is important to regularly check the website of the council your rental property falls within to ensure your ongoing compliance with local licensing rules, e.g. Liverpool have enacted this however Sefton currently haven t. HMOs must also meet certain defined standards in safety and management. The Department for Communities and Local Government (DCLG) issued guidance for landlords and property managers of HMOs to understand what is required in order to be compliant which can be found at Right to rent checks These have been introduced as part of the Immigration Act 2014 within the private rental sector across England and place restrictions on illegal immigrants accessing rented accommodation. From 1st February 2016 the immigration status or right to rent of all prospective occupants aged 18 and over must be proven by a tenant and confirmed by a landlord before a tenancy can be granted. The Immigration Act 2016 imposes criminal sanctions on landlords for non-compliance. Please consult publications/right-to-rent-document-checks-a-user-guide

13 Tax on rental income All rental income arising from property in the UK is subject to tax. UK residents can usually complete a HMRC Self Assessment tax return to declare this income. Overseas landlords have to be taxed at source, unless their agent has permission from HMRC to pay rent to them gross of tax. Please consult for more information. Deductible allowances can help minimise tax on rental income. We recommend taking professional tax advice to ensure that you are maximizing your allowances. Insurance As a landlord you must have buildings and contents insurance in place at all times and these should be specific to a rental property. Even if your property is not furnished, it is still worth considering having contents insurance as some offer public liability cover, replacement locks and potentially the cost of rehousing tenants in the event of fire/flood. Unfurnished properties that contain white goods such as a washing machine and fridge-freezer are still worth insuring under a policy specific to a rental property since the cost of repair/replacement can be considerable. Money Laundering Regulations All estate agents are subject to the Money Laundering Regulations 2007 and the Proceeds of Crime Act As a result we will need to ask you for proof of identity and proof of address. We will require sight of all original documents or alternatively certified copies. Below is a list of acceptable identity documents for landlords acting as an individual. LPS requires two different documents one from List A and one from List B which must be dated within the past three months. LIST A - Identity Document Valid signed passport Valid UK driving licence EEA member state identity card LIST B - Proof of Address Recent utility bill Home or motor insurance certificate Recent mortgage statement Current local authority tax bill/tenancy agreement Recent bank/building society statement Solicitors letter confirming house purchased/land registration Valid UK driving licence (only where this has not been used as a List A identity document) NHS medical card State pension benefits book

14 The important stuff Landlord Fees, Contracts & Finance Standard fees Lettings only: Two weeks Rent (+ VAT)* No Renewal Charges for the tenant continuing after the first term! * Subject to a minimum fee of 375 +VAT Other fees Inventory check-in: 85 Gas Safety Certificate: 65 Electrical Safety Certificate: 150 Lettings & Property Management: 10% (+ VAT) Some landlords negotiate a different rate depending on property, portfolio or circumstances. We are always flexible as we are independent Finders fee: two weeks rent ** ** subject to a minimum fee of VAT Anti-Money Laundering and Identification Checking Fee: 15 Energy Performance Certificate: 65 (non commercial) Deposit protection registration: 15 Property inspections beyond the first (first included within lettings fee): 75 Section 21: 75 HMRC Return for Non-resident Landlords: 75 Insurance Cases: 10% plus VAT of the case if we act on your behalf Court appearance: 300 per day Works over 750, Major Works Co-ordination fee: 5% (+ VAT) of the invoice total. Your vetted contractor may pay a referral fee to LPS. The fee paid will be included within the contractor s invoice and could be up to 20% of the total invoice amount depending on the service provided, the details of which are available on request. This does not affect the final amount you pay

15 Contracts A tenancy agreement is the contract between landlord and tenant. The quality of the tenancy agreement used can have a direct impact on your ability to make a claim on the tenant s deposit, to hold them liable for rent, utilities and to ensure any notices are correctly served or received. For this reason, we recommend using LPS tenancy agreement. We will select the appropriate type of contract, prepare any specific clauses agreed and make this available for electronic signature through InTheLoop. Rental payments LPS successfully collects 90% of all rents due to landlords using our comprehensive property management service. Rent arrears are one of the greatest concerns a landlord can have so letting through LPS should give you peace of mind. We even offer a rent guarantee through our third party insurer. Our advanced systems allow us to transfer rent to your nominated bank account usually within 5-7 days of receipt. All transactions can be viewed on your InTheLoop where statements of account are securely stored. Deposits The deposit for a long let is usually equivalent to four weeks rent. LPS will hold the deposit as stakeholder. We are legally required to register a deposit for an Assured Shorthold Tenancy every time a tenancy is granted, extended or renewed. Failure to do so entitles the tenant to make a claim against the landlord and the penalty for non-compliance is up to three times the deposit value. For Assured Shorthold Tenancies the deposit will be registered with Landlords and lettings agents who take a deposit in England and Wales must protect it within 30 days of receiving the money from the tenant. Proof of the deposit protection, known as Prescribed Information, must be given to the tenant within 30 days, plus the latest version of the Government publication How to rent: the checklist for renting in England. LPS will arrange all of this on your behalf.

16 Find us Liverpool London Ireland City Centre 28 Exchange St East Liverpool L2 3PH T Mayfair 121 Park Lane London W1K 7AG T Armagh Armagh Business Park Armagh, BT60 1HW South Liverpool 115 Picton Road Liverpool L15 4LF T

What you need to know to rent your property

LANDLORD GUIDE What you need to know to rent your property Cocoon are experts in lettings, so feel free to contact us at any time to answer any questions you may have. In the meantime, see below for useful