10 Top Tips for Residential Landlords
If you are considering becoming, or have recently become, a landlord of residential premises, we have set out below our 10 top practical tips for avoiding litigation, and ensuring that problem tenants can easily be removed. Landlord and tenant litigation is notoriously lengthy and can be expensive, but taking note of the tips below should assist in the event that difficulties arise.
- Carry out full checks on perspective tenants. Check that prospective tenants can afford to rent the property from you to ensure that rent arrears do not become a problem. Many landlords use a tenant credit referencing service, request details of last 3 years' residences, employment details, require proof of identity (including passport and driving licence), and sight of their last 3 or 6 months' bank statements. It is always advisable to obtain a tenant's date of birth and national insurance number, as this will assist in tracing tenants who disappear without paying their outstanding rent!
- Have a carefully drafted tenancy agreement. A carefully drafted tenancy agreement will set out the obligations of both the landlord and tenants and will provide mechanisms for termination in the event of default. Without such a written agreement, there may be a question at law as to the basis of the tenancy arrangement which can result in difficulties in possession/eviction claims.
- Register any deposit paid with a tenancy protection scheme. Under the Housing Act 2004, all landlords of residential properties making use of an Assured Shorthold Tenancy are required to deal with deposits received in accordance with an authorised scheme for the purpose of safeguarding deposits. If the deposit is not protected in this way, a Court will not grant a Possession Order. This can result in considerable delays, particularly where a section 21 notice is required to bring a tenancy to an end which requires a minimum of two months notice to be provided to the tenant before possession can be ordered by the Court.
- Deductions from deposits. If your tenant feels that you have unfairly deducted sums from their deposit at the end of the tenancy, they will be able to submit a claim to an adjudicator. In order to ensure that such claims are not successful, ensure that you prepare a detailed schedule of condition at the outset of the tenancy which includes dated photographs, and then prepare a further schedule when the tenants vacate the premises. Without such evidence, an adjudicator will have difficulty rejecting the tenant's claim.
- Bouncing cheques. If a cheque paid to you by a tenant bounces, there is a relatively straightforward claim which can be made via the County Court once the appropriate notice has been served. There is usually no defence to this claim on the part of the tenant. If this does occur, rather than waiting to receive the monies from your tenant, seek legal advice as soon as possible in order that the appropriate action can be taken.
- Service Charge. If one of your obligations as landlord is to collect service charge from your tenants, ensure that the collection of these sums is properly documented and that you can demonstrate how these funds have been used in order to comply with your obligations as landlord under the lease.
- Section 8 - v - Section 21 Notices. These are the two notices which can be served in order to start the procedure of removing tenants. A section 8 notice can only be made on specified grounds, and in some circumstances, only two weeks' notice must be provided to tenants. A section 21 notice requires two months' notice to be given, but no grounds are required. Consider carefully which of these notices is appropriate, and ensure that the date provided in a section 21 notice stating when possession is required is correct, or you will not be allowed to rely on the notice in any subsequent possession proceedings.
- Tenants' Possessions. Make explicit provision in the agreement for what will happen to your tenant's possessions in the event that they are not removed from the property at the end of the tenancy period, as this will make it easier for you to remove and/or sell these items once the appropriate notice has been served.
- Energy Performance Certificates (EPC's) As a Landlord you are responsible for providing an EPC for a property which is to be let. The requirement is triggered as soon as a prospective tenant views the property, is provided with written information about it or enters into a contract to let the property (whichever is sooner). A completed EPC lasts for 10 years and the penalty for not providing one for a residential property is £200. If you already have an EPC from when the property was purchased, this can also be used when the property is let. It is also worth noting that for individual dwellings or shared houses, one EPC is required for the whole building but for self contained flats, an EPC is required for each flat. No EPC is currently required for bedsits.
- Houses in Multiple Occupation (HMO's). If the property is an HMO then you need to consider the fact that you may require a licence from the Local Authority. HMOs can include bedsits, shared houses, student accommodation, hostels, accommodation for workers and blocks of converted flats. The Local Authority has the power to impose a licence requirement for all HMOs so you should check the requirements in your area. However, if you can answer yes to the following questions it is likely that a Licence will be mandatory:
- Do you rent out property?
- Does your property have three or more storeys (including habitable attics or basements)?
- Does your property have five or more unrelated tenants?
- Are any of your tenants unrelated to each other?