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Landlord Guidance NotesThis section is intended for Landlord Guidance and information, where you will find a brief overview of definitions, letting legislation and other information that will affect Landlord's when letting their property About Assured Shorthold Tenancy AgreementsThe Assured Shorthold Tenancy offers the tenant little security of tenure but gives the tenant the right to refer the rent to a rent assessment committee if he feels that it is too high. It should be pointed out that a rent assessment committee has to show that a tenant is paying substantially above the rent paid for similar properties in the area before ordering a reduction in rent. In practice we feel that with an increasing number of properties on the market it is unlikely that a Landlord would secure tenants if his rent was too high and therefore few tenants will wish to refer rents to the committee. The original 1988 legislation laid down important procedural steps which had to be followed to ensure that a legally binding tenancy was created but the process has been greatly simplified by amendments introduced in the 1996 Housing act. There is now no minimum time period for an assured shorthold tenancy, although a Landlord cannot obtain a court order for possession of the property within the first six months of the tenancy. For this reason we usually recommend that the tenancy agreement is for a minimum fixed term of six months; this binds both the Landlord and tenant to this period of time. Please note that an assured shorthold tenancy cannot be granted where the Landlord is resident on the premises. Energy Performance Certificates (EPCs)From the 1st October 2008 Landlords offering property to rent will be legally required to provide prospective tenants with an Energy Performance Certificate (EPC) Energy Performance Certificates (EPC) tell you how energy efficient a home is on a scale of A-G. The most efficient homes - which should have the lowest fuel bills - are in band A. The Energy Performance Certificates (EPC) also tells you, on a scale of A-G, about the impact the property has on the environment. Better-rated homes should have less impact through carbon dioxide (CO2) emissions. More Information on our Energy Performance Certificates (EPCs) Landlord Buildings & Contents InsuranceOrchard can provide landlord
insurance quotes for landlords who wish ensure that their investment
is adequately protected. Every landlord should protect their property
with adequate insurance cover. From the landlord who lets a small
studio or one bedroom flat, to the successive property investor
who owns an extensive property portfolio. Whatever the landlords’
circumstances a considerable amount of capital is tied up in their
property, landlord insurance will protect you against losing your
capital investment, and can also help protect the income you receive
from your tenants rent. Orchard Landlord Buildings & Contents Insurance Rules & Regulations There are a number of legal requirements concerning, primarily, the health and safety of the tenant which directly affect landlords who are considering letting their property. These are summarised below and we strongly recommend that you familiarise yourself with the regulations and ensure that your property complies with them as the penalties for noncompliance are severe. The rules are very largely a matter of common sense and it is likely that you will find that your property already meets the required standards. Our representative will be pleased to answer any queries that you may have. We can provide you with the full text of any of the regulations if you require. Should you favour us with your instructions to let or manage your property we will ask you to sign a declaration that you both understand the regulations and will ensure that your property meets them. Furniture & Furnishing (fire) (safety) regulations 1988. This legislation defined certain standards and tests which were applied to (mainly) foam filled furniture and applied to manufacturers and importers of furniture from 1st November 1988. From 1st March 1990 the legislation extended to retailers of new furniture and from 1st March 1993 to retailers of second hand furniture. An amendment to the regulations in 1993 made it an offence to hire out non compliant furniture in the course of business and this includes landlords letting furnished accommodation. Any furniture that you supply must therefore meet the fire resistance requirements. If your furniture was manufactured or imported new since 1st November 1988 it will almost certainly comply and should bear a green edged label with a picture of a cigarette and a match to confirm its fire resistance. Furniture manufactured prior to this date may or may not comply and will probably not bear a label. If you are unable to obtain confirmation of its fire resistance from the manufacturer you should remove it from the property prior to the commencement of the tenancy. Furniture and furnishings to which the regulations apply include beds, mattresses, headboards, suites. seat pads. cushions, pillows and loose or stretch covers. Failure to comply with the regulations may lead to a prosecution with penalties of imprisonment or fines up to £5,000. Gas Safety (Installation & Use) Regulations 1994. Regulation 35 of the approved code of practice imposes a duty on landlords to ensure that any gas appliances in a rented property are maintained in a safe condition to prevent risk of injury to any person. More particularly each gas appliance must be checked for safety at intervals of not more than twelve months by either the Gas Board or a CORGI Registered gas fitter. Landlords should maintain a record of when each gas appliance was checked, the defects found (if any) and the remedial action taken. This record is in the form of a "Landlords Gas Safety Certificate" should be made available to the tenants on moving in to the property and within 28 days of the annual inspection being carried out. PLEASE NOTE that under our terms of business we consider that it is the Landlords responsibility to ensure that these safety checks are carried out and we accept no liability should you fail to do so. However, we have been able to negotiate favourable rates with a local CORGI registered firm and, on receipt of your WRITTEN instructions will be pleased to arrange safety checks on your behalf. Should you have a Gas Board 3 star service contract (or similar) this will cover one annual inspection of the boiler. These contracts do not, however, cover gas cookers or fires and you will still need to arrange for these appliances to be safety checked. The basic 3 Star Contract does not include provision of a Landlords Gas Safety Certificate, although the Gas Board can provide this at an additional cost. Failure to comply with these regulations may lead to a prosecution with penalties of imprisonment or fines up to £25,000. Electrical