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It can be very rewarding and fun being a landlord, but there are lots of things you need to consider too.
We've put together this short landlord's guide which is predominantly aimed at first time landlords, but could be useful for landlords with previous experience looking for a refresher.
If you would like some advice or to have a chat with one of our specialists then give us a ring or call into your local branch.
1. How much rent will my property achieve?
Thomas Morris will provide you with a free market appraisal based on current rental activity in the local area. A discussion will also take place on when your property will be available, how long you wish it to be rented for and whether you will leave it furnished or unfurnished. Our service will then be tailored to your requirements.
2. What do I need to do before placing it on the market?
There are a number of steps that are necessary although some of these can be taken after you have placed your property on the market but prior to a tenant moving in. One matter that will need to be addressed is to gain the consent of your mortgage lender (if you have one) to allow you to rent out the property.
It will be advisable to address issues of poor decoration, worn carpets, no window coverings, overgrown gardens and so on, as these may affect the time it takes to secure a tenant and may possibly reduce the achievable rent.
If there are gas appliances at the property, you will need a current Gas Safety Certificate. We can organise this for you together with an Energy Performance Certificate (EPC) which is also a legal requirement before a tenant can take up occupation. Furthermore, if you leave any portable electrical appliances such as lamps or freestanding fridges and washing machines they must be safe for a tenant to use. It is considered good practice to have any electrical appliances safety (PAT) tested. You should be aware that if you leave any portable appliances for the use of the tenant, these will have to be repaired or replaced at your cost if they breakdown or fail.
There is a legal requirement for landlords to provide smoke alarms on each floor and carbon monoxide detectors in rooms which are used wholly or partly as living accommodation and contain a solid fuel burning combustion device. Carbon monoxide could also be emitted from a faulty gas or oil boiler so again it would be good practice to provide detectors in locations containing all such appliances. Legislation also requires landlords to carry out Water Safety Risk Assessments for Legionella bacteria. There is no legal mandate how this should be done however the Health and Safety Executive (HSE) have produced a clear Code of Practice. Any landlord not following this code would have little defence against any claim or prosecution brought by a tenant.
Under new regulations Landlords must ensure mandatory electrical inspections are carried out in rental homes by qualified EICR Electricians on all new tenancies from 1st July 2020. These reports must be completed every 5 years thereafter.
We will require a copy of this report and are legally required to provide a copy to your tenants.
Landlords can face tough financial penalties if they fail to comply with the new regulation, which is part of the government’s commitment to improve standards in the sector. Breaches of the regulations could result in financial penalties of up to £30,000 to Landlords. For new and fully rewired properties, an Electrical Installation Certificate can be presented in place of an EICR report provided the date of the next inspection mentioned on the certificate has not elapsed.
It is also important that as a Landlord you are aware of the Homes (Fitness for Human Habitation) Act 2018
As of March 20th 2019, the Fitness for Human Habitation Act came into force for tenancies in England. This legislation amends the Landlord and Tenant Act 1985 so that landlords must ensure their property is fit for human habitation at the start of the tenancy and then maintain this standard throughout rest of the time the tenant lives in the property.
It is important to note that fit for human habitation does not mean that there is a defect in the property. It means that there is a defect in the property that is so serious that a court considers the property to be unfit for that person to live in. This is an important distinction because it means that the property has to be judged on the basis of the property condition as it is, and whether it is unsuitable for the actual person who lives in it as opposed to the generic tests applied by local authorities using the Housing Health and Safety Rating System. As a result, a younger, fitter tenant living on their own would have a higher threshold for what is unfit for them to live in than an older person or someone with a young family.
The types of matters you will need to ensure do not occur are;
• the building has been neglected and is in a bad condition
• the building is unstable
• there’s a serious problem with damp
• it has an unsafe layout
• there’s not enough natural light
• there’s not enough ventilation
• there is a problem with the supply of hot and cold water
• there are problems with the drainage or the lavatories
• it’s difficult to prepare and cook food or wash up
• or any of the 29 hazards set out in the Housing Health and Safety (England) Regulations 2005
If the courts find that a property is not fit for human habitation, then they may require compulsory improvement to the condition of the property and/or compensation to the tenant.
For more information please refer to https://www.gov.uk/government/publications/homes-fitness-for-human-habitation-act-2018
Finally, there are issues relating to insurance which must be addressed – we can provide more information regarding the insurance of rental premises and contents if required.
Your Thomas Morris representative will talk you through a checklist and we can deal with all these issues for you.
3. Where do tenants come from?
We have a state-of-the-art computerised matching system which will be put to work within minutes of you instructing Thomas Morris. If that initial search is not successful, we attract new tenants by way of advertising your property on the internet via the key property websites including www.rightmove.co.uk, www.zoopla.co.uk and of course www.thomasmorris.co.uk. It will also be advertised in the window displays of our 7 prominent residential estate agency branches. We make sure no stone is left unturned in tracking your tenants down!
4. Do I have to show prospective tenants around my property?
Where appropriate, we can offer a full accompanied viewing service at no extra charge, however if you would prefer to show viewers round yourself, that is fine.
5. What happens when someone expresses an interest?
When a prospective tenant shows an interest in your premises, we will take up references upon each individual. We will obtain a credit reference report checking their financial standing (including establishing household income) and contacting the previous Landlord (if applicable). Under the Immigration Act 2014, it is the landlord’s responsibility to ensure that all tenants have the Right to Rent in the UK – the checks will include verifying and keeping a copy of the passports and all evidence of their immigration status (biometric residence permit). This applies to ALL tenants. Thomas Morris Property Management will undertake the Right to Rent checks on your behalf and Thomas Morris Property Management will also carry out the relevant checks for renewals on fully managed properties.
