CHOOSING AN AGENT
When selling a property it does not matter to many homeowners which estate agent they use as long as the agent finds them a buyer at the right price. Ultimately if the buyer damages the property or fails to pay the mortgage, it is their property and their problem.
Choosing the right letting agent is much more important because you will be allowing a complete stranger to live in a property that is still yours. It therefore matters very much that the tenant looks after the property, and it matters very much that they pay the rent because it is still your property.
A bad tenant can cost an unfortunate Landlord thousands of pounds in legal fees, lost rent and dilapidations etc. Some Landlords assume that the more agents they instruct, the more they increase their chances of finding a good tenant. In our view, the more agents you instruct, the more you increase your chances of finding a bad tenant. There is nothing wrong with speaking to several agents before deciding which to use; but only instruct one.
Remember, agents generally only receive their commission when the tenant they introduce takes occupation. As a result most agents prioritise sole agency properties because their fee is assured when they find a tenant. They also know they have the time to do their job properly and professionally. For an agent to make a concerted effort to find a tenant only to discover that a competitor has already found one is particularly frustrating when the tenant invariably blames the agent for wasting their time.
A less reputable agent may decide they cannot afford to wait for a good tenant and will therefore try to persuade you to accept any tenant simply to secure their commission.
Unfortunately it takes considerably longer and can cost considerably more to get a tenant out than it does to get them in.
The Lettings Process
The purpose of this guide is to provide an insight into letting a property legally and professionally.
Whether managing a portfolio, or cautiously considering renting your own home for the first time, there is much to consider.
Lloyds Residential Property Services Limited was established in 1996. The director and senior managers have combined experience in the local East London and West Essex areas of over 25 years. The company has been built on the basis of their local knowledge and determination to provide a professional, friendly and fair service to all those who choose to do business with us; and we pride ourselves on providing a service that we would like to receive. All staff receive specialist training in-house as well as through organizations such as ARLA.
Due to the number of injuries and fatalities that have occurred due to untested gas or electrical appliances, old and dangerous wiring and sub-standard, non-fire retardant furniture, legislation now exists to make every Landlord legally responsible for ensuring the properties they let are safe.
The legislation specifically covers the safety of gas and electrical appliances and soft furnishings. Landlords also have a Duty of Care to ensure the electrical installation is safe.
No Landlord ever consciously sets out to harm a tenant. Nevertheless if an accident does occur for example, due to faulty wiring, one must be able to demonstrate in a Court of Law, that “Due Diligence” was shown. In the case of electrical wiring, this is done by ensuring a bona fide electrician tests the installation and provides a written report confirming it is safe. The eyes of the law are then likely to focus on the electrician who approved the installation and not you. You will have taken every reasonable precaution.
The penalty for failing to comply with statutory safety legislation is a maximum fine of £5000 and / or six months imprisonment FOR EACH OFFENCE! In the case of an injury or fatality resulting from non-compliance, considerably harsher penalties may apply.
In the event of civil proceedings being brought against a Landlord for failing in their Duty of Care to a tenant resulting in serious injury or a fatality, damages awarded to the victim’s family will be decided by the Court.
Furthermore in the event of damage to your property resulting from non-compliant appliances, installation or furniture you may also invalidate your contents and buildings insurance.
“The Gas Appliances (Installation and Use) Regulations 1994” requires all gas appliances in rented properties to be checked by a CORGI registered gas installer annually. Any faults found must be promptly rectified (also by a CORGI registered gas installer) and detailed records kept. A copy of a current inspection certificate together with evidence that remedial work (if any) has been carried out must be left at the property. Additionally gas tests should be carried out every time a new tenancy commences.
Every portable electrical appliance must be tested to ensure it is safe unless brand new and proof of purchase can be supplied. A report from a bona fide electrician on legitimate headed paper must confirm that all the items on your list have been tested and are safe. Defective plugs and frayed flexes must be replaced and any appliances failing the test must be removed. Instructions regarding the safe operation of appliances must be supplied.
The Furniture & Furnishings (Fire) (Safety) Regulations 1988 (As Amended in 1989 and 1993)
All soft furnishings supplied must be fire retardant. The regulations apply to beds and mattresses, headboards, sofa beds, futons etc. Nursery furniture, garden furniture, scatter cushions and seat pads, pillows, beanbags, loose and stretch covers for furniture. Compliant items will be labeled.
Bed bases and or mattresses should carry the label “BS 7177”.
All other soft furnishings should carry the label “CARELESSNESS CAUSES FIRE”
If these labels are not attached to an item, then regardless of the reason, unless you can provide proof of purchase, it must be removed from the premises.
The legislation may seem daunting but we deal with this every day on every property we let. The regulations must be taken seriously but as a professional letting agent we will guide and help you to ensure that you comply and that your property is safe.
Compliance need not be expensive.
We can arrange all the checks on your behalf.
Replacing non-compliant furnishings or electrical appliances is NOT always necessary – we let many properties without soft furnishings or certain electrical appliances.
The installation of at least one smoke detector on every floor is recommended. Battery powered smoke detectors often cost less than £10 each and may save lives. It is important however that these are regularly checked. All new homes built after June 1992 must be fitted with mains operated smoke detectors on every floor.
Section 11 of The Landlord & Tenant Act 1985 requires Landlords to:
Rental income is liable to tax whether or not the Landlord resides in the UK. Tax is generally levied on rental profit, mortgage interest, agency charges, furniture depreciation, repairs and maintenance is all taken into account. Landlords are recommended to seek independent tax advice.