Equipment (Safety) Regulations1989. These regulations cover all mains voltage household electrical goods including cookers, kettles, vacuum cleaners, washing machines, immersion heaters etc. and impose an obligation on the Landlord to ensure that the goods are safe so there is no risk of injury or death to humans or pets or risk of damage to the property. In practice, unless you are aware of any particular fault with an appliance, It is difficult to ensure that it is safe. In general, though, you should remove any item with damaged or frayed wiring, badly fitted plugs etc. and ensure that instruction booklets necessary for the safe operation of any appliance are available for the tenant's use. You should avoid purchasing second hand appliances for the property or, if you do, should have them checked by a qualified engineer. Any non-working appliance should be removed from the property prior to the commencement of the tenancy. There is currently no obligation upon the Landlord to provide a smoke alarm. However, where one is provided the Landlord is required to ensure that it is maintained in working order at all times. Failure to comply with the regulations may lead to a prosecution with penalties of imprisonment or fines up to £5,000. Taxation of Rented Property The following
is intended as a rough guide to the taxation liabilities which may
arise from the letting properties by a private Landlord. It must
be stressed that the rules surrounding this subject are extremely
complex and that an individual's personal circumstances can greatly
affect their liability to tax. This is only a basic guide and should
not be relied upon to provide definitive information; Orchard can
accept no responsibility for any losses arising from so doing. Rent received from rented accommodation is taxable. The taxable income is arrived at by calculating the rent received during the tax year and deducting allowable expenses. Expenses which are allowable include such items as:
Click here to Visit www.direct.gov.uk for more detailed information http://www.hmrc.gov.uk/leaflets/c9.htm Non-Resident Landlords Taxation A Landlord is non-resident for tax purposes if he is living outside the UK for a period of more than six months. On 6th April 1996, a new scheme for the taxation of the rental income of non-resident landlords came into force. From that date Orchard, if appointed as managing agent, are obliged by law to deduct tax at the basic rate (20%) unless we have received a certificate from the Inland Revenue giving us approval to pay rents gross. There are no exceptions to this. To obtain this approval it is necessary to submit a form NRL1 to FICO (Financial Intermediaries & Claims Office) declaring that:-
You also have to undertake to:
For those landlords who wish to apply for this approval themselves Orchard can supply the necessary form or they can be obtained from FICO (address and phone number below). We can also supply details of reputable accountants experienced with dealing with the affairs of non resident landlords. Certificates can be applied for before a tenancy commences and we strongly recommend that any Landlord going overseas applies as early as possible. These certificates are not transferable so if a certificate has been obtained previously naming another letting agent a new application will have to be made. For those landlords who do not obtain an approval certificate the new regulations impose a considerable administrative burden on the letting agent as each quarter the tax has to be calculated on the rent received less any allowable expenses and the tax paid over to the Inland Revenue. A certificate of tax deducted also has to be provided to the Landlord for each year ended 31st March. There are stringent regulations for record keeping and these records must be available for Inland Revenue inspection at any time. There are also strict time limits for payment of tax which can lead to large interest payments if they are not met. Because of this additional administrative burden we will charge any non resident Landlord who has not got an approval to receive rents gross £50 + VAT for each quarter that no approval is held to cover our additional costs. The Inland Revenue produces several leaflets which explain the above scheme and other aspects of taxation in more detail, these are:-
If your property
is mortgaged, you will need the approval of your mortgage lender
before you can let your property, a copy of which should be sent
to Orchard Property Services once obtained. Leases should
be checked for stipulation against letting the property out. It is the responsibility of the owner to insure the structure of the building and the contents therein. Details of insurers should be given to Orchard. All Insurers must be notified that the property is to be let. Tenants will be advised to arrange adequate insurance cover for their own personal possessions. Click here for more detailed information Non-Resident UK Tax Inventory An Inventory of the contents and condition of the property must be drawn up for the incoming tenants. Please see our Management Details regarding this Service. Water Rates In most cases, unless you have a metered water supply, the water rates remain payable by the Landlord throughout the tenancy. For more Landlord Guidance and Information on Inventories click here Legal Fees If a breach of contract arises, any resultant legal action will be taken only after first discussing the situation with you and your Solicitor. Any legal fees that should arise will be your responsibility Rental Any rental quoted to the tenant by Orchard on your behalf is inclusive of all outgoings for which you are responsible with the exception of gas, electricity and telephone services. Furnishing & Decor Furniture should be of a good standard and decor should be as plain and light as possible. High standard properties attract good quality tenants. Pictures & Plants Properties always look more 'homely' if a few pictures are left hanging and possibly a few plants remain. It is advisable to remove all personal ornaments, books etc. Television It is not necessary to leave a television although some Company Lets would expect one. The tenant is responsible for the license in all cases. Telephone It is usual practice for a working telephone to be connected for the use of the tenant at the commencement of the tenancy. Cleaning The property should be thoroughly cleaned prior to the commencement of the tenancy. If Orchard feel that a 'Spring Clean" is necessary at the termination of a tenancy, in between lets, we will arrange a cleaner at the previous tenants expense.
Council Tax The Council Tax, as with the Community Charge, will remain the responsibility of the tenant throughout the tenancy. Some properties such as those occupied entirely by students will be exempt. We will notify all the relevant utility companies and council tax department of a change of occupants, so the tenants will be billed. |