Letting Your Property Cavendish Publishing Limited London • Sydney • Portland, Oregon This book is supported by a Companion Website, created to keep titles in the Pocket Lawyer series up to date and to provide enhanced resources for readers Key features include: u forms and letters, in a ready-to-use Word format Access all the material you need at the click of a button u updates on key developments Your book won’t become out of date u links to useful websites No more fruitless internet searches www.cavendishpublishing.com/pocketlawyer Letting Your Property Rosy Border & Mark Fairweather Cavendish Publishing Limited London • Sydney • Portland, Oregon Second edition first published in Great Britain 2004 by Cavendish Publishing Limited, The Glass House, Wharton Street, London WC1X 9PX, United Kingdom Telephone: +44 (0)20 7278 8000 Facsimile: +44 (0)20 7278 8080 Email: info@cavendishpublishing.com Website: www.cavendishpublishing.com Published in the United States by Cavendish Publishing c/o International Specialized Book Services, 5824 NE Hassalo Street, Portland, Oregon 97213–3644, USA Published in Australia by Cavendish Publishing (Australia) Pty Ltd 45 Beach Street, Coogee, NSW 2034, Australia Email: info@cavendishpublishing.com.au Website: www.cavendishpublishing.com.au © Border, Rosy and Fairweather, Mark 2004 The first edition of this title was originally published by The Stationery Office All rights reserved No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, scanning or otherwise, without the prior permission in writing of Cavendish Publishing Limited, or as expressly permitted by law, or under the terms agreed with the appropriate reprographics rights organisation Enquiries concerning reproduction outside the scope of the above should be sent to the Rights Department, Cavendish Publishing Limited, at the address above You must not circulate this book in any other binding or cover and you must impose the same condition on any acquirer British Library Cataloguing in Publication Data Border, Rosy Letting your property—2nd ed—(Pocket lawyer) Landlord and tenant—Great Britain I Title II Fairweather, Mark 346.4’104346 Library of Congress Cataloguing in Publication Data Data available ISBN 1-85941-855-4 10 Printed and bound in Great Britain Contents Welcome ix Buzzwords xiii Frequently asked questions (FAQs) xvii PART I BEFORE YOU LET YOUR PROPERTY You are making history The assured shorthold tenancy explained 11 Is your property safe? 15 Is your property habitable? 23 Some important considerations 31 Buy-to-let 35 PART FINDING A TENANT Do you need an agent? 41 Set your stall out 45 Track down a tenant 47 10 Tenants receiving benefits 53 CONTENTS v 11 The selection process 61 12 References and deposits 71 PART THE NITTY GRITTY 13 Getting down to business 77 14 During the tenancy 83 15 Parting company 87 16 A word on tax 93 17 The Assured Shorthold Tenancy Agreement 105 PART DOCUMENTS AND INFORMATION 18 Sample letters 127 19 Useful contacts 137 Index vi 143 LETTING YOUR PROPERTY Disclaimer This book puts you in control This is an excellent thing, but it also makes you responsible for using it properly Few washing machine manufacturers will honour their guarantee if you don’t follow their ‘instructions for use’ In the same way, we are unable to accept liability for any loss arising from mistakes or misunderstandings on your part So take time to read this book carefully Although this book points you in the right direction, reading one small book will not make you an expert, and there are times when you may need to take advice from professionals This book is not a definitive statement of the law, although we believe it to be accurate as at January 2004 The authors and publisher cannot accept liability for any advice or material that becomes obsolete due to subsequent changes in the law after publication, although every effort will be made to show any changes in the law that take place after the publication date on the companion website About the authors Mark Fairweather is a practising solicitor, and is one of the founding partners of the legal firm Fairweather Stephenson & Co He and Rosy