We have a great deal of experience of acting on behalf of landlords and managing the letting of their properties. It's because of our track record that we are perfectly placed to put together the following guide for landlords, which should answer any questions you may have about letting your property with Emsleys. Click on the heading to view each section
Income tax is payable on rent received from property which is let. The amount you pay is dependent on your circumstances. You can offset expenses incurred "wholly and exclusively" for the purpose of letting against the rent and we would advise that you contact your accountant or the Inland Revenue with respect to issues such as relief allowances, in line with your personal circumstances.
Those living abroad for more than six months in any tax year will be regarded as a non-resident landlord. Where landlords may be going travelling or on extended holidays they will be regarded as an overseas landlord unless information can be provided to prove the contrary. These conditions also apply to members of the HM Forces and HM Government employees.
The conditions also apply to companies that have their offices or other place of business outside the UK and companies incorporate outside the UK. In addition it also applies to Trustees.
We would recommend that you contact your Inland Revenue office or your accountant should you have any queries regarding your status.
Where a landlord is resident overseas under rules effective from 6th April 1996 the letting agent or tenant (where there is no letting agent and the rent is more than £100 per week) must deduct basic rate tax from the landlord's rental income and pay this over to the Inland Revenue on a quarterly basis.
Landlords can apply to the Inland Revenue Centre for the Non-Resident Landlord's Scheme (NRL). To receive their rent with no tax deducted under the scheme landlords can complete the forms:
Separate application has to be made for each individual (including husband and wives)
Once approved by the Inland Revenue they will write to the letting agent notifying them of an approval number. Once received, the letting agent can cease to withhold tax. However, until the exemption certificate has been obtained by the letting agent they must retain tax.
We therefore recommend that the Inland Revenue be contacted as soon as possible and preferably prior to any tenancy commencing. Further information may be obtained from the website www.hmrc.gov.uk.
There are different types of tenancy agreements available. Our Lettings and Property Management service will prepare a suitable document for the letting that is being conducted. Invariably this will be an Assured Shorthold Tenancy for a fixed period of at least 6 months. The agreement is legally binding upon you and your tenant.
Should you have any queries with the documentation you should speak with our Lettings and Property Management service. If you wish to use your own Tenancy Agreement or other documentation introduced by another party, then a charge will be made for any involvement we have in arranging or overseeing this.
To comply with recent money laundering legislation it is necessary we verify the identity of our clients. We require proof of identity along with proof of address.
Acceptable proof of identity includes
Photograph driving licence
From December 2003 the legislation with respect to rental property changed. There is no longer an obligation on the part of the landlord to pay Stamp Duty charges. Stamp Duty becomes the responsibility of the tenant where the net present value exceeds £125,000 per tenancy. This is applicable on a cumulative basis and your tenant will be made aware of their responsibility should the agent believe that Stamp Duty is liable.
Our Lettings and Property Management team will prepare an inventory for all Fully Managed clients.
hly recommended that a schedule of condition of the property is recorded for both landlord and tenant before a tenancy commences so that the tenant can be checked-out against this record (giving fair wear and tear) at the termination of the tenancy.
For Let Only clients where specifically instructed, we will undertake an inventory at an additional charge.
The check-in and check-out procedures are the responsibility of the landlord.
For Fully Managed properties we will collect and hold the deposit, as stakeholder. We shall collect a sum equivalent to six weeks rent, although this may vary given certain circumstances and on agreement by the landlord. This will be returned to the tenant on written agreement by both parties as soon as possible following the checkout at the termination of the tenancy.
Where disputes arise we will endeavour to be fair and equitable between both parties, but it's the responsibility of both parties to reach agreement regarding the deposit and we cannot release funds to either party without such an agreement. It is not normal practice to pay interest on monies held on behalf of landlords and tenants.
With our Let Only service we will collect the deposit as with our Fully Managed service and then account for this to the landlord along with the first month's rent (less our fee and any other out of pocket expenses).
Since 6 April 2007, all deposits paid in connection with an Assured Shorthold Tenancy must be dealt with in accordance with a Tenancy Deposit Scheme authorised by the Department of Communities and Local Government, initial requirements must be complied with by a Landlord within fourteen days, beginning on the day which it is received.
The Landlord must give the tenant information relating to the authorised scheme, compliance with the initial scheme requirements, and information about how the requirements operate as prescribed by statutory regulations. The information needs to be in a form prescribed by regulations, and within the fourteen day period.
If the deposit is paid by another person on behalf of the tenant (for example a parent) that person must be provided with the required information in addition to the tenant.
