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Landlords Guide

Founded in Hertfordshire in 1983 and with three offices across the County, Wrights Estate Agents have brought together a team of staff with extensive knowledge of the sales and lettings markets which, combined with our enthusiasm and desire to progress, means that we have retained our market-leading position.

We offer an extensive range of services including residential sales, residential lettings, property management and financial services.

People from all walks of life are looking to become involved in the rental market whether investors, companies, people who need to relocate due to work commitments or homeowners who are having difficulty in selling their own properties.  Increasingly, large numbers of people are entering the 'Buy to Let' sector as an opportunity for investment.

As a result, Landlords have come to expect extensive knowledge and expertise from the Agency they choose to act in their interests.

Wrights provides a range of letting and management services based on the experience, skills and expertise of our lettings teams.  As members of National Association of Estate Agents (NAEA) and Association of Residential Letting Agents (ARLA), you can be assured that we have a detailed understanding of the lettings and management sector and will ensure that you are given the best possible service.

Our flexible service can be tailored to your needs with a choice of terms available; we would be pleased to discuss your own requirements in more detail.

Preparing to rent out your property
First impressions count for everything when it comes to property, so it's vital your home looks its best for potential tenants. Maintaining this condition for all your viewings will give you the best chance of letting your home and achieving the best possible price.

The external view
This is the first view your potential tenants will have of your property, so you should focus on optimising its appearance. Remember to have this all done before the agent takes the marketing photographs.

•    Wash down the front door and make sure the house number is clearly visible
•    Tidy up the front and back garden (weed, trim hedges, add some new plants if necessary, clear any dead or unsightly plants, mow and fix any damaged lawn)
•    Repair cracks, holes or blemishes in the driveway or walls
•    Give the window frames and door a lick of paint if they need it
•    Keep rubbish and rubbish bins out of sight

The interior
•    Clean thoroughly from top to bottom - carpets, floors, windows, fixtures and fittings
•    De-clutter and tidy away or remove unnecessary objects such as books and ‘knick-knacks’. Clear out cupboards and wardrobes of non-essential items
•    Make minor repairs - fix leaky taps and cracks in the walls, replace broken or crooked tiles, replace burned-out light bulbs and make sure everything works!
•    Eradicate unpleasant odours like pet smells and cigarette smoke
•    Decorate rooms if required - a quick coat of paint can re-energise the appearance of a room.
•    Make sure all aspects of your property are up to scratch and meet all of the required standards to give you the best chance of finding the right tenants and achieving the best price.

The garden
The garden should be neat and well maintained and with any fences in good order. As a general rule, tenants can only be expected to carry out basic gardening duties; mowing the lawn and keeping beds weed-free.  

The suggested improvements could really make the difference to how quickly you let your property and how much rent you can charge. The lettings market is highly competitive and tenants can afford to be choosy so set the right impression from the start.

Furniture
Landlords and letting agents are subject to The Furniture and Furnishings (Fire) (Safety) Regulations 1988 (amended 1989 & 1993) Under the Regulations, upholstered furniture:

1.    Must have fire-resistant filling
2.    Must have passed a match resistance test or, in some cases the cover should have a fitted fire-resistant liner.
3.    The combination of the cover fabric and the filling material must have passed a cigarette resistance test.

When buying new or second-hand furniture for a rental property, you should always check to see that there is an appropriate label. Furniture or furnishings purchased after March 1st 1990 from a reputable supplier must also be properly labelled with set information and a fire safety warning.

Who should you consult before letting your property?
Before you can let your property, you need to consult a number of parties:

Your mortgage lender
Most lenders will give consent to let subject to certain conditions: Your lender may ask that you let your property on an Assured Shorthold basis, that the initial fixed term does not exceed 12 months and that an administration fee is payable.
The Government “help to buy” scheme does not allow any property brought under these terms to be rented.

Your insurance company
If you don't let your insurance company know that you have let your property, you may not be covered in the event of damage, fire or theft.

Your freeholder or head leaseholder (if you have one)
This is important if you wish to let, for example, leasehold flat.
You may also find it useful to get advice from an accountant or the Inland Revenue.

Choosing a tenant
A successful tenancy is dependent on matching the right tenant to the right property and landlord. A professional agent will ensure that prospective tenants comply with any restrictions that you may have e.g. no smokers, pets or children. Sometimes a restrictive covenant is included in leases e.g. satellite dishes not permitted on the building; your agent should ensure that this information is relayed to prospective tenants. Once an application is received your agent should go through the details carefully so that you, as the Landlord can make an informed decision about whether to proceed with the application or not.