Border have written 14 books together, including five titles in Cavendish Publishing’s Pocket Lawyer series He has two children and lives in Suffolk Rosy Border, co-author of this title and series editor of the Pocket Lawyer series, has a first class honours degree in French and has worked in publishing, lecturing, journalism and the law A prolific author and adapter, she stopped counting after 150 titles She owns and manages several properties, which she describes as her ‘pension fund’ Rosy and her husband, John Rabson, live in rural Suffolk and have a grown up family Rosy enjoys DIY, entertaining and retail therapy in French markets vii Acknowledgments A glance at the ‘Useful contacts’ will show the many sources we dipped into while writing this book Thank you, everybody We would especially like to thank Deborah Gold and the team at Shelter for their help and advice with Chapter 10, and John Rabson for IT support and refreshments VIII LETTING YOUR PROPERTY Welcome Welcome to Pocket Lawyer Let’s face it, the law is a maze and you are likely to get lost unless you have a map This book is your map through the part of the maze that deals with letting residential property Important note: is this the right book for you? This book is about landlords and tenants Taking in a Lodger in the Pocket Lawyer series is about landlords and lodgers The law treats landlords with tenants differently from landlords with lodgers Which kind of landlord are you? Turn to p 11 to find out We put you in control This book empowers you This is a good thing; but being in control means responsibility as well as power, so please use this book properly Read it with care and don’t be afraid to make notes—we have left wide margins for you to just that Take your time—do not skip anything: m m everything is there for a purpose; if anything were unimportant, we would have left it out Think of yourself as a driver using a road map The map tells you the route, but it is up to you to drive carefully along it Sometimes you are in danger of getting out of your depth and you will need to take professional advice Watch out for the hazard sign WELCOME ix source of free advice, assistance and useful leaflets Membership is currently £55 a year and you can get tax relief on this Incorporated Association of Landlords ‘The professional body for private landlords’ As above, you will get tax relief on your subs Advice on buy-to-let The ‘money’ sections of the quality newspapers are sound on buy-to-let You could start with those, then fire up your search engine, key in ‘buy-to-let’ and be prepared to be spoilt for choice Additionally, ARLA have a leaflet on their website; access www.arla.co.uk/btl/whatisbuytolet.htm Try also www.findaproperty.co.uk As well as buy-to-let, this site also directs you to letting agents, legal advice for landlords (we liked Landlord Zone and Letting Zone—see below) and even trade associations for electricians, plumbers, chimney sweeps, etc A very useful site indeed Access Your Mortgage Magazine (Financial Website of the Year) on www.yourmortgage.co.uk See also www.best4let.com (‘the home of buy-to-let’) Other useful websites Landlord Zone www.landlordzone.co.uk offers plenty of free information for landlords We particularly enjoyed their 20 Steps to Successful Residential Landlording on www.landlordzone.co.uk/ successful_landlording USEFUL CONTACTS 139 Shelter Website: www.shelternet.co.uk If you are considering taking a tenant receiving benefits, the Shelternet site offers a lot of useful advice from the tenant’s point of view, as well as much that is of general interest to small landlords Fair and unfair contract terms The Office of Fair Trading (OFT) Consumer helpline: 08457 224 499 Website: www.oft.gov.uk Download a leaflet, Unfair Tenancy Terms (OFT381) and a booklet, Guidance on Unfair Terms in Tenancy Agreements (OFT356), or order from the helpline Trading standards Website: www.tradingstandards.net Advice on many aspects of letting your property, including electrical safety, upholstered furniture and much more Look in your local telephone directory under Trading Standards or access their website Stamp