Landlord Essentials

Brick and mortar has always had an appeal for those seeking long-term capital appreciation and stable cashflow. However, landlording can be a land of minefield in the UK, where rules get updated constantly. Whether you are an accidental landlord or a seasoned investor, this guide has all the essentials covered.

Know your responsibilities

Property Preparations
Your landlord responsibilities begin even before you sign the tenancy agreement. The property has to comply with:
- Gas safety – annual check by a registered engineer and certificate to be provided to tenants at start of each tenancy and renewed annually
- Electrical safety – all electrical installations inspected and tested by a qualified electrician every five years and a copy of the electrical installation conditions report provided to tenants
- Fire safety – property fitted with smoke alarms and carbon monoxide detectors if necessary, and meeting fire safety regulations
- Energy efficiency – a minimum rating of E (which is being proposed to go up to C) and a copy of the energy performance certificate provided to tenants
- Housing health and safety – properties should be free from hazards that could pose a risk to tenants’ health and safety (e.g., damp, mould, poor ventilation, and overcrowding)
- License – you might also have to meet the HMO requirement. Even though it is not your intention to do HMO, you would need a license when you rent to a group of friends

Tenancy agreements
There are different tenancy types and each comes with its own legal implications. It is important to understand what you are getting into and have a written tenancy agreement in place, clearly outlining the terms and obligations of tenants and landlords. The terms must be fair and in line with current regulations – housing law supersedes rental contracts and any agreement that gives any party fewer rights than they have in law is considered a sham agreement. While we all want to have more protection on our investment, we should be aware of the boundary. Technical errors, however minor and non-intentional, could prove costly.

Tenant selection
You must check the immigration status of all adult tenants before allowing them to move in to ensure they have the right to rent in the UK. On top of the legal minimum, it is customary to carry out enquiry on credit history, employment and feedback from former landlords. If you are considering taking up landlord insurance, some of these reference checks will be mandatory under the policy term. In marketing the property or reviewing the applications, you must comply with the equality legislation, which prohibits discrimination against tenants based on race, sex, disability, religion, sexual orientation, and other protected characteristics.     

Deposit protection
You must place any security deposit into a government-approved tenancy deposit scheme within 30 days of receipt and return it (minus any deductions for damage or unpaid rent) within 10 days of agreement between the two parties (agreement over the amount to be returned should there be any deduction). To avoid potential disputes, always have a signed inventory list to go with the tenancy contract and document each inspection.

Repairs and maintenance
You are responsible for maintaining the structure and exterior of the property, as well as keeping in good repair plumbing, heating, and electrical systems. Any issues that affect health and safety (e.g., broken heating in winter) should be dealt with promptly. Regular inspection allows you to spot maintenance problems early before they turn into expensive, large-scale repairs. Being prompt in your required duty also helps foster relationship with tenants.

Rent increase
So your mortgage rate has gone up and service charge has also been raised. Or the rental market has tightened. To demand a rent increase, you must give the correct notice. And the amount has to be fair and inline with current market conditions, as tenants have the right to dispute.

Tenancy termination  
If you would like to terminate the tenancy, you must follow the legal process down to the t. Serving the correct notice with all required documents is paramount. Throughout the process and indeed tenancy, maintain an open and professional dialogue with tenants. If a landlord needs to go to court for eviction or to recover rent arrears, it can result in a lengthy wait and substantial legal costs. Besides, there is always a risk that the tenant could counterclaim for unfair eviction, causing more time, emotional and financial stress.

Know your tenant

KYC is a legal requirement. Beyond the paperwork, maintaining a dialogue with tenants is crucial in landlording as it fosters trust and creates a more positive living environment. Tenants and landlords have the same goals: timely rent payments and timely resolution to any issues. Work with each other. A good rapport also increases tenant retention and can reduce the likelihood of conflicts or legal disputes, ultimately benefiting both parties in the long run.

Working with an agent

If the above sounds all too daunting, work with an agent. Being a landlord no longer means passive income at the fingertip as regulations get more onerous and non-compliance risks go up. For those of you that do not have the time or inclination to deal with the task, a letting agent is a good solution. Switching agents is simple and can be done mid-tenancy.