If the current difficulties in the housing market persist then demand for rented accommodation will increase, and with it rents. Many people see lettings as a way to increase income during these difficult times and choose to become landlords. Before they do here are 6 points a new residential landlord should consider:-
If a landlord grants a tenancy and takes a deposit it must be paid into an accredited Tenancy Deposit Scheme (TDS). Details of the scheme must also be given to the tenant within 14 days. If a landlord does not voluntarily comply, the court may order the landlord to do so and pay the tenant three times the deposit amount. The landlord will also be unable to start possession proceedings against the tenant.
It may sound obvious, but many landlords do not sign up tenants to formal tenancy agreements thinking it will save time and money. It is tempting to rely on “off the shelf” agreements from high street stationers. However these ready-made agreements are not be suitable for every situation and prospective landlords should seek advice from a solicitor, before drawing up and entering into a tenancy agreement.
Tenancy Deposit Schemes
Most private tenancies are Assured Shorthold Tenancies (AST) running for an initial 6 month period which allows the landlord to regain possession, for any reason, at the end of that period. However, possession cannot be recovered automatically. The landlord must give the tenant at least 2 months notice in the specified form. If the tenant does not vacate, the landlord will have to get a court order requiring the tenant to leave. Landlords should always see a solicitor before drawing up Notices as any mistakes will render the Notice invalid, causing further delay and expense to the landlord.
Obtaining the mortgage company’s consent
Normal residential mortgages often prohibit homeowners from letting their properties .Prospective landlords should check that any proposed tenancy will not be in breach of their mortgage terms prior to signing and obtain any consents that are required.
Energy Performance Certificates
From 1 October 2008 all residential landlords will be required to provide tenants with an Energy Performance Certificate (EPC). EPCs show the energy efficiency of the property. EPCs need to be compiled by energy assessors and can take some time to be completed. Accordingly, any landlord intending to let a property after September should consider commissioning an EPC in good time. However landlords can use an EPC included in any Home Information Pack available when they bought the property. Failure to comply with the regulations can result in a landlord being fined.
Houses of Multiple Occupation
Houses of Multiple Occupation (HMOs) need to be licensed by the Local Authority. If a landlord lets out a property with three or more habitable floors to 5 or more unrelated tenants, a licence may be required and a prospective landlord should check with the Local Authority beforehand. Failure to obtain an HMO licence if needed is a criminal offence punishable by a fine of up to £20,000.
The bottom line is that while a DIY approach may appear to save time and expense in the short term, it is in fact a false economy. Landlords should take advantage of professional legal advice both when drawing up tenancy agreements and whenever they experience problems with their tenants. Failure to do so could leave them with hefty bills and a property they own but cannot use.