duty The Inland Revenue Helpline: 0845 603 0135 Website: www.inlandrevenue.gov.uk/so Leaflet: Stamp Office: Stamp Duty on Agreements Securing Short Tenancies 140 LETTING YOUR PROPERTY Office of the Deputy Prime Minister ODPM 26 Whitehall London SW1A 2WH Tel: 020 7944 4400 Fax: 020 7944 6589 Website: www.odpm.gov.uk/housing This government department offers a wealth of helpful information for landlords and tenants Their website offers two excellent leaflets that you can download: Assured and Assured Shorthold Tenancies, a Guide for Landlords, and Letting Your Home See also their leaflet Landlord Accreditation Health and safety At the time of writing, there are proposals to replace existing fitness standards (which have gradually evolved over a period of 80 years) with a new Housing Health and Safety Rating System You can find out more Inland Revenue about this on the website of the Deputy Prime Minister, as above Orderline: 08459 000 404, am to 10 pm days a week Tel: 08459 000 444 (when that office is closed) E-mail: saorderline.ir@gtnet.gov.uk Website: www.inlandrevenue.gov.uk There are several leaflets available, all in clear English Try IR87, Letting and Your Home; IR150, Taxation of Rents: A Guide to Property Income; and IP283 Helpsheet, Private Residence Relief If you rent out property while you are abroad, ask for IR140, Non-resident Landlords, Their Agents and Tenants You can download leaflets from their website, or order by telephone USEFUL CONTACTS 141 For personal advice on your particular situation, look under ‘Inland Revenue’ in your local telephone directory Checking Creditworthiness The register of County Court Judgments Maintained by: Registry Trust Limited 173/175 Cleveland Street London W1P 5PE Tel: 020 7380 0133 For £4.50 per name (make out the cheque to Registry Trust Limited) you can get a print-out of any judgments against that name The Individual Insolvency Register came into operation in March 1999 and keeps details of bankruptcy and individual voluntary arrangements (a sort of half-way house between solvency and insolvency) You can apply free of charge: in person at any official receiver’s office (listed in your local telephone directory), where you fill in a form and receive a print-out of the information in writing to The Insolvency Service 5th Floor West Wing 45–46 Stephenson Street Birmingham B2 4UP by telephone to the Insolvency Service, tel: 020 7637 1110 They will tell you over the phone whether an individual is bankrupt (or is subject to bankruptcy proceedings) or has entered into an IVA Tenant Verifier Service This is run by Experian, the credit reference agency Tel: 0115 901 6004 Fax: 0115 992 2538 Website: www.tenantverifier.com 142 LETTING YOUR PROPERTY Index accelerated possession xviii, 90–91 access rights, in tenancy agreement xxi accredited landlords 29–30 address list 134–35 advertisement for tenant 47, 50–52 use of box number 61–62 agents see letting agents Association of Residential Letting Agents , 7, 8, 36, 44, 137 assured shorthold tenancy (AST) xiii, xvii, 7–8 court order 13 deed xxi, 12 drawing up agreement xix, 105–23 fair rent 5, 13 initial fixed period xiv, 12, 77 inventory xiv, 77, 78, 79–80, 89, 119–23 maximum rental xxi non-resident landlord 11 notice see notices repossession see repossession safety regulations see safety regulations self-contained accommodation xv, 11 INDEX six monthly lets standard letting provisions 105, 108–19 statutory control 11 tenancy agreement xix, 105–23 see also tenancy agreement written statement of terms bad tenants xii bathroom fittings 46 Buy-to-Let schemes xiii, 8, 31–32, 35–38 advantages 37 disadvantages 38 mortgages xiii, 31–32, 36 raising the money 36 return on money 35 sources of advice 139 university towns 35–36 capital gains tax xx, 97–99 carbon monoxide gas 17–18 carpets 45 cavity wall insulation 27 child support 60 child tax credit 59 children, selection of tenant 63, 78 clear English x company lets xiii, 48, 49–50 controlled tenants corporation tax 99–100 143 Council for Registered Gas Installers (CORGI) 18, 137 council houses 3–4 council tax name of new occupant 82 person liable for 78 council