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Buy to Let – My Top Ten Tips

See our advice on Buy to Let and how we can help you.

1. Know your tenant

Understanding the legal status of your tenant and appreciating the effect of the same is crucial. Rights available to tenants and obligations of landlords differ dependent upon the type of tenancy. Ensure that you take references.

2. Recognise the importance of a written contract

Whilst oral contracts are valid, a written contract removes the potential for ambiguity. In the event of a dispute or a concern regarding a right or obligation, both parties have that written document to consult.

3. Energy Performance Certificate (“EPC”)

A landlord is obligated to provide an EPC. There are also upcoming changes to energy efficiency of rental properties which should be considered and acted upon immediately by landlords.

4. Protect tenant deposits

Landlords must protect a deposit received from their tenants in respect of an Assured Shorthold Tenancy in an approved deposit scheme within 30 days of having received the same. In addition, Landlords are also obliged to provide the tenant with details of their holding of the deposit within 30 days of receipt.

Failure to comply within the above timeframe could result in financial penalties and could also render the Landlord unable to serve a valid section 21 Notice to bring the tenancy to an end if considered necessary.

5. Know your obligations

A landlord has various statutory obligations which they owe to their tenant in addition to any contractual obligations, for example in relation to a short lease, there is an obligation to keep the structure, heating and water systems in good repair. There are also obligations in relation to providing Gas Safety Certificates, electrical safety and fire safety which must be adhered to.

6. Considerations specific to Houses in Multiple Occupation (“HMO”)

Landlords have extra legal responsibilities if the rental property is a HMO. A home is probably a HMO if three or more unrelated people live there as at least two separate households.

The additional obligations are imposed upon landlords to reduce the risk of fire and to ensure that tenants living in shared properties have adequate facilities.

A landlord must also obtain a licence from the council if the HMO is at least three storeys high, has five or more unrelated people living in it or has two or more separate households living there. A landlord can be fined and ordered to repay up to 12 months’ rent (or housing benefit to the council) if they fail to obtain a license.

Furthermore, a landlord may not give a section 21 notice to a tenant to bring an assured shorthold tenancy to an end if it is required to be licensed as an HMO but that is not so licensed.

7. Recognise a defaulting tenant

Be alert to potential breaches of the tenancy agreement by a tenant. Remedies for breaches may be available to a landlord or there may well be an opportunity to obtain possession of the property if necessary. Consider writing into your tenancy agreement the ability for you to carry out regular inspections of the property.

8. Understand your options should you require possession

Having understood the legal status of your tenant make yourself aware of the grounds for taking back possession should this prove necessary. For example in relation to an Assured Shorthold Tenancy, there is an ability to take possession at the expiry of the tenancy (and not before 6 months from the commencement) on a purely procedural basis as well as during the continuation of the tenancy due to the tenant’s breach. It may be that taking back possession without having to prove a breach on behalf of the tenant could provide possession in a more timely and cost effective manner. If court proceedings are necessary, the landlord will generally only be able to recover very limited costs from the tenant such as the court fee. You may however be entitled to recover your costs contractually under the terms of the tenancy agreement. Consider writing into your tenancy agreement the ability for the landlord to recover its legal costs in pursuing the tenant for breaching the agreement and if possession proceedings are necessary.

9. Bear in mind the time that it may take to obtain possession

You will be unable to simply take back possession of the property at the expiry of the tenancy or on default by the tenant. A court order will be required if the tenant does not leave voluntarily. Depending on whether you are relying on a “fault” or “non-fault” ground it can take between 6 to 12 weeks to obtain an appointment with a court bailiff to deliver possession back to you. You should consider how you would meet any obligations you have under the property (eg: to your mortgage company) if the tenant is in occupation and not paying rent. You may need to work such rental voids into your overheads or consider insuring against such risks.

10. Keep an eye on developments

Landlord obligations are ever changing. Increased responsibility in respect of checks on the immigration statuses of tenants by landlords and further health and safety checks are coming into force. It is therefore important for landlords to keep an eye on the changes to their obligations whilst renting out their properties.

For example, there is now an additional 3% stamp duty payable on the purchase of second homes. In addition since the beginning of April 2017, there are restricted tax breaks for higher rate tax payers on their rental income.

CONTACT LYNSEY

If you would like more information or advice relating to this article or a Property Litigation law matter, please do not hesitate to contact Lynsey Newman on 01727 798092.

© SA LAW 2017

Every care is taken in the preparation of our articles. However, no responsibility can be accepted to any person who acts on the basis of information contained in them alone. You are recommended to obtain specific advice in respect of individual cases.

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