Failure to comply with the relevant scheme would entitle the tenant to apply to the County Court, and the Court may order repayment of the deposit to the tenant or to the designated account of a scheme administrator. In addition the Court MUST order the Landlord to pay to the tenant a sum equal to three times the deposit within fourteen days of the date of the order. Failure to comply with the scheme also prevents a Landlord serving a section 21 Notice for possession.
There are two types - custodial or insurance.
At the end of the tenancy the parties should agree the split of the deposit, or have it resolved by the Court, either way they notify the administrator of the scheme who must make payment within ten days. If one party is uncooperative the TDS will make provision so that the other party might apply to the administrator for the whole or party of the deposit to be paid to it.
Such an application can only be made at least fourteen days after the end of the tenancy, and be accompanied by confirmation that either the applicant has no current address/contact details for the other, or has sent written notice asking acceptance of proposals for the split of the deposit, and there has been no response for at least fourteen days. Applicant must confirm s/he believed s/he is entitled to the amount claimed – accompanied by a Statutory Declaration containing information prescribed in paragraph 4 TDS Order 2007.
The Administrator will notify other party of claim, and if accepted, pay out money claimed. If not accepted, referred to dispute resolution. If no consent for dispute resolution, court proceedings will be necessary to determine the issue.
The single provider of the Custodial Scheme is the Deposit Protection Service Ltd., set up by Computershare Investor Services Limited. Disputes are resolved by the Chartered Institute of Arbitrators. The service is aimed at Landlords.
Under the Insurance Scheme, the deposit is paid to the Landlord who might retain it, on the basis that, at the end of the tenancy agreed amounts are paid back to the tenant, and any amounts not repaid are paid into a designated account held by the scheme administrator. The Landlord must pay an administration charge to the Administrator and contribution towards insurance premiums which will pay to protect the deposit from misappropriation by the Landlord. The Landlord undertakes to the Administrator to pay over such sums as the Administrator directs, the insurance exists to pay the Administrator where the Landlord defaults.
Insurance Schemes are run by a choice of two companies, Dispute Services Ltd., an insurance based scheme for lettings agents (annual fee payable), and Tenancy Deposit Solutions Ltd. for Landlords (joining fee and additional fee for each deposit). The former resolves disputes through Dispute Services Ltd, the latter through the Chartered Institute of Arbitrators. In all cases the right to resolve disputes via Court is retained.
The Dispute Service www.tds.gb.com e-mail deposit@tds.gb.com
Computershare Investor Service Ltd
Properties may fall vacant for any manner of reasons and a landlord should make arrangements for the property to be looked after during such times. Should an owner wish us to look after the property during void periods a float would need to be supplied to the agent to be used against emergency repairs and/or payment of utility bills. The total amount of the float is to be re-claimed from the rental income when the property is next let so as to keep it at one level.
Should an owner require specific inspections of the property during void times (other than visits made during the normal course of re-letting) an additional fee for inspections will be charged.
The landlord should also ensure that the insurance policies for the property do not lapse whilst vacant and therefore you should check with your policy provider for such details.
Where a new build property is purchased an owner may have a period in which he can refer maintenance matters and building faults to the builder/developer. You should ensure you inform your agent of such arrangements so that they may liaise with the builder/developer on items which may be faults and which the builder/developer are liable to repair at their cost.
An agent cannot be held responsible for undertaking repairs, maintenance or replacements if they have not been informed of any such relationships, or for carrying out works should the builder/developer be unwilling to undertake them in a timely manner.
Where specifically instructed we will attend snagging meetings with the builder/developer and carry out an inspection report for the owner at an additional charge. However, it must be remembered that the agents are not experts in all building matters and will only carry out a visual inspection of the property and verify that all appliances are in working order.
For instance should a leak develop from a faulty shower installation the agent may be unable to confirm such a leak by running the shower as the problem may be hidden from view.
Where we carry out a Fully Managed service, we will collect the rent from the tenant generally on a monthly basis by standing order. This is then transferred to the landlord's designated bank account after deduction of our fees and other payments due in accordance with the terms of our retainer, and a statement of account will be sent to you.
We will endeavour to carry this out as soon as practicable following receipt of the rental payment. However, we do allow 21 days for transfer as cases may arise where a tenant pays by cheque and verification of clearance by the banks is required, or in circumstances of late payment by a tenant.
Should a tenant not make rental payment, and it should be borne in mind that people's circumstances may change, we will use our best endeavours to contact the tenant within 5 days of the non-payment and verify the reasons for receiving no rent. If no payment is received by the 14th day we shall inform you and advise you on the courses of action available. As part of a legal practice our Housing Law team is very well placed to assist on any action that may be required.
