LANDLORDS GUIDE

Preparing to let your property

Before you begin the process of letting your property, you need to be thoroughly prepared. There is a lot to do and plenty to think about before you can think about getting your new tenants through the door.
First impressions count for everything when it comes to property, so it's vital your home looks its best for potential tenants. Maintaining this condition for all your viewings will give you the best chance of letting your home and achieving the best possible price. So, what preparations should you make?

The external view

This is the first view your potential tenants will have of your property, so you should focus on optimising its appearance. Make sure all aspects of your property are up to scratch and meet all of the required standards to give you the best chance of finding the right tenants and achieving the best price.

• Tidy up the front and back garden (weed, trim hedges, add some new plants if necessary, clear any dead or unsightly plants, mow and fix any damaged lawn)
• Repair cracks, holes or blemishes in the driveway or walls
• Give the window frames and door a lick of paint if they need it
• Make sure the house number is clearly visible
• Keep rubbish and rubbish bins out of sight

The interior

As well as the physical standards of the property itself, there are numerous other standards that will need to be met, including safety standards for gas and furniture. Read more about your health and safety obligations in our guide to being a landlord.

• Declutter - create more space by moving some furniture into storage, tidy away or remove unnecessary objects, books and knick-knacks, clear out cupboards and wardrobes of non essential items
• Make minor repairs - fix leaky taps and cracks in the walls, replace broken or crooked tiles, replace burned-out light bulbs - make sure everything works
• Clean thoroughly from top to bottom - carpets, floors, windows, fixtures and fittings
• Eradicate unpleasant odours, like pet smells and cigarette smoke
• Decorate rooms if required - a lick of paint can re-energise the appearance of a room
• Clean, tidy and presentable?
• Of a sufficient size for the family composition?
• Clean and free from damage, such as damp?
• Free from serious disrepair?
• Structurally sound and not suffering from conditions such as subsidence?

It may seem like a lot of work, but with time, energy and even a bit of money spent now, it could really make the difference to how quickly you let your property and how much rent you can charge.

Who should you consult before letting your property?

Before you can let your property, you need to consult a number of parties:

• Your mortgage lender - your lender may ask that you let your property on an Assured Shorthold basis
• Your insurance company - if you don't let your insurance company know that you have let your property, you may not be covered in the event of damage, fire or theft in the property
• Your freeholder (if you have one) - important if you wish to let a leasehold flat, for example.

The cost of letting your property

While your thoughts may be leaning towards how much you can make by letting your property, it is important that you consider and budget for the costs involved, too. You should budget for the following costs:

• Any monthly mortgage repayments owed on the property
• Any expenses involved in bringing the property up to the required standards, both physically and in terms of the regulatory safety standards of furniture, utility equipment and appliances
• Furniture and furnishings (if required)
• Solicitor's fees
• Letting agent and management fees
• Insurance fees
• Contingency budget for ad hoc repairs and maintenance

Plan carefully and make sure you always have access to funds to make essential repairs if and when required. It will put you in a much better position to retain a satisfied tenant.

Choosing a letting agent

You should never underestimate the work involved in the successful letting of your property.
The vast majority of landlords prefer to hand over the responsibility for finding a tenant to a dedicated and qualified letting or estate agent. This cuts out all of the necessary awkwardness of having to deal directly with viewings and negotiating with potential tenants. There are considerable advantages in using a letting agent, who will:

• Advertise your property efficiently to thousands of potential tenants looking for property to rent in the area (make sure you choose an agent that lists its properties on major portals, such as Rightmove & Zoopla)
• Have knowledge of the local market, including the type of properties to rent in the area, the potential demand for them, the rental prices being achieved and the kind of tenants who might be interested in your property.
• Manage and conduct viewings, giving them the opportunity to try and secure tenants for your property and providing you with valuable feedback along the way
• Negotiate with tenants on your behalf when discussing the rental price of the property
• Provide you with advice and guidance

