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Letting Agents

Many new landlords choose to employ a letting agent, especially if they are going abroad for a while or will be unable to keep tabs on the property. Make sure you understand what their letting agreement means, whether they will just be finding a tenant and checking references, or whether there is a complete management service. Check they are members of one of the professional organisations (ARLA, RICS, NAEA) and that they have bond and insurance cover. Above all, read their letting contract to see what they will do and what they will charge. Are legal expenses covered too?

Doing it Yourself

Some of the most successful landlords are those who rely upon personal referral for all their tenants. It takes time to build up that expertise, but before you take on a tenant consider:

• Where they are coming from, how long they will stay and where they will go,
• How can they pay the rent?
• References and/or guarantees
  

This is a business and it's vital you get it right. The wrong tenant could be a disaster.

Resident Landlords

There are special rules about letting rooms in your home. You must continue to live there, of course, but there is special tax treatment and the tenant has far less security. That reflects the fact that the property is your home, and the special risks associated with it.

Some people think that if they let out their home for a period, while they are away for a year, for example, then there's no need to take legal action if the tenant doesn't move out on the set date. Sadly, that isn't true, and it's all the more
important to know why the tenant will be able to move on as agreed.

Student Lettings

These can be very profitable, but of course the risks are greater.
The advantage with students is that they will normally move on at the end of term, the risks are that all students' finances are precarious these days, and the wear and tear is higher. A guarantee is worth having, but check the guarantor is able to meet it too.

It's also particularly important with student lettings that each party fully understands what is involved in the agreement. As the tenancy will normally be furnished an inventory check is vital at the outset.

Letting Rooms

If you are letting rooms individually to tenants (rather than to a family or group of students together) other than as a resident landlord then you are subject to the very stringent requirements for HMOs (houses in multiple occupation) which require registration with the Council, fire checks and special safety provisions. Not for the faint-hearted …

Health and Safety

Gas checks must be made annually by a CORGI plumber, whose certificate must be produced to the tenant. Electrical checks must be made regularly, and furniture must comply with anti-combustion regulations. There are no special requirements for fire, save common sense and decent alarms and sprinklers.

The landlord is responsible in any event for the structure of the building and the integrity of electricity, gas and water supplies. The local Council can provide leaflets on the regulations.

Tenancy Agreement

The normal agreement is for a fixed term of 6 to 12 months, depending on the personal circumstances of both landlord and tenant. This is called an Assured Shorthold Tenancy. These tend to follow a standard format, and allow for special terms to be inserted as well.

It's most important the tenancy agreement is prepared ahead of the letting, so the tenant can see it and know all about any special terms. Those terms must be fair to both parties, failing which a court may rule them out as invalid.

The tenancy agreement is prepared in duplicate so each party has a copy signed by the other. The tenant should also have a copy of the agreed inventory, and contact details (if there is no letting agent) for emergencies.

Expiry of the Term

Six months is the minimum term for an Assured Shorthold, the parties may have agreed longer. Unless it has been ended legally by the appropriate notice (there is a standard form), it will then continue automatically until ended by either party : by the landlord on 2 months notice, the tenant on 1 month - the notice should expire at the end of a rental period, so more than the minimum may well be needed. Hence if the agreement was for 6 months from 15 September, the landlord must serve a notice by 14 January to end it on the expiry date, or, if it continues after then, the notice must be at least 2 months and expire on the 14th of a month. This can be tricky!

It's often the case that both parties prefer to enter into a fresh term which gives security and must be for at least another 6 months. Landlords letting through agents should watch out for special charges for renewals. This is also the time when any change in rent can be negotiated.

Rent and Housing Benefit

By and large, Assured Shortholds are outside rent restriction and the rent agreed at the outset will be legally enforceable. That means also that the rent cannot be increased during the tenancy except by agreement.

If the tenant is on benefit, or on low wages then he can apply for Housing Benefit which is paid through the Benefit section of the local Council (not the DSS). Although they cannot challenge the rent as such, they may pay benefit for only part of it for various reasons, eg that the rent is high for such a property or the tenant does not need a 3-bedroomed house. Although the tenant will still be liable for the balance, that may be of no practical help!

If HB is paid, it can be paid direct to the landlord, but only if the tenant agrees. Most landlords prefer this method for obvious reasons, but if the tenant did not qualify (or forgets to mention when he goes to work on the taxis) the Council can recoup overpaid benefit directly from the landlord.

Rent Arrears

These are an occupational hazard and every landlord should be prepared for them ! It's here that keeping on top of things pays off. If the tenant can't pay one month, then the odds are he won't budget for next month either. Action has to be swift and appropriate, but of course within the law : prosecutions for harassment carry huge fines and even imprisonment.

It could be that there are problems over Housing Benefit, in which case immediate contact with the HB Section of the Housing Department is vital. Get the tenant to sign an authority to allow you to talk to them direct, when he first claims.
If the arrears are at 2 months (and you shouldn't be waiting any longer) then the notice period to end the tenancy is two weeks but a special notice is needed which must specify the relevant sections of the Housing Act and the details of the breaches of the tenancy agreement. This notice is best prepared by a solicitor.

Repairs

In the cities, rent arrears and repair problems go hand in hand. It can happen here. Years of drought followed by years of persistent wet weather have taken their toll on residential property, old or new. Nowadays the experienced landlord has anticipated the problems by budgeting for regular maintenance of the structure, and new boys on the block should think of this too. Outdated heating systems, gas appliances and safety are all the more important, let alone leaking roof tiles which attract the attention of Environmental Health Officers whose powers to serve repair notices are wide and frightening.

Meanwhile damp and condensation in modern buildings are common problems where premises are secured all day against burglars by tenants out at work. It's worth a regular check and bearing in mind that although the property is your business investment, it's also their home …

Court Proceedings

If the tenant won't go, or has run up rent arrears, then only a Court Order can put him out. That means what are called Possession Proceedings in the County Court. The procedure is relatively straightforward unless the tenant puts in a valid Defence in which case legal representation is a must. The Claim Form is not too difficult (see the Court Service website or ask the Court office yourself for the forms for Claim and separate Particulars of Claim). There's a court fee (currently £120). Anyone can do it - though landlords who have regular experience might ask what they are doing wrong in the first place!

Actually for those inexperienced with courts, it's not that easy. Unless we ourselves prepared the Notice Seeking Possession, we find it's often defective. True, there is an "accelerated possession procedure" for simple cases, but a defect in the papers can wipe that out, and it doesn't apply to rent arrears.

If the paperwork is correct, the Court must grant an immediate order (usually suspended for 14-28 days to let the tenant move out peacefully) where an Assured Shorthold has been ended on 2 months notice or there were 2 months arrears. Only once the order has expired can the tenant be compelled to leave if he has not done so already, and this can only be done by a Court Bailiff. The eviction process isn't that easy either, but that's another story …

How FJG Can Help

We can prepare your tenancy agreement for a fixed charge, which includes incidental advice. We'll provide you with a draft to check in accordance with any special requirements and then the final document in duplicate for signature by both parties.

We also prepare formal notices for a fixed fee, either the Notice Requiring Possession (fixed term or periodic, 2 months notice) or Notice Seeking Possession (2 weeks for rent arrears etc)

For Court proceedings, we'll give you an estimate for what's likely to be involved, which must be revised if any Defence is entered or more than one court hearing is required.

Our regular clients also benefit from the firm's free Helpline scheme.

Contact Chris Graves at CGraves@fjg.co.uk