Our Rent Guarantee and Legal Protection Scheme is available to all landlords of our Fully Managed Service. The scheme provides for cover of up to six months loss of rent (excluding the first month's rent) and legal expenses up to £50,000. The cover stops immediately when the property becomes vacant. Please contact us for further details.
Should you wish to take up the scheme, our Fully Managed fees increase by 2% Plus VAT.
The Tenancy Agreement is normally for a minimum term of six months (unless otherwise agreed). You thereby give the tenant the right to stay in the property for this length of time. To comply with legislation and reserve your right to terminate the tenancy at the end of the term we serve the tenant with a section 21 notice shortly after their tenancy commences which verifies the end date of the agreement.
On or before the fourth month of your tenancy we will contact you to verify if you wish to regain possession of the property at the end of the term or if you wish to continue letting the property. We will then convey your decision to the tenants.
Various scenarios can result if continuing to let the property:
1.The tenant may have decided to leave the property at the end of the term whereby we will inform you and seek your written confirmation to re-let the property. For Fully Managed properties we would then arrange to check-out the tenants at the end of the tenancy and contact you with respect to the return of their deposit.
2.The tenant may advise they would like to renew the tenancy. This can be done in two ways:
A.All parties sign a new tenancy agreement for another fixed term of generally six months
B.The tenants holdover, whereby no further agreement is signed but the tenancy becomes a periodic tenancy and the tenancy continues as before until either party gives notice to terminate the tenancy in the future
Following the European Directive on EnergyPerformance if you are offering any accommodation to let (this includes sub-letting) as from the 1st October 2008 you will need to make an Energy Performance Certificate (EPC) available that reflects the energy performance of the accommodation on offer. The EPC should be provided to a tenant at the earliest opportunity and no later than when a viewing is conducted or when written information is provided about the property or in any event prior to entering a contract to let.
The EPC must be free to the tenant.
A landlord is responsible for ensuring there is an EPC available for the accommodation even if an agent or another service organisation is acting on your behalf. The purpose of the EPC is to show prospective tenants the energy performance of the building. The EPC shows the energy efficiency rating (relating to the running costs) and environmental impact rating (relating to CO2 emission rating) of the building. The certificate will be accompanied by a report which contains recommendations on how to improve the buildings efficiency. However there are no statutory requirements to implement any of the recommendations. An EPC is valid for 10 years or until a newer EPC is prepared.
An EPC can only be produced by an accredited Energy Assessor. This protects landlords and tenants by making sure the assessor has the appropriate skills to carry out energy assessments. You can find an accredited Energy Assessor at http://www.ndepcregister,com/ or by contacting an accreditation scheme or by contacting an agent who may be able to assist you in locating an assessor.
The information is fed into a Government approved software package which will produce your EPC. At the same time recommendations will be produced by the software and reviewed by the assessor with their knowledge of your property, to produce a recommendation report to accompany the certificate. The EPC registered and stored in the national register www.ndepcregister.com with a unique Energy Assessor reference number.
From 1st October 2008 an EPC is required whenever premises in a social or private rented sector are let to a new tenant.
Landlords must provide a copy of the EPC free of charge to the tenant at "the earliest convenience" (i.e when prospective tenants are first given written information on the property or are arranging a viewing) and must provide a copy of the EPC to the person who takes up the tenancy.
The EPC is valid for 10 years and can be reused as many times as required within that period. However once a more recent EPC is commissioned this supersedes an existing one and the most recent one must be used.
An EPC is not required for any property occupied prior to 1st October 2008 and which continues to be occupied after that date by the same tenant. An EPC will only be required once that tenant vacates and the property is subsequently remarketed to let. An EPC must be carried out by an accredited assessor and registered by the assessor.
The penalty for failing to make an EPC available to any prospective tenant is in most cases fixed at 12.5% of the rateable value of the building subject to a minimum penalty of £500 and a maximum of £5000. There is a default penalty of £750 where the formula cannot be applied. In addition, the EPC will still be required If a Landlord has an agent, the agent may be asked to ensure these requirements are met, but the Landlord remains responsible for breaches.
The most appropriate way to deal with the EPC is through the marketing of the property. This may be via web links or electronic communications, so prospective tenants can access the information.
For further information about EPC's:
Energy Performance Certificates
www.communities.gov.uk/epbdThe Carbon Trust
www.carbontrust.co.uk/energyBuildings Regulations Part L
www.planningportal.gov.uk