Thinking Of Purchasing A House To Let?

There are many things to think about when letting your property…

Property safety

The Landlord must ensure that the property is safe to be rented out which involves:-

Installation of working smoke alarms on every floor where there is living space;
Installation of carbon monoxide detectors in every room where there is a solid fuel burning appliance;
A valid gas safety certificate for all gas appliances at the start of the tenancy which must be renewed every 12 months and a copy passed to the tenant within 7 days;
Comply with health and safety obligations including the preparation of a Legionella Risk Assessment in relation to the risk of Legionnaires Disease at the property
Electrical Condition Report

Arrange an EPC

Landlords are required to produce to their tenants a valid Energy Performance Certificate on the day they move into the property. An EPC, as they are more commonly known, compares the current energy efficiency of the property with potential figures the property could achieve with improvements.

From April 2018 landlords will have to ensure that the property has a minimum standard of an E rated building in order to be let and this should be considered when purchasing a property to let.

An EPC is valid for 10 years, unless improvement works have been undertaken, that amends their energy efficient rating.

Electrical Condition Report

The Electrical Safety Standards in the Private Rented Sector (England) Regulations 2020 came into force on 1^st June 2020 requiring landlords to have the electrical installations in their properties inspected and tested by a person who is qualified and competent, at least every 5 years where a private tenant has a right to occupy a property as their only or main residence and pays rent. This includes assured shorthold tenancies and licences to occupy.

There are exceptions set out in the Regulations which include social housing, lodgers, those on a long lease of 7 years or more, student halls of residence, hostels and refuges, care homes, hospitals and hospices, and other accommodation relating to healthcare provisions.

Houses in multiple occupation are included if the HMO is a tenant’s only or main residence and they pay rent.

They will apply to new tenancies from 1 July 2020 and existing tenancies from 1 April 2021. A new tenancy is one that was granted on or after 1 June 2020.

Landlords are required to provide a copy of the electrical safety report to their tenants, and to their local authority if requested.

It is likely that the majority of landlords already make sure the electrical installations in their rented properties are safe, however this will now be a requirement for all landlords.

The Regulations require that:

Ensure national standards for electrical safety are met.
Ensure the electrical installations in their rented properties are inspected and tested by a qualified and competent person at least every 5 years.
Obtain a report from the person conducting the inspection and test which gives the results and sets a date for the next inspection and test.
Supply a copy of this report to the existing tenant within 28 days of the inspection and test.
Supply a copy of this report to a new tenant before they occupy the premises.
Supply a copy of this report to any prospective tenant within 28 days of receiving a request for the report.
Supply the local authority with a copy of this report within 7 days of receiving a request for a copy.
Retain a copy of the report to give to the inspector and tester who will undertake the next inspection and test.
Where the report shows that remedial or further investigative work is necessary, complete this work within 28 days or any shorter period if specified as necessary in the report.
Supply written confirmation of the completion of the remedial works from the electrician to the tenant and the local authority within 28 days of completion of the works

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Check your Tenant’s right to rent

From 1st February 2016 you must check that all tenants and/or lodgers aged 18 and over can legally rent property in England. This includes:-

People residing at the property who are not named on the tenancy;
Where there is no tenancy agreement;
The agreement is not in writing.

You can check the status of those living at the property by checking and taking copies of the tenants’ identification. This can include:-

UK passports;
European Economic Area passport or identity cards;
Permanent Residence Cards;
Travel documents showing indefinite leave to remain;
Home Office immigration status documents;
Certificate of Registration or naturalisation as a British Citizen;

You are required to carry out checks on all tenants regardless of whether you believe them to be a British Citizen and failure to do so could lead to fines up to £3,000 per tenant.

Arrange a Tenancy Agreement

When a tenant agrees to let your property you must provide them with a tenancy agreement, the most common of which is an Assured Shorthold Tenancy (“AST”). This will contain terms of the letting to include the name of the parties, the address of the property, duration of the tenancy and the rent payable. The AST will also include details the required notice period should the tenancy be terminated. The initial rental period will usually be 6 months and the Landlord cannot give notice terminating the Tenancy earlier than the end of the 6 month period.

You must also provide the Tenant with a copy of the Government’s ‘How to Rent’ booklet as failure to do so will mean that you cannot serve a s.21 Notice to them later in the tenancy asking them to vacate the property.

Protecting the Tenant’s deposit

As a Landlord you must pay the deposit that your Tenant pays to you in a government approved Tenancy Deposit Scheme within 30 days of receiving the same. This only applies to properties that are rented on an AST that started after 6 April 2007. The three Schemes that are currently government approved are

Deposit Protection Service;
MyDeposits;
Tenancy Deposit Scheme.

As part of the Tenancy Deposit Protection Scheme you must provide the tenant with the Prescribed Information required under the Scheme. This must be done within 30 days of the deposit being protected and also must be served on any guarantor or anyone else who has contributed to or paid the deposit.

Other points to consider

As well as your legal requirements there are other points that you may wish to consider when letting your property such as:-

Landlord’s insurance. Potential landlords need to make sure their buildings and contents insurer knows they are letting out the property and that the cover will remain valid.
Whether you use an agent to market and manage the letting;
Landlord’s Mortgage. If you have purchased the house with the help of a regular mortgage (as opposed to a buy-to-let mortgage) the landlord must make sure the mortgage terms allow the property to be rented out.
Referencing your tenants;
Income Tax; The first £1,000 of rental income is tax free, anything above must be declared to the HMRC.
Conducting an inventory.

RENTING CHECKLIST

Safety

Smoke alarms
Carbon monoxide detectors
Valid gas safety and copy passed to tenant
Legionella Risk Assessment

Energy Performance Certificate

Rating of minimum standard
Copy passed to tenant
Improvement works carried out? Revised EPC obtained

Tenants right to rent

Identification checks carried out on tenants/occupiers

Tenants deposit

Paid into Government approved scheme

Arrange tenancy agreement

Other points

Landlord’s insurance
Appoint managing agent (if required)
Obtain references for your proposed tenant
Prepare an inventory