Managing agents

After you've found suitable tenants for your property, you have the option of either managing the let yourself, or hiring the services of a managing agent to work on your behalf. Much will depend on your circumstances. If you are living abroad, for example, you may want to employ a managing agent to make sure your tenants and the property are sufficiently looked after while you're away.
The majority of letting agents also offer property management services. If this is an option you're interested in, consult the letting agent first to make sure they can offer this service. A managing agent will:

• Vet potential tenants by sourcing references from previous landlords, conducting credit checks and obtaining bank details
• Organise tenancy agreements and inventories
• Manage the start and end of the tenancy based on your instructions
• Organise the collection of rent from the tenants and arrange for repairs during the tenancy
• Inspect the property periodically on your behalf for its condition and state
• Provide professional advice and guidance throughout the duration of your relationship

Pre-tenancy checklist

A pre-tenancy checklist should help you make sure you've ticked all the right boxes before you make the next step in letting your property.

• Update your insurance to take into account that your property is going to be let
• Get the requisite permission from your mortgage lender
• Make sure all furniture and furnishings comply with the latest fire regulations
• Ensure that all gas appliances and equipment have been serviced by a GAS SAFE registered engineer and that safety records are kept in a safe place
• Inform the council tax department and utility suppliers that the property will be let (relevant if you plan on being a non-resident of a self-contained property)

Tenancy agreement and inventory

There are a number of crucial documents you need to have organised before you let your property. The most important is the tenancy agreement as this is the legally binding contract between you and the tenants that will form the conditions of the let.

Tenancy agreements

The tenancy agreement is a contract between you and the tenants. It specifies certain rights to both you and the tenants, such as the tenants' right to live in the property for the agreed term and your right to receive rent for letting the property.

Assured Shorthold Tenancy Agreement

Since the late 90s, the AST has been the most common form of tenancy agreement and sets out the obligations of both tenant and landlord. The most important aspect of this agreement is that the landlord has the right to repossess the property at the end of the agreed term. Despite its name, the agreement does not have to be short and can continue as long as both parties are happy for it to do so. There is no minimum term specified, either, although the tenant has the right to remain in the property for at least six months.
If the fixed term is for three or more years, however, a deed must be drawn up by a solicitor.
There are specific requirements linked to an AST that include:

• The tenant(s) must be an individual
• The property must be the main home of the occupant
• The property must be let as separate accommodation

The landlord is normally obliged to provide the tenant with two months' notice if they want to terminate the agreement.
The agreement will most likely contain the following information:

• Your name, the tenant's name, the address of the property which is being let
• The date when the tenancy will commence
• The duration of the tenancy from the start to the agreed finish of the occupation
• The amount of rent payable, how often it should be paid, when it should be paid and when it can be legally increased
• The agreement should also state what other payments are expected, including Council Tax, utilities, service charges, etc.
• What services as landlord you will provide, such as maintenance of common areas
• The notice period which you and your tenants need to give each other if the tenancy is to be terminated

The landlord inventory

This is one of the most important documents in the letting process. It details the contents of the property you will be leaving for the tenants to use and the condition they are in on the day the tenant moves in. It should also include any existing cosmetic blemishes, such as peeling wallpaper or flaking paint. You should be extremely thorough and give it your full attention.
On the day the tenant moves in, both the tenant and agent (or you, if you're letting privately) will be expected to agree the exact condition of the contents of the property. All parties will initial each page and sign it. Make sure every party has a copy of the signed document. This should avoid any unnecessary disputes about any damage that may be caused by the tenant during the tenancy.

When should the property inventory be checked again?

It is recommended that the landlord/agent schedule regular six monthly inventory checks at the property in order to assess any damage that may have occurred. You must provide the tenant with sufficient notification of your intention to visit the property for this purpose (24 hours should be sufficient). It is most common, however, for a final inventory check to be scheduled on the day the tenant moves out.