Under the Finance Act 1995 Landlords must apply for an exemption certificate to be issued to the Agent to enable rent to be paid without deductions for tax. Only the Landlord can make the application for an exemption certificate which, if granted will be issued directly to the Agent. Application forms may be obtained from the Agent’s Management Department. Until an exemption certificate is received the Agent is legally obliged to deduct tax at the basic rate against net rental income.
A tenant paying rent directly to an overseas Landlord should still withhold tax. The Landlord has a Duty of Care to make the tenant aware of this.
Where Lloyds Residential Property Services are instructed to process rent payments and / or manage your property rent will be forwarded to you within two working days of receiving cleared funds (except in exceptional circumstances) less agreed deductions.
Lloyds Residential Property Services offer comprehensive Rent Guarantee and Legal Protection insurance policies. For further details contact your local office.
Once a tenant is secured references will be available for inspection by the Landlord prior to the signing of the Tenancy Agreement. Ultimately Landlords must satisfy themselves as to the suitability of any tenant introduced.
If requested, this service is available free of charge. An independent referencing company will research the Tenant’s employment and financial history, investigate credit worthiness and speak to previous landlords (if any) before providing a written report. Landlords should be aware that the past performance of a tenant does not necessarily guarantee their future conduct or their ability to pay the rent – it is, like all references, historic. Whilst this is often a helpful guide, circumstances do change which cannot be foreseen.
Under the Housing Act 1988 it is only possible to create three types of tenancy:
To create an Assured Tenancy under the Housing Act 1988 the following criteria must exist:
An Assured Shorthold Tenancy – is a form of Assured Tenancy that offers limited security of tenure to the tenant and as a consequence, providing all the required criteria are met, possession is guaranteed. To create an Assured Shorthold Tenancy the following criteria must be met in addition to the criteria creating an Assured Tenancy.
Landlords must give at least two month’s notice under Section 21 of The Housing Act if possession is required at the end of, or after, the expiry of a fixed term tenancy agreement.
This is obtained by serving a Notice Requiring Possession. Unless otherwise stated in the Tenancy Agreement, tenants paying their rent monthly are required to give a months notice whilst tenants paying weekly need to give four weeks notice. Whilst the term of an Assured Shorthold Tenancy can now be for less than six months, a court can still not evict a tenant under Section 21 of the Housing Act until a term of six months has expired. There are other grounds for eviction i.e. non-payment of rent where it is not necessary to give two months notice.
It is a criminal offence to threaten, or forcibly evict a tenant. Only a Court may evict a tenant after due process of law.
This is an important legal document forming an integral part of the Tenancy Agreement.
Unfortunately many Landlords fail to realise its importance (both in legal and financial terms).
Amounts cannot be withheld from a tenant’s deposit in compensation for loss or damage unless it can be proved (often in Court) that the loss or damage was actually caused by the Tenant.
Technically the document should be called an “Inventory and Condition Report” as an inventory simply listing the contents of a property will be useful only in the event of items missing and not damaged. If the condition of the particular item is not accurately described and the inventory signed by the tenant prior to taking occupation, how can it be proved that the tenant caused the damage?
Unfurnished properties also require an inventory. Presumably there will be wall and floor coverings, kitchen and bathroom fittings etc the condition of which also needs to be described.
Where a dispute cannot be resolved amicably by referring to the contents of the inventory, a tenant’s only recourse is to commence proceedings through the Courts. This is a relatively inexpensive process that is usually settled by arbitration. Judgment will be made only on the basis of written documentation. If the inventory proves the tenant is responsible for the damage as you claim, they will lose the case and you will be entitled to compensation. Conversely, if the inventory provides insufficient proof in the opinion of the Court, the judgment will be made in favour of the tenant and you will be ordered to return the monies you have withheld.
In the circumstances we strongly recommend that you provide a detailed “Inventory and Condition Report”.
The Landlord should insure the premises and their own contents, including public liability for the full period of the tenancy. Lloyds Residential Property Services can arrange competitively priced buildings and contents insurance on behalf of the Landlord. Should you not require this service, you must advise your insurers that the property is to be rented. Failure to do so may invalidate the policy.
The Landlord is responsible for the payment of ground rent and service charges (not utilities) throughout the tenancy. Where Lloyds Residential Property Services are instructed to manage the property arrangements may be made for such payments to be deducted from the rents received.
You will usually require written authority from your Lender before a tenancy is granted. In the case of a leasehold property permission is also required from the Freeholder. You should also check with insurers to ensure cover is extended to rented property.
It is wise to ensure the garden is tidy and well maintained before the tenant takes occupation. Where the tenant is expected to maintain the garden the appropriate tools should be provided.
In our experience the better and cleaner the property, the easier it is to secure a good tenant. Good tenants do not generally rent properties in poor condition.
We therefore recommend that Landlords ensure carpets are clean, attend to any internal decoration required prior to a tenant taking occupation. The tenant is not obliged to leave the property any cleaner upon vacating than it was when they took occupation.
COMPLAINTS PROCEDURE
We sincerely hope you never need to follow this procedure. The future of Lloyds Residential Property Services depends on the quality of our service. If you are impressed hopefully you will recommend us, if not you certainly won’t.
We will try to provide a service we would like to receive. Nevertheless, if you find you are dissatisfied PLEASE TELL US. Whatever your reasons, it is only by knowing about it that we can attempt to rectify the situation. Initially it is a good idea to discuss the matter with the senior person responsible for the office with which you are dealing. However, if they are unable to resolve the matter please write to: