This guide also applies to those who, perhaps, did not set out with the intention of becoming a landlord. It may be that you have inherited a property that you have been unable to sell. Or perhaps you have moved house but are unable to sell your old address.
As a landlord, it is important for you to have a clear understanding of legislation that exists and how to get professional help when needed*. This can be quite overwhelming at first! There are over a hundred different pieces of legislation that relate to letting properties that you as a landlord should be aware of. Failure to comply with legislation relating to letting accommodation can lead to hefty financial penalties or, in very rare cases, even a prison sentence. The latest piece of legislation to affect landlords is the Government's Immigration Act, which makes landlords legally responsible for checking the immigrant status of tenants and their ‘Right to Rent’ in the UK.
We recognise that letting a property can be difficult and stressful. Another important point to recognise is that the lettings legislation in England and Wales heavily favours tenants over landlords. This guide serves to outline the key points a landlord should be considered prior to and during the letting of their property.
The next steps should help address the following questions:
It is not unreasonable to request your prospective tenant to provide photographic proof of identity in the form of a passport or driving licence.
For overseas prospective tenants, you will need to obtain an “Immigration Right-To-Rent” application form and your tenant should fill this out within 28 days before signing the tenancy.
Ask your prospective tenant to complete a “Referencing form” which will include details such as their National Insurance number. On the basis of this application, you will be able to perform a credit check regarding the tenant’s credit history. You must take consent from the tenant prior to performing this check; credit check companies stipulate this. If your prospective tenant is coming from abroad you will not be able to do a credit check. You may consider asking for the whole annual sum of rent up-front for the fixed-term or getting a guarantor.
You may also consider taking references from their current landlord and employer.
The property you are letting is likely to be one of your most valuable assets. Prior to entrusting the letting/management of a property to an agent, and signing a contract with them, it is sensible to ask the following questions:
It is imperative to draw up a tenancy agreement. Occasionally, landlords are tempted, when letting a friend or relative, to do so on an informal basis, without a tenancy agreement. This can become messy if the tenancy does not work out as planned.
It is important to remember that circumstances can change during a tenancy, which can impact directly on the tenancy, for example, loss of tenant employment or benefit entitlement, relationship breakdown. It is therefore advised to approach any tenancy as a business venture, drawing up a tenancy agreement. Always ensure the tenant has a copy of the agreement and that they are clear about the details of their obligations and responsibilities.
Orlando Reid’s “Assured Short-hold Tenancy” (AST) agreement stipulates that the tenant becomes directly liable for registration and payment of all utility bills. Do not be tempted to include the costs of gas, electricity or water in with the rent. It is good practice for a landlord to notify the utility companies of a tenant's name and the meter readings on the day they move in and move out.
Always have a detailed inventory report done on the day the tenant moves in and the day they move out. These will prove invaluable should you need to make a claim against the tenant's deposit money after they vacate. Should an inventory and check-out not be conducted, the landlord will be unable to deduct money from the tenant's deposit.
If you are letting a house with multiple occupancies you should expect to be billed the full Council Tax charge as the Council will not bill individual tenants. You will need to account for this charge when setting the rent.
We strongly recommend that you take out comprehensive rental insurance, as a safeguarding measure.
There are two ways to end an assured shorthold tenancy.
The more straight-forward way is that a tenant gives the landlord written notice of their intention to vacate, clears all their belongings out and hands the keys back to the landlord on departure. Alternatively, the landlord serves the tenant notice, and the tenant accepts this.
The other way is if a landlord takes steps to evict the tenant, against the tenant’s will. This is a three-stage process that is costly and long-winded.
Stage One involves serving a valid notice on the tenant. There are two such notices. The Section 21 notice requires no reason or grounds to be served, but the landlord needs to give two months' notice to the tenant. The other notice is a Section 8 notice, which is served when there has been a serious breach of the tenancy agreement. There are 17 grounds on which you can serve a Section 8 Notice. It is most commonly used for rent arrears, where at least 14 days' notice of leaving is needed.
Stage Two involves making an application to the County Court for a Possession Order. A court fee is required. It is important to have the application to the County Court completed fully and accurately. Failure to do both could lead to you missing out on a possession order and losing your court fee.
Stage Three involves making a further application to the County Court for an eviction warrant. A further court fee is required.
Most tenants comply with their tenancy agreements and pay their rent on time. However, occasionally, things go wrong. With the recent cuts to benefit entitlement, some tenants are struggling to maintain full payment of their rent. In addition, some tenants do not look after the property as well as their landlord expects. In these circumstances, you may be found being a member of a landlord association such as the RLA helpful.