References
Wrights use an outsourced company which references are obtained from the prospective tenant’s bank, employer, accountant (if the applicant is self-employed) and previous landlord or letting agent. In addition a credit reference will indicate whether the applicant has any previous county court judgement against them. As a landlord you should be aware that references can only give an overview of the applicant, they are not a guarantee for the performance of the tenant.

The Tenancy Agreement
An assured shorthold tenancy is now the automatic or default form of tenancy for most residential tenancies. An assured shorthold tenancy (AST) gives the landlord the right to get the property back at the end of the tenancy (although a court can still not award possession during the first six months if a tenant refuses to leave). Most ASTs are for a fixed period and this can be for any length of time but will typically be for between 6 and 12 months.

Guarantors
Some applicants may be unable to provide full references.  
In these cases you may be happy for a tenancy to proceed providing the applicant has a guarantor i.e. someone who will take on the tenant’s obligations relating to the tenancy in the event that the tenant is not able to. A guarantor should also be referenced to ensure that they are financially capable of taking on the debt if the tenant fails to pay the rent.
The guarantor would be expected to sign a guarantor deed confirming their willingness to act as guarantor for a named tenant relating to a specific property. It is essential that the guarantor is given a copy of the tenancy agreement so that they fully understand the extent of their obligations.

What is a “break-clause”?
This is a clause sometimes inserted in a fixed term tenancy, typically if the initial fixed term is for a year or more. A break clause will usually be worded in such a way as to allow either landlord or tenant to give two months written notice at any stage after a particular date or period of the tenancy, thus terminating the tenancy earlier than the end of the original fixed term.

Inventory/Schedule of Condition
This is an absolutely essential document that provides a written benchmark and should be amended, updated and agreed at the beginning of each new tenancy. A properly constructed Inventory/Schedule of Condition details the fixtures and fittings and describes their condition and that of the property generally.  

Landlords should be aware that in the event of a dispute at the end of a tenancy, the landlord will need to provide solid evidence that loss or damage has occurred. The tenant’s deposit belongs to the tenant and continues to do so until such time as the landlord becomes entitled to make reasonable deductions from it.

The Tenancy Deposit Scheme (TDS)
The Tenancy Deposit Scheme (TDS) is an insurance-backed deposit protection and dispute resolution scheme run by The Dispute Service and is based on a scheme established in 2003 to provide dispute resolution and complaints handling for the lettings industry. The new scheme enables letting agents and landlords to hold deposits.
www.thedisputeservice.co.uk

Energy Performance Certificate
As of the 1st October 2008 private landlords offering a property to rent are required to have in place an Energy Performance Certificate (EPC) for the property.  As of the 6th of April 2012 the EPC must be in place before marketing and displayed on all advertising.
EPC's can only be produced by fully qualified and accredited Domestic Energy Assessor (DEA) who will need to visit the property to carry out the assessment and then issues the certificate.  The EPC includes an energy rating from A (best) to G (worst) and makes recommendation on how to make the property more energy efficient.  The EPC is valid for 10 years, regardless of how many change of tenancies there are at the property.  If you require any further information you can refer to the following website: epc.direct.gov.uk/  
To assist you in this, we can organise the EPC on your behalf, at a cost of £100 Inc. VAT.  Please forward a cheque, made payable to Wrights of Welwyn Garden City.  If you already have an EPC in place, please forward this to our office at the earliest opportunity.

Gas Safety Regulations
The Gas Safety Regulations place a legal duty on landlords and agents dealing with rented properties to ensure that all gas appliances (boiler, gas cooker, gas fire) are safe, and that the flues and pipe work leading to the appliances are safe. The law states that a current gas safety record (Landlord’s Gas Safety Certificate) must be produced and given to a tenant before they move in. Gas appliances and flues in rented accommodation must be checked for safety every 12 months by a Gas Safe registered gas installer.
The manufacturer’s installation guide for all gas appliances to be tested must be available at the property at the time of the inspection.
Please note that these Regulations also cover appliances using bottled gas and propane gas.

Carbon Monoxide Detectors
Carbon Monoxide has no smell, taste or colour and is therefore impossible to detect until it is too late. Carbon Monoxide Detectors give both a visual and audible warning if there is a build-up of CO to dangerous levels and these can easily be fitted and at low cost.

Smoke Detectors
Building Regulations require that all properties built after June 1992 must have mains operated inter-connected smoke alarm fitted on every level of the property. Older properties do not have to comply but landlords would be well advised to provide at least battery operated smoke alarms in the property.
It is important to determine who is responsible for testing and maintaining the smoke alarms - the landlord, agent or tenant. If the tenant is to be made responsible, this should be included in all paperwork relating to the tenancy.

Electrical Safety Checks
Anyone who lets residential accommodation (such as houses, flats and bedsits) as a business activity is required by law to ensure the equipment they supply as part of the tenancy is safe.
The Electrical Equipment (Safety) Regulations 1994 requires that all mains electrical equipment
(cookers, washing machines, kettles, etc), new or second-hand, supplied with the accommodation must be safe. Landlords therefore need to regularly maintain the electrical equipment they supply to ensure it is safe.
The supply of goods occurs at the time of the tenancy contract. It is, therefore, essential that property is checked prior to the tenancy to ensure that all goods supplied are in a safe condition. A record should be made of the goods supplied as part of the tenancy agreement and of checks made on those goods. The record should indicate who carried out the checks and when they did it.
It is strongly advisable to have the equipment checked before the start of each let. It would be good practice to have the equipment checked at regular intervals thereafter. You should obtain and retain test reports detailing the equipment, the tests carried out and the results.

Overseas Landlords
A landlord is considered an overseas landlord for tax purposes if they are out of the country for more than six months in any tax year. Landlords are obligated to pay tax if it is due and must declare their income whether or not they are resident in this country. The tax system for overseas landlords is dealt with through the Centre for Non-Residents (CNR) and overseas landlords must apply to the CNR for consent for their agent to pass on gross rental income (i.e. without deducting tax). If your agent does not have this consent, he is duty bound to deduct an amount equivalent to the base rate of tax from the rent, less any allowable deductions. Please note that these rules also apply to members of H M Forces.
http://www.hmrc.gov.uk/CNR/nr_landlords.htm

Tax and Allowable Expenses
There are certain allowable expenses that can be deducted from rental income:
•    Management costs including agent’s fees and VAT
•    Insurance premiums for buildings, contents, rent and legal protection
•    Interest on a mortgage or loan to purchase or improve the let property
•    Upkeep of gardens, swimming pools etc.
•    Maintenance and cleaning costs in preparing a property for letting
•    Some depreciation for fair wear and tear
•    Repairs and maintenance during the tenancy
•    Advertising costs
•    Legal and accountant’s charges
•    Payments for water rates and council tax (if not paid by the tenant)
•    Ground rent and service charges

Repairs & Maintenance Issues
A landlord has a legal responsibility to repair the structure and exterior of the property, including drains, gutters and external pipes; to keep in working order the installations for the supply of gas, electricity and water; and, for the provision of heating and water heating.
A tenant has an implied covenant to act in a “tenant-like manner”. Broadly speaking, this means a tenant should:
•    Report maintenance issues promptly and take reasonable steps to ensure that no damage is caused to the property, its fixtures or fittings
•    Replace light bulbs, new batteries in smoke or CO2 detectors.
•    Keep the property reasonably warm and aired to help prevent condensation or freezing of pipes
•    Leave the property secure when absent from it
•    Keep the garden and other areas reasonably tidy and free from rubbish

Periodic Inspections
The purpose of these visits is to ensure that the tenants are looking after the property and are not breaching any of the conditions of the tenancy agreement e.g. by having an unauthorised pet. Your agent should have a set format and checklist and should check on the following:
•    Repairs that have been undertaken or outstanding work that is required
•    The general standard of housekeeping
•    Evidence of unauthorised occupants – human or other!
•    Breaches of any of the terms of the tenancy
•    Signs of condensation
•    The general condition of the interior and exterior of the property
•    The general condition of the garden, pathways and any outbuildings

Periodic maintenance inspections should be carried out by your agent in line with the terms of business.

Insurance
Landlords should take care to review any existing policies when letting a property as some standard insurance products will either not provide cover, or might place restrictions on cover, for rented property and/or its contents. Failure to inform your insurer that you are letting a property could invalidate any subsequent claim. It is for a landlord to insure the building and his/her contents, fixtures and fittings. The tenants are responsible for insuring any of their own possessions.

Buildings and Contents Insurance
Mortgage lenders generally require borrowers to take out adequate buildings insurance but often landlords do not see the need to take out contents insurance if the property is unfurnished. However, buildings and contents insurance also gives the landlord a level of public liability cover. Public liability covers the landlord for claims against them by anyone coming into contact with the property e.g. tenants, visitors, contractors and officials. For example, if a tenant tripped on loose carpeting, fell down the stairs, and as a result of injury was unable to work, they could make a claim against the landlord for damages.

Legal Protection Insurance
If a tenant fails to leave a property and the landlord needs legal assistance, this insurance will pay for a nominated solicitor and a barrister to represent the landlord if the matter goes to court.

Rental Guarantee Insurance
As long as the tenant has been referenced to the satisfaction of the insurance company, this type of insurance will cover the rent if the tenant falls into arrears.

Landlord Emergency Protection
A landlord can insure their property and goods with an emergency 24 hour call-out service. A contractor will visit the property and make the problem safe to prevent further damage if they are unable to fix it immediately.

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