With the UK facing a ‘critical shortage’ of rental properties, according the Royal Institution of Chartered Surveyors, the price of renting is set to increase over the next few years.
While this means renting out a property could potentially be more profitable, there are a number of things you will need to do before you consider putting your property on the rental market. However, as long as you stick to some guidelines you can avoid getting caught out.
Check your mortgage
If you have a mortgage the first thing you will need to do is check that your lender will allow you to let the property.
If you have a buy-to-let mortgage then this may not be a problem, but if not, you may need to obtain specific consent from the lender. They may put a time limit on this consent and ask you to pay a fee.
If you are proposing to let a leasehold property, check that your lease allows you to sublet. If not, you will need to get a specific licence from your landlord. You are likely to have to pay your landlord’s costs of providing this consent.
Finally, make sure that you check that your local authority does not operate a landlord selective licensing scheme.
Selective licensing was brought in 2006 to try to get rogue landlords to clean up their acts. It is a good idea to check with your local authority if you are in a selective licensing area as you will need to obtain a licence to become a landlord if you are.
This means that the council will check if you are a ‘fit or proper person’ to be a landlord, as well as making other stipulations concerning the management of the property.
If you don’t get a licence when you should, you could be banned from renting properties in the future and forced to pay back your tenant up to 12 months’ rent.
Comply with regulations
There are a number of legal requirements necessary before letting out your property. Firstly, you must obtain a landlord’s gas safety certificate and hand this to the tenant before the tenancy commences.
In addition, you must make sure you comply with all safety requirements. For instance, a smoke alarm must be installed on each storey of the property that is used wholly or partly as living accommodation.
Furthermore, a carbon monoxide alarm must be installed in any room that is used wholly or partly as living accommodation and contains a solid fuel burning combustion appliance.
You must make available to any prospective tenant a copy of a valid energy certificate before the start of the tenancy.
Finally, ensure you give the tenant a copy the current edition of the How to rent: the checklist for renting in England.
Vet your prospective tenants
It is crucial that when you find tenants you check their immigration status. Sections 20 to 37 of the Immigration Act 2014 prohibit private landlords of residential properties from allowing certain people to occupy them.
Your tenant must have the right to be in the UK before you grant them a tenancy and if there are any limitations you need to make a note of them and regularly check their status.
Nobody wants to be stuck with tenants who don’t pay their rent, so it is imperative that you carry out reference checks. This will highlight any previous credit issues the tenants may have had.
When drawing up a tenancy agreement it is advisable to engage a solicitor to help you to make sure it meets yours and your tenants’ requirements.
Before your tenant moves in
Make sure you take an inventory of the items in the property and attach this to the tenancy agreement. This is to ensure that when the tenant leaves the property you can check all the items have been returned.
It is also useful to take a schedule of condition with photos so you have a record of the state of the premises when it is let.
Finally, if you take a deposit, make sure that it is protected within 30 days of receipt and serve the relevant prescribed information on the tenant within 30 days.
It is important that these requirements are met otherwise a tenant may have a claim against you for the return of the deposit and a penalty of up to three times the deposit.
If you follow this advice you will be on the path to making yourself a landlord and your property a commercial success in the rental market.
Shilpa Mathuradas is head of property litigation at London law firm Osbornes Law.
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