tax benefit 59 creditworthiness 72 useful addresses 142 decoration 45 deeds xxi, 12 demand for rent 83, 130 deposit xiii, xix housing charities 74 receipt 80, 132 return of 89–90 selection of tenant 68, 71, 73–74 tenancy agreement 77 tenant’s money 74 tenants receiving state benefits 73–74 deposit guarantee schemes 57, 73–74 discretionary, meaning xiii discrimination in selection of tenant 69–70 drawing up agreement xix electrical safety 15–17 useful addresses 138 electricity meter reading 81 employers, finding tenant through 49 energy saving schemes grants 27 Warm Front Team 138 exclusive possession xiii–xiv expenses capital expenditure 96 taxation and 95–97 144 fair rent 5, 13 finding a tenant advertisements 47, 50–52, 61–62 company lets 49–50 employers 49 friends or relations 47–48 hospitals 49 Housing Action Groups 54 in receipt of benefits see tenants receiving benefits selection process see selection of tenant university accommodation officers 48 word of mouth 47 fire safety 19–20 furniture and furnishings 19–20, 45 smoke alarms 19 fixed term tenancy xviii freehold xiv friends as tenants 47–48 furnished property xix furniture fire safety 19–20, 45 provision of 29 gas meter reading 81 gas safety 17–19 useful addresses 137 grants 27–28 ground rent xiv, xviii, 32 habitability compulsory remedial work 26 enforcement notice 26 furniture 29 grants 27–28 habitable meaning xiv houses in multiple occupation 24–25 LETTING YOUR PROPERTY insect infestation 26 purpose-built blocks of flats 25 statutory duty 23, 24 tenant’s obligations 28–29 vermin 26 handing over keys 81 Health and Safety Executive, gas safety action line 137 holiday lets home improvement grants 27–28 homelessness organisations 53–54 hospitals, finding tenant through 49 houses in multiple occupation (HMOs) xiv habitability 24–25 Housing Action Groups 54 housing association property, sub-letting xix housing benefit 55–56 see also tenants receiving benefits clawing back overpayments 57 standard local housing allowance 60 income tax 94–95 Incorporated Association of Landlords 139 Individual Insolvency Register 142 initial fixed period xiv, 12, 77 Inland Revenue see also taxation addresses 140, 141 website xx insect infestation 26 INDEX insurance injury to tenant 33 letter to insurance company 32–33, 128 inventory xiv, 77, 78 inspection when tenants leave 89 signing 79–80 jointly and severally xiv, 48 keys handing over 81 keyholder 83 landlord accreditation schemes 29–30 decline of private landlord 5–6 meaning xiv–xv non-resident 11 resident xv, 11 Landlord Zone website 139 landlord’s notice of intention to apply for possession 13, 87–89, 133 landlord’s notice proposing a new rent under an Assured Shorthold Tenancy 84–85 lease xv leasehold xv letting out leased property xviii, 32 letting agents xx, 6–7 advantage of using 43 deposit holding 74 disadvantage of using 43 finding 43–44 full management 43 introduction only 42 145 levels of service 42–43 rent collection 42 rogue agents 43–44 services supplied by 41–43 tenancy agreement 41 licence xv lighting 46 local authorities deposit guarantee schemes 57, 73–74 safety inspections 21 social housing 3–4 local reference rent 56 lodgers 11 mandatory, meaning xv marriage break-ups mobile home park mobile home xxii pitch xxii mortgages agreement from lender to let xviii, 31–32 Buy-to-Let see Buy-to-Let schemes extra charge for letting 31–32 multiple occupation xiv, 24–25 National Inspection Council for Electrical Installation Contractors 17 National Inspection Council for Electrical Installations138 non-resident landlord 11 notices xv, xvii–xviii landlord’s notice of intention to apply for possession 13, 87–89, 133 146 landlord’s notice proposing a new rent under an Assured Shorthold Tenancy 84–85 notice proposing different terms for a statutory periodic tenancy 85 Office of Fair Trading, contract terms 140 overseas property xxii paints 45 Pathfinder 60 periodic tenancy, term of let xviii pets 78 possession accelerated xviii, 90 exclusive xiii–xiv landlord’s notice of intention to apply for possession 13, 87–89, 133 quickie procedure xviii, 90 vacant poverty trap 59–60 child support 60 child