Being a landlord comes with many responsibilities, including legal obligations. At Romain Coleman, our landlord solicitors offer legal advice by answering seven of the most common questions a landlord may have.
Whether you are a landlord who’s been renting your property out for years or you’ve just purchased your first buy to let, it’s normal to have questions. Romain Coleman has a wealth of experience in supporting landlords to make the most out of their rental property. In this post, our specialist landlord solicitors answer some of the most common questions asked by landlords.
Here are the 7 most common questions that landlords ask us:
Absolutely. On the face of it, it seems like an obvious answer, but it is still quite surprising how many landlords don’t have an effective tenancy agreement in place. This can often be because the landlord rents out his or her property to somebody as a favour. Also, it happened because landlords don’t use a letting’s agency or simply are not aware of how important such an agreement is.
If you don’t have a recognised agreement in place, you can find yourself in a ‘he said, she said’ situation, where it’s difficult to establish your rights as a landlord.
If the landlord and tenant live in separate properties, i.e. the landlord does not share the same property with the tenant, the tenant has control of the property and pays rent to the landlord, then as the landlord, you’d be strongly advised to have an AST – an Assured Shorthand Tenancies agreement.
An AST can be for a fixed term, ranging from weeks to years. It can also be periodic, meaning that the landlord and tenant agree that the tenancy rolls on indefinitely and where the tenant pays at agreed times – e.g. at the end of the month.
A good AST also carefully lays out the roles, responsibilities, and expectations of both landlord and the tenant.
If a landlord then needs to end the agreement, he or she can issue a Section 21 notice and provide two months’ notice. If the tenant refuses to leave, then generally you can start the eviction process.
If a tenant fails to pay their rent, it is possible to take action against them depending on the type of tenancy agreement you have with them. Under the Housing Act 1988, you have the right to evict the tenant, provided that you follow the correct eviction process – this is very important.
It can be tempting to begin the eviction process as soon as payment has been missed. However, it is always advisable to talk to your renter first and understand what’s going on. Try and establish a dialog to understand what is actually happening. It may be they have fallen on hard times through lines or a job loss, and just need a bit of breathing space. If this is the case and you can exercise a little patience and work out a way to have them pay the arrears, then you may find that you have a loyal tenant for many years to come.
If your tenant stops paying the rent, here are a few things you can do:
Our experienced landlord solicitors can support you at every step to ensure that you don’t make any mistakes that could cause further loss. If the matter needs to be taken to court, we can provide you with legal advice and services to reach the outcome you desire.
Landlords must put deposits from tenants into a TDP, a government-backed tenancy deposit scheme within 30 days of receiving them. There are three different schemes – the Deposit Protection Service, MyDeposits, and the Tenancy Deposit Scheme.
You can find details on these schemes on the Gov.UK website.
Renting out your property comes with a certain amount of cost involved. These can generally be broken down into:
Letting costs: The agent fees associated with finding a new tenant and letting out your property. Also, management fees if you let the agent manage the property for you. The fees vary from agency to agency, so we advise that you look into different agencies and the services they offer. Of course, landlords can also self-manage their properties – this would mean you are taking on more responsibility but also less money to splash out.
Preparation & maintenance: Bringing the property up to legal standards, including certifications for gas & electricity, smoke and gas alarms, and energy performance certificates (EPC). This means you’ll need to show a Gas Safety record that shows all the gas equipment has been checked and certified, along with the boiler. You also need to test all the electrical equipment; this is called PAT Testing. If you are supplying furniture and beds, they must comply with the furniture and furnishing legislations to reduce the risk of fire in the property. Finally, any renovation work required, replacement of carpets, white goods and cleaning.
Legal fees: If you are managing your own property, having the appropriate tenancy agreements drawn up. And, if you experience problems with your tenant, the costs associated with sorting that out.
Insurance: Mortgage companies insist on buildings insurance. Even if you don’t have a mortgage, you should still have buildings insurance and possibly contents insurance if you are renting the property furnished. You may also consider insuring for loss of rent if a tenant doesn’t pay for any reason.
Mortgage: Buy to let typically has higher fees and insurance rates than normal mortgages. Also, if this is a second property, then additional stamp duty.
Taxation: Being a landlord is running a business, and as a consequence, you will be liable to pay tax on any profits you earn. How you manage this business is up to you; whether you declare it as additional personal income, or run it as a separate business. We do advise that you speak to a professional chartered accountant to certain how tax, in this case, applies to you.
Yes, you’ll need to tell your mortgage company that you are letting out a property unless you purchased the property with a buy to let mortgage. Be prepared as they may increase your interest rate or charge you an admin fee. It is classed as fraud if you withhold this information from your mortgage company.
Also, your insurance company needs to know and you will probably have to take out a new insurance policy.
When deciding how much rent to charge, it is important to research rental properties that are of a similar spec, size, and target market to yours. You could also get a valuation from a letting agent as well as an understanding of the market you are aiming for. Proximity to amenities such as tube stations will also boost the price.
Another point to consider is that of competition. Market conditions fluctuate and sometimes competition is high. If you are keen to rent your property quickly, consider offering it at an attractive price point. However, you’ll need to make sure you get your numbers right, as buy-to-let can often have slim yields and any rent reductions or increased costs can significantly affect this negatively.
Landlords, in their search for an ideal tenant, could look to offer minimum lease lengths and also hold out on price in an attempt to attract renters in a strong financial position. Again, this is down to how keenly you need rent out your property and whether you are renting in a renter or landlord’s market.
This is an area in which landlords need to be very careful. It’s so important that we have a whole article on the subject of what questions a landlord should and shouldn’t ask.
In a nutshell, though, you need to steer clear of any questions that might involve race, religion or anything else that may imply discrimination. It may seem obvious, especially in this day and age, but it is easy to make mistakes or fall into carefully prepared traps by bogus tenants looking for an opportunity to capitalise on discrimination claims. Our advice is to read our article.
As you might expect, we receive many questions from landlords and these were just some of the top questions. If you require further details specific to your situation, get in touch with us. Our residential property landlord solicitors can provide you with specialist landlord legal advice and support, to ensure you are making the most out of renting out your property.
Call us now on 0208 520 4555 or fill out our Online Form.
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This post is not legal advice and should not replace professional advice tailored to your specific circumstances. It is intended to provide information of general interest about current legal issues.