Landlords Guide

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Rules & Regulations

If you're thinking about becoming a landlord by letting property to tenants, then there are certain rules that you must abide by. Find out who you need to notify and what you need to provide for your tenants by law.

The first step if you're thinking about becoming a landlord is to find out if you are entitled to rent out your property.

If you have a mortgage, this means checking the agreement you have made with your mortgage provider. They will probably require you to change your mortgage (for example, to a buy to let mortgage), which is likely to incur fees and/or a higher monthly payment.

You will also need to check with your building insurer to make sure that the buildings insurance covers you when letting the property out. And if the property is leasehold, you should inform the head landlord.

Finally, the property must be fit to be rented out. Of course, it should be in a good state generally but it's worth checking the whole property over and making sure you're happy with the level of maintenance that will be required before going ahead with rental. By law, 'fit for human habitation' includes the structure and exterior (including drains, gutters and external pipes) as well as the interior. Access to basic services - heating, water, electricity - is vital and you're going to have to be ready to respond promptly when repairs need to be made.

Before your tenants move in

If your property has a gas supply, it is vital that you obtain gas safety certificates for all the relevant appliances (such as the boiler and gas oven) before any tenants move in. We can arrange this with a Gas Safe (formerly CORGI) registered heating engineer; they will check your gas appliances and issue you and your tenant with the correct paperwork, which must be updated annually.

Since October 2008, it has also been mandatory to provide tenants with an energy performance certificate (EPC).

Furnished or Unfurnished

Will your property by furnished or unfurnished? Depending on the area, it's usually easier to let an unfurnished property. But if you will be providing furniture, be aware that all soft furnishings, including beds, sofas, cushions and upholstered chairs, must be non-flammable - and they must have the 'Furniture and Furnishings (Fire) (Safety) Regulations 1988' labels to prove it.
References, Credit Checks, Contracts & Desposits
Get a Reference

You're not obliged to get references from potential tenants, but it's a good idea, especially if you don't know the people you're letting to. The very mention of references should discourage time wasters. Who the reference is from is up to you; evidence of income from their employer is good to know, but a good reference from a previous landlord will give you more peace of mind. In addition to this a credit check will highlight any potential warning flags.

Sign a Contract

If you don't plan to live in the property with your tenants, then your contract will probably be an Assured Shorthold Tenancy agreement (AST). Although it will be assumed that your tenancy is shorthold if you don't have a written contract, it's a very good idea for you to provide your tenant with an agreement that you both sign. This will make it a lot easier to ensure that your tenant honours their side of the bargain (paying rent on time, keeping the property clean and tidy and allowing you to inspect it) and for you to ask for compensation if they don't. If things go really badly, the AST entitles you to a possession order.

Secure a Deposit

Most landlords like to ask for a month's worth of rent as a deposit, in case of unpaid rent or damage to the property. Under new rules, if you ask for a deposit from your tenant, you now have a responsibility to ensure that the money is held in an authorised Tenancy Deposit Scheme and to give the tenant all the necessary details. The deposit will normally be returned at the end of the tenancy, minus any compensation, but if there is any dispute, the scheme provides free mediation.
Who Pays What?

As for who pays what once the tenant is in - well, that's up to you, but it's vital that you agree everything beforehand and make sure it's covered by the contract. Usually, the tenant will pay at least the council tax and water charges. You'll probably decide it's best for them to pay other bills too - electricity, gas, telephone - as this means you won't get stung for high usage.
Declaring Your Income

Letting residential property is classed as a business, whether you're renting a single flat or a street of houses. You'll need to pay tax on any income you earn, minus expenses - although your obligations will vary according to your situation. For example, if you are employed in a job as well as earning a small income from being a landlord, then the rental income will be added to your overall income and tax deducted from the total via PAYE. Contact your local tax office, or an independent financial advisor, to find out more.

Landlord Fee

A landlord will typically be charged a percentage of the rent collected and a tenancy set up fee or a tenant find fee once a property is successfully let out by the agent. Also they may be charged a fee for organising maintenance of works at a property, carrying out inspections and tenancy renewals, dependent on the package agreed with the agent. All fees will be subject to VAT should the agent be VAT registered.

Client Money Protection

Hilton & Horsfall are not members of any CMP schemes

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