Are You a First-Time Landlord?
The thought of becoming a Landlord for the first time can be both exciting and somewhat daunting. The idea of receiving a healthy regular return on your investment, certainly when compared to what the banks and building societies can offer, is tempting particularly for those planning financial security for the future.
It is worth noting that a Landlord’s responsibilities are many and varied and their obligations to both the Tenants and the property may seem onerous at first glance.
Professional advice is essential if a “trouble free” let is to be achieved. In this month’s newsletter, the first of a regular feature, we will guide you through the first stage of the process, the “pre-letting” requirements …
First of all, most rental properties will already be subject to a mortgage or other loan. It is normally a requirement that written consent from the lender to let the property is obtained. Failure to comply may constitute a breach of your mortgage agreement but be aware that approval consent fees may apply. Always speak to the Mortgage Provider.
Head Lease Approval
Where a property is held on a long lease, often the case with flats or apartments, the Landlord must ensure that the intended letting is permitted under the terms of the “Head lease”. Permission is usually required to “sublet” and approval consent fees may again apply. It is worth noting that in most cases both the ground rent and the service charge remains the responsibility of the Landlord.
Buildings and Contents Insurance
As a Landlord, you are responsible for ensuring that the property is fully insured for both buildings and where appropriate, contents. This should also include third party liability cover, always check with your intended provider.
Gas and Electrical Compliance Checks
Where gas is connected to a property, all of the appliances, pipework and flues in the property must comply with the “Gas Safety Regulations 1998”. This includes an annual safety inspection carried out by a Gas Safe Registered Engineer who will provide a “Landlord’s Gas Safety Record” prior to the commencement of any tenancy. Likewise, you should ensure that the electrical supply and wiring is safe and obtain safety certificates from a suitably qualified electrical contractor.
Furnished or Unfurnished?
You may consider letting out your property on a furnished or part-furnished basis. Think carefully. First of all, all soft furnishings including upholstered furniture, beds, mattresses, pillows and cushions supplied in the property and forming part of the proposed letting, need to be labelled as being fire retardant. The “Furniture and Furnishings (Fire Safety) Regulations” outline all of the Landlord’s responsibilities.
The condition of the property, fittings and equipment provided all need to be fit for purpose, clean and fully operational. Warranty documents should always be retained.
Smoke and Carbon Monoxide Detectors
Recent legislation has introduced a requirement for all Landlords to provide Smoke and Carbon Monoxide alarms to ensure the safety of the Tenants. You must ensure that at least a battery-operated smoke alarm is provided on each individual floor of the property and should also provide a suitable Carbon Monoxide detector located close to any gas or solid fuel burning appliance.
Energy Performance Certificate
All Landlords are obliged to provide an “Energy Performance Certificate” when offering a rental property to the market. The EPC shows a record of the energy efficiency levels and Co2 emissions of a building. The cost is minimal and provides cover for ten years. It is worth noting that a minimum “E” rating will be required for all properties offered to rent from April 2018.
HMRC and Tax
As a Landlord, it is always nice to receive “unearned income”. However, you are responsible for notifying H M Revenue and Customs of the income you receive and will also be responsible for payment of any tax liability which arises from rents collected. Certain costs are tax deductible, and you should always seek professional advice to minimise your outgoings.
If these “Pre-Letting Requirements” are addressed in good time, you’ll be ready to offer your property for rent …. In the next article, we’ll look at the best ways to market your property to ensure you achieve the highest rent possible to maximise your investment potential!