What you need to know as a potential Landlord.
In this weeks blog we’re going to be looking at what you need to know as a potential Landlord. Oasis welcome all types of landlord whether it’s your firsts venture or your last!
Fire Regulations Governing Furnished Properties
Under the 1988 Fire Regulations Act it became law from March 1993 onwards that any property let furnished must comply with that Act. Therefore, any furnishings (except pre 1950’s) left with a property must comply with BSI standards. Failure to comply with these regulations now carries a heavy penalty of £5,000 or a six month prison sentence if not adhered to.
There is obviously a financial limit that landlords will wish to go to when furnishing a property. We therefore recommend that items of specific, intrinsic or sentimental value are not left within the property. To the same extent expensive china or glassware is not considered suitable and certain electrical items we recommend are not to be left due to their costly repair liability. These include: Food Mixers, Televisions, Computers, DVD Players, Hi-Fi Equipment, etc.
Electrical and Gas Regulations
It became Law in October 1994 for all gas appliances within a property to be serviced and safety checked at least once every 12 months by a Gas Safe registered engineer. The revised gas regulations also stipulate that a certificate must be available for the tenants’ inspection, proving that the services have been carried out. We can arrange for such services to be carried out by our recommended registered engineers or a Landlords choice of registered engineer.
In order to comply with various legislation, including the Landlord and Tenant Act 1985 and Consumer Protection Law, landlords are required to ensure that electrical installations and appliances are safe. Oasis can organise this certification for you.
Energy Performance Certificate EPC
From the 1st October 2008 an EPC must be available to prospective new tenants. They are valid for 10 years. Your property cannot be advertised without one. OASiS can organise this assessment for you.
In order to comply with the Health and Safety Executive’s Code of Practice, landlords should carry out a risk assessment on hot and cold water systems at their property to determine the risk of Legionella, especially if there are open water tanks, cooling systems or a swimming pool. Works may need to be done to make the property safe for habitation.
Should I tell my Mortgage Company? (If I do not have a buy to let mortgage)
It is usual for the following parameters to apply to the above question if the mortgage company is to agree:
- In some cases a higher rate of interest may be charged.
- In some cases, your mortgage company will levy an administration charge.
- References and tenancies may have to be seen by the mortgage company before granting permission.
- The mortgagors may insist on the correct documentation to ensure reoccupation. They may also insist on the management being conducted by a recognised body such as a member of the National Association of Estate Agents (NAEA) or the Guild of Professional Estate Agents (GPEA), or the Guild of Lettings and Management (GLM).
- It is usual for a length of time to be set that the property can be let for.
- Permission will usually only be given if the mortgage account has been managed to the lenders satisfaction.
What about Tax?
It is necessary to prepare accounts each year on all properties let, whether they are furnished or unfurnished. Your accounts should be presented to the Inland Revenue indicating what taxation liability might arise. Tax Liability is assessed on the tax year running from 5th – 4th April. You are able to claim many allowances when letting your property that can be deducted from your profit.
Such allowances included letting agents fees, solicitors fees, accountant fees, maintenance and repair work carried out during the letting or wear and tear allowance, leasehold, ground rent and service agreements on central heating and other appliances. Mortgage interest can also be offset.
The responsibility of payment of tax depends on whether or not the Landlord lives in the UK or abroad. If the Landlord lives in the UK then the Inland Revenue will assess the Landlord for the appropriate tax. If the Landlord is abroad then the letting agent will be assessed for tax and will be responsible for paying it on the Landlords behalf. This is done on a quarterly basis direct to the Inland Revenue at the current rate of tax of the net rental.
Since the introduction of self-assessment it is now possible for Landlords to apply for an exemption certificate by completing a “Non- Resident Landlord Form” allowing the agent to continue paying the rental without deduction of tax.
Maintenance… who is responsible for what?
As a rule of thumb, The Landlord is responsible for exterior and interior maintenance. The Tenant has a responsibility to show a duty of care to the property and contents. As part of our property management services we arrange periodic inspections of your property to ensure that the tenants are fulfilling this obligation. These include less formal inspections at six weeks from commencement to get a feel for how the tenants are getting on and advise them of any concerns we may have early in the tenancy. We also return for a further visit before termination of tenancy to advise on any issues which may require address to avoid any deposit disputes.
Utilities and other costs
The Tenant will be responsible for the council tax, gas, water, electric and telephone accounts. The Landlord will remain responsible for buildings and contents insurance and any other outgoings such as service charges, ground rent etc.
Insurers must be notified of the letting of your property so that the policy on the structure and contents may be endorsed. Insurance will be invalid if insurers are not correctly informed. OASiS also advises that insurance specific to contents cover is arranged to protect against possible damage by Tenants. OASiS cannot be held responsible for loss or damage to the contents while the property is let. We are pleased to be able to offer a full range of specialist tailor made insurance for Landlords at competitive rates, including policies that protect against rent default.
For a full breakdown of the various service levels please visit our Landlord Services page for a more in depth explanation.