tax credit 59 council tax benefit 59 working tax credit 59 Rachmanism 4–5 receipts deposit 80, 132 rent 80, 131 record keeping xxi, 83–84 reference xv letter requesting 129 selection of tenant 68, 71–73 register of County Court Judgments 72, 142 LETTING YOUR PROPERTY regulated tenants relations as tenants 47–48 relocations 6–7 rent collection by landlord 83–84 by letting agents 42 demand for 83, 130 fair rent 5, 13 ground rent xiv, xviii, 32 increases 84–85 landlord’s notice proposing a new rent 84–85 local reference rent 56 maximum for assured shorthold tenancy xxi receipt 83, 131 record keeping 83 rent advance scheme 56 tenancy agreement 77 Rent Assessment Committee 13, 85 rent book xix, 83 repairs compulsory remedial work 26 council houses enforcement notice 26 failure to maintain grants 27–28 order for landlord to carry out responsibility for xx, 78 tenant’s obligations 28–29 withholding rent for 28 repossession accelerated possession xviii, 90–91 assured shorthold tenancy (AST) 13 court order 13, 90 inspection of property 89 INDEX landlord’s notice of intention to apply for possession 13, 87–89, 133 return of deposit 89–90 service of notice 88–89 resident landlord xv, 11 risk management 20–21 safety regulations assured shorthold tenancy (AST) electrical safety 15–17, 138 fire safety 19–20, 45 gas safety 17–19, 137 local authority inspection 21 risk management 20–21 statutory duties 15 sample letters 127–35 selection of tenant accepting or rejecting 69 ‘blurb’ 66, 67 children 63, 78 deposit 68, 71, 73–74 disability 70 discrimination 69–70 face to face meeting 66–69 identification 64, 67 information about property 66 interviews 66–69 pets 63, 78 protecting oneself 61–62 references 68, 71–73, 129 safety 64, 66–67 telephone vetting 62–64, 65 tenant in receipt of benefits 68 tenant’s guide 83 use of box number 61–62 self-contained accommodation xv, 11 services, person liable for 78 147 shared facilities 11 Shelter 140 Small Landlords’ Association 33, 38, 138–39 smoke alarms 19 social housing 3–4 stamp duty 100–03, 140 standard letting provisions 105, 108–19 standard local housing allowance 60 statutory, meaning xvi storage space 46 sub-letting xvi taxation xvii, 93 capital gains tax xx, 97–99 corporation tax 99–100 expenses 95–97 income tax 94–95 Inland Revenue addresses 140, 141 Inland Revenue website xx record keeping xxi, 83–84 sale of rental property xx stamp duty 100–03, 140 wear and tear xvi, 95 ten percent wear and tear xvi, 95 tenancy fixed term xviii meaning xvi periodic xviii tenancy agreement access rights xxi agreed changes 85 assured shorthold tenancy (AST) 105–23 children 63, 78 council tax 78 deposit 77 drawing up xix duplicate 79, 105 148 extent of property 77 fair and unfair contract terms 140 initial fixed period xiv, 12, 77 inventory xiv, 77, 78, 79–80, 89, 119–23 letting agents 41 original 79, 105 pets 78 rent 77 repairs 78 signing 79–80 stamp duty 100–03 standard letting provisions 105, 108–19 state of property when handed back 78 Tenant Verifier Service 142 tenants bad xii controlled finding see finding a tenant handing over keys 81 marriage break-ups regulated selection process see selection of tenant visit to property with 81 working away from home 10 young professionals 10 tenants receiving benefits 53–60, 63–64 child support 60 child tax credit 59 clawing back overpayments 57 council tax benefit 59 LETTING YOUR PROPERTY deposit guarantee schemes 57, 73–74 deposits 73–74 direct payment of rent 55–56 Housing Action Groups 54 housing benefit 55–56 local reference rent 56 officialdom 57 paperwork 57 Pathfinder 60 poverty trap 59–60 pre-tenancy determination 56 rent advance scheme 56 sources of supply 53–54 standard local housing allowance 60 working tax credit 59 term of let fixed term tenancy xviii INDEX initial fixed period xiv, 12, 77 one month xvii periodic tenancy xviii six months two months xvii Trading standards 140 unfit for human habitation 26–27 unfurnished property xix university accommodation 48 vacant possession vermin 26 Warm Front Team 138 wasting asset xv water meter reading 81 wear and tear xvi, 95 working tax credit 59 149 Notes Notes Notes Notes