Property letting traps
The buy-to-let boom is over, but recent trends may lead many reluctant homeowners into the rental market. The latest signs from the housing market suggest that we may be heading for another slowdown, if not an actual double dip. Recent research by More Than Business concludes that, if there is a second housing downturn, as many as 10% of homeowners may be forced to let their existing properties and downsize.
Letting produces an income, of course, and allows homeowners to hold on to their properties with the hope that things will improve. First-time landlords, however, need to be aware of the potential traps as well as their legal responsibilities towards tenants and third parties.
More Than’s report lists eight points worthy of considering:
Electric and gas appliances – Landlords must ensure the safety of electrical installations and have gas appliances checked annually.
Energy performance certificates (EPCs) – EPCs have been a legal requirement since October 2008. They must be provided to tenants free of charge before the contract is signed.
Damage deposits – Since 2007, landlords letting their property under an assured short-hold tenancy (the most widely used form of lease) have been legally required to place tenants’ deposits in one of three approved tenancy deposit protection schemes. Failure to do this may result in a court action against the landlord for three times the amount of the deposit.
Tenants’ rights – Landlords should make sure they become familiar with tenants’ rights as well as their own. For instance, landlords may not enter a let property without the tenants’ permission.
Tenants’ references – Landlords should run credit and reference checks on prospective tenants, to make sure they are fit and proper persons and will be able to pay the rent.
Fire regulations – The property must comply with fire-safety standards with respect to furniture and furnishings, and be supplied with extinguishers, fire alarms and fire exits.
Insurance – Standard owner-occupier insurance policies are not adequate for letting. Special landlord policies are needed.
Lease or contract – The most frequently used lease or rental contract is the assured short-hold tenancy.
We should add a ninth point: homeowners who did not originally contemplate letting and have a mortgage will require the mortgagor’s consent to let their property. In the current economic circumstances, this ought not to be unreasonably withheld.