Thomas Morris operates a policy of treating all tenants fairly and will find them properties based on suitability and affordability. We do not descriminate against tenants in any way.
6. When do tenants move in?
Once we are satisfied that the tenant is right for you, a date for occupation is agreed. Prior to that date, we carry out full Inventory of the property including photographs and a Schedule of Condition to ensure detailed records of the contents and condition of all aspects of the property are comprehensively recorded. This protects you as the landlord from problems and disputes which may otherwise occur later on as the tenant has to agree and sign this document upon moving in. If you are currently living in the property, you will need to take final meter readings and notify your utility providers, water company, telephone services and the Local Authority Council Tax department of your vacation date. Our inventory will include opening meter readings for the tenant (excluding water meter readings unless the meter is within the property or fixed to the external wall).
7. Do tenants pay a deposit?
We will collect from your tenant, one month’s rent in advance together with a deposit equivalent to 5 weeks rent which is held in a separate client account during the tenancy. All tenancy deposits taken by landlords or agents for landlords must be protected by law in a government approved scheme. We use an insurance based scheme – TDS (Tenancy Deposit Scheme) administered by the Dispute Service.
Within 30 days of receiving a deposit, we must provide the tenant with a certificate of deposit registration.
To avoid disputes going to court, each scheme will be supported by an independent Alternative Dispute Resolution service (ADR), whose aim is to make any disputes faster and cheaper to resolve than through courts.
8. How and when do I receive the rent?
We will credit the rent (less relevant commission) to your nominated bank account each month and you will be sent a statement detailing income and expenditure. You are responsible for any tax due on your rent received. We recommend that you consult your accountant on tax matters.
9. Who pays the bills whilst the property is rented?
The tenant normally pays rent, council tax, water rates and all other domestic bills.
You as the landlord pay the mortgage, building and contents insurance. If your property is leasehold, you will continue to pay the relevant leasehold charges – you will also need the permission of the freeholder to rent out your leasehold property.
10. What about the garden?
The garden is the responsibility of the tenant. If you want to leave a lawn mower, it will be your responsibility to have it repaired in the case of a breakdown. If you have a particularly large garden, you may elect to include the services of a gardener in the rental price.
11. What if there is a problem with the property or tenant whilst it is rented?
Your property will be managed by two nominated team members in our Property Management Administration Centre and these individuals will always be your point of contact.
We undertake a minimum of three inspections per annum to ensure all is well within your property. You will receive a detailed report from us after each one together with photographs if appropriate. Again, please note that any item within the property which has ceased to function or which is malfunctioning (e.g. cooker, immersion heater etc), you as the landlord have a responsibility to rectify it. We can arrange all such essential repairs on your behalf.
We operate an out of hours telephone service which will deal with emergencies such as no heating, no electrics, or a damaging water leak. We will organise work with our maintenance companies and advise you the next working day.
12. What about tax on my rental income?
Tax payable to the Inland Revenue is on the profit made. You can offset certain items such as our fees, some repair costs and part of your mortgage interest amount.
If you are an overseas landlord, you will need to complete Inland Revenue Tax forms on line at www.gov.uk.
Until we receive confirmation from the Inland Revenue, we are required by law to deduct 20% tax from overseas landlords rental incomes.
We suggest that you seek advice from your accountant on the above matters.
13. What happens at the end of the tenancy period?
The property will be let on an Assured Shorthold Tenancy, normally for an initial fixed term of 6 or 12 months.
Should you wish to retake possession of your property at the end of the first 6 or 12 month contract, notice will need to be served to your tenant after month 4 or month 10 of the contract – our Administration Centre will contact you at the appropriate time to discuss your options as follows:
a) You can sign a further 6 or 12 month agreement with the tenant or
b) Give the tenant the required 2 months notice or
c) Allow the existing tenancy to become Contractual Periodic Tenancy (monthly) – in this case, should you require the property back, you are required to give two months notice prior to the rent due date, the tenant would need to give 1 month's notice to leave.
At the end of the tenancy, we will carry out a Final Inspection which involves us returning to the property immediately after the tenant has vacated and checking the property against the original inventory. You have to allow for normal wear and tear, any damage will be dealt with from the deposit subject to agreement from the tenant. A dispute, after proper attempts have been made to resolve it can be notified by either party to the administrator of the Tenancy Deposit Scheme. The disputed amount will be sent to the scheme administrator and evidence will be considered. Once a decision has been made, the scheme administrator will allocate the amount to the appropriate parties as soon as practical.
The following charges are payable at various stages during the tenancy period.
Administration charge per Tenancy - £300 for initial marketing and finding prospective tenants, preparation of the tenancy agreement, providing documentation to all stakeholders.
Inventory Fee:
1 bedroom property - £110
2 bedroom property - £125
3 bedroom property - £140
4 bedroom property - £155
5 bedroom property - £175
6 bedroom property - £225
Preparing and Serving of a Section 21 notice - £58.75
Registering/Protecting tenants deposit with the TDS - £35 per annum.
Lease Renewal - £100
All fees are quoted inclusive of VAT unless otherwise stated.
Client Money Protection is provided by Propertymark. The redress scheme for Thomas Morris is The Property Ombudsman Scheme.
