Understanding Landlords’ Regulations

Tenant agreements, regulations and rights can be complicated and daunting. If an agreement has not been drawn up properly, you could find yourself out of pocket and faced with additional expenses and loss of income while your property is not drawing an income.

The easiest and most secure way to make sure the law is on your side is to engage an experienced lettings management team to run things for you. Makes sure they are ARLA trained – that is the professional body for letting agents in the UK.

Energy Performance Certificates (EPCs)

As a landlord you’re responsible for obtaining an EPC for each property you let, whether it is a house, self-contained flat, bedsit or even a shared house. An EPC gives a property an energy efficient rating of between A (for the most efficient properties) and G. It must be produced by a qualified Domestic Energy Assessor but is valid for 10 years and can be reused as many times as you need during that period.

Property advertisements must contain an EPC rating and you must make one available free of charge to prospective tenants. Failing to obtain an EPC before you market your property could result in penalty of £200 per dwelling.

For more information take a look at:

https://www.gov.uk/buy-sell-your-home/energy-performance-certificates

https://www.rla.org.uk/landlord/guides/epc/

Landlord’s insurance

If you are letting a property, home insurance is not enough. For peace of mind you need to take out landlord’s insurance, which will cover the structure of your property (or properties) and optionally any of your furniture that’s in the property. It won’t, however, typically cover any personal property belonging to tenants.

To protect yourself we suggest, as a minimum, your landlord’s insurance should not only covers standard perils – such as fire, lightning, flood, water leaks and theft – but also malicious damage by tenants and public liability. You could also consider insurance that guarantees rent or provides legal cover.

Tenancy deposit scheme (TDP)

If you rent your property on an assured shorthold tenancy you must put your tenant’s deposit in a government-backed tenancy deposit scheme (TDP). TDP safeguards it so your tenants can be confident they will get any deposit they are entitled to back at the end of the tenancy. There are two types of scheme: a custodial scheme where you pay the deposit into the scheme and the scheme looks after it; and an insurance-based scheme where you keep the deposit but have to pay insurance to the scheme.

By law you have to give your new tenants details of the scheme within 30 days of receiving their deposit. At the end of the tenancy you must return the deposit within ten days of you both agreeing how much your tenant will get back. It is reasonable for you to take money off the deposit for damage or missing items, but not for wear and tear. If the deposit is in dispute it will be protected under the TDP until the issue is sorted out.

You may have to pay compensation or risk not being able to evict your tenants if you don’t abide by the scheme. More information is available at:

https://www.gov.uk/tenancy-deposit-protection/overview

https://www.citizensadvice.org.uk/Documents/Advice%20factsheets/Housing/h-tenancy-deposits.pdf

Notice periods

There may come time when you want to regain possession of your property. Once the fixed term of a tenancy has expired you don’t have to give any notice, but you can also seek possession before the end of the tenancy if your tenant has broken the tenancy agreement – if their rent is in arrears, for example – providing certain conditions have been met. There are a total of 17 grounds on which you may seek possession. In all cases you must give your tenant written notice, usually either two weeks or at least two months depending on the grounds.

Often tenancy agreements allow tenants to leave on the last day of their fixed term agreement without giving notice. A tenant can also end a tenancy early if you agree or if the tenancy has a break clause, which would explain how and when the tenant should serve notice. If a tenant simply abandons your property without giving notice you are entitled to carry on charging rent until the agreement comes to an end.

Notice period can be complicated, but you can learn more at:

https://www.gov.uk/gaining-possession-of-a-privately-rented-property-let-on-an-assured-shorthold-tenancy

http://www.rla.org.uk/Section8

http://england.shelter.org.uk/get_advice/private_renting/ending_a_tenancy/ending_a_fixed_term_agreement  

Taxation

You may have to pay tax when you start renting out property. You must inform HM Revenue that you are receiving rental income. If you don’t, you could be charged a penalty. If it’s property that you own personally, you can report rental income of more than £2,500 a year on your Self Assessment tax return. If it’s less than £2,500 a year, HMRC has a helpline for you to report it.

Tax is payable on the profit you make from renting out the property, after deductions for allowable expenses including, letting agents’ fees, legal fees, accountant’s fees, insurance, maintenance, Council Tax and more. And if your property is furnished you can claim 10% of the net rent as a wear and tear allowance.

To maximize your income from your property it is important that you understand your tax obligations and allowable expenses. You should seek out the advice of experienced professionals, but in the meantime a brief overview can be found at:

https://www.gov.uk/renting-out-a-property/paying-tax

 

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