Deposits

It is common practice to request a deposit from the tenant prior to them moving in to protect you from damage caused by the tenant beyond normal wear and tear, or in case the tenant leaves without paying the rent. Some agents will handle this on your behalf. It is usually equivalent to one month's rent and is taken along with the first month's rent in advance.

The tenant should be provided with a receipt and a clear understanding of what the deposit is for and the conditions for its full return. You must return the money to the tenant within a reasonable period of time after the last day of the agreement if there is no damage to the property or its contents beyond normal wear and tear and if the rent payments are up to date.

If you do decide to withhold some or all of the deposit, you must notify the tenant as soon as possible in writing, stating how much money you are retaining and why. If possible, provide receipts of estimates or costs incurred to repair damage to the property.

The Tenancy Deposit Scheme

From 6 April 2007, new legislation was introduced to help tenants and landlords avoid and resolve disputes relating to the return and use of a tenant's deposit. Under the legislation, if landlords fail to protect the tenant's deposit, they may have to pay the tenant three times the value of the deposit.

Why are deposits protected?

The Deposit Protection Scheme is designed to make sure:

• Tenants get all or some of their deposit back when they are entitled to it
• Any disputes involving landlords and tenants over the return of the deposit are easier to resolve
• Tenants are actively encouraged to look after the property they are renting

Whenever a deposit is taken from a tenant as part of an Assured Shorthold Tenancy, either by a landlord directly or a managing agent, it must be protected in one of the government-initiated schemes. There are two types of scheme, described as 'custodial schemes' and 'insurance-based schemes'.

Custodial scheme

The deposit is held by the scheme for the duration of the agreement and repaid at the end of the tenancy. It is also free to use. Within 14 days of being paid the deposit, the landlord or agent must provide details to the tenant of how the deposit is protected, including:

• The contact details of the chosen Tenancy Deposit Scheme
• The landlord or managing agent details
• How they can apply for the return of the deposit
• The detail concerning the purpose of the deposit
• What to do if a dispute arises regarding the return of the deposit

At the end of the tenancy, if an agreement is reached between both parties, the deposit will be divided up (if required) and returned accordingly. If a dispute arises, the scheme will hold on to the money until the courts or the dispute resolution service solves the disagreement.
The DPS is currently the only provider of the custodial scheme.

Insurance-based schemes

As with the custodial scheme, the deposit is held by the scheme for the duration of the agreement and repaid at the end of the tenancy. However, instead of passing the deposit directly to the scheme, the landlord retains the deposit and pays an insurance premium to the scheme.

Within 14 days of being paid the deposit, the landlord or agent must provide details to the tenant of how the deposit is protected, including:

• The contact details of the chosen tenancy deposit scheme
• The landlord or managing agent details
• How they can apply for the return of the deposit
• The detail concerning the purpose of the deposit
• What to do if a dispute arises regarding the return of the deposit

At the end of the tenancy, if an agreement has been reached by both parties, the landlord returns some or all of the deposit to the tenant. If a dispute arises, the landlord must hand over the deposit to the scheme until a resolution is reached. If the landlord fails to comply, the scheme returns the deposit to the tenant, if they are entitled to it.

There are two providers offering an insurance-based scheme, Tenancy Deposit Solutions and The Tenancy Deposit Scheme.

Landlord and tenant rights and responsibilities

The responsibilities of both parties are likely to be detailed within the tenancy agreement, although some conditions may vary from one property and landlord to the next.

Preparing for your tenants to move in

So, you're now ready for your tenants to move in. Here are a few pointers and reminders to help you organise the smooth transition for you and your tenants.

Before the tenants move in:

• Make sure the property is clean and presentable
• Redirect your mail (if you used to live there)
• Arrange for all utility accounts to be transferred to the tenant
• Arrange for the council tax to be paid by the new tenant
• Make sure instructions are on all relevant appliances
• Make sure all relevant equipment is labelled correctly
• Prepare a number of spare keys for your tenants (if required)

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