Buy to let, although not as popular as in the boom times before the credit crunch, remains an attractive proposition for many in times of low interest rates, poor savings returns and stock market volatility, not to mention the poor performance of some pension schemes.
If you have a property that you are thinking of letting, here is our list of 10 key things you need to know.
- When you let out a dwelling to a tenant, in most cases the tenancy is called an Assured Shorthold Tenancy (AST). This will be the case unless you agree otherwise in writing or the terms fall outside the scope of assured tenancy legislation.
- Under an AST you have a guaranteed right to get your property back after at least six months and as long as any fixed term agreed has ended and you have given your tenant at least two months’ written notice in advance. Be careful though, you will not be allowed to recover possession by a court unless/until a valid notice has been given.
- You can seek to recover possession at any time on certain specific “grounds” (reasons) for possession, such as rent arrears, anti social behaviour and damage by the tenant. You will need to serve what is called a “Section 8 Notice” first which must be in a prescribed form and you must comply with time limits before seeking possession.
- Even though you may be entitled to recover possession, if your tenant does not leave, you cannot just evict them yourself. To do so can be a criminal offence and give your tenant the right to stay in the property until they have been lawfully evicted and also to claim damages from you. You must apply to a county court for a possession order to get your property back.
- Always use a written tenancy agreement as this will give clarity. Make sure that the terms are up to date and comply with current legislation. You must provide an address for service in England and Wales for service of proceedings upon you, unless you do so rent is not lawfully due.
- If you receive a monetary deposit from your tenant when letting your property you must ensure that it is protected in one of three government-authorised Tenancy Deposit Protection schemes. This is a legal requirement and you will not be able to recover possession in certain circumstances and may be ordered to pay a financial penalty to your tenant if you do not do so.
- Agree an inventory of the condition and contents of the property with your tenant at the start. This will assist later on if there is a dispute over the condition of the property at the end of the tenancy.
- As Landlord you are responsible by law for repairs to the structure and exterior of the property, heating and hot water installations, basins, sinks, baths and other sanitary installations, the safety of gas and electrical appliances (these must be checked by a registered engineer every year) and the fire safety of furniture and furnishings that you supply. You may also have agreed to be responsible for other things in the tenancy agreement.
- You must provide an Energy Performance Certificate for your property when it is being let to a new tenant. There are fixed penalties for not doing so.
- Inform your mortgage company, if you have one, and insurer that you are letting your property as there may be restrictions on your mortgage and you may need to amend your insurance cover.
This is only a brief summary of what you need to know. Landlord and tenant law is deceptively complicated and getting it right can be very important and costly if you get it wrong. If you are at all in doubt seek expert legal advice and assistance.
For more information on the above or related questions please contact Jeremy Weaver on firstname.lastname@example.org