Landlords property information package

PREPARATION & PRESENTATION

Our experience has shown that those properties which have been properly prepared for letting benefit from successful, long terms lets, generating the right market rent and attracting reliable tenants. In the majority of cases where tenants have been problematical, badly maintained property or opportunist landlords have been the root causes. We recommend your property is properly prepared and that any decorating jobs are undertaken prior to marketing. Furniture should be of good quality or removed all together. Windows should be clean, and domestic appliances serviced. If you have any unreliable appliances in the property you should consider replacement or removal prior to letting. Our representative will offer impartial advice aimed to assist you. In summary, quality homes attract quality tenants. Unfortunately the reverse is also true.

ADVERTISING

As an established letting agent we attract numerous enquiries for rental property every day. We advertise all of our rental property in the most prominent window display in the High Street, on the Internet (via both our own and other high profile websites) in the local press and through advertising boards.

SELECTION OF SUITABLE TENANTS

We will discuss with you the target tenants suitable for your property, and will endeavor to source tenants matching the agreed criteria. Once an application is forwarded, references are usually taken from the following: Current Employer, Previous Landlord and Personal Character Referee. We also credit check tenants for reliability and track record. We aim to process all references within 7 working days.

INVENTORY

Once a tenant’s application has been placed and accepted, providing you take advantage of our Inventory & Inspection package, we will prepare an Inventory. This is not just a list of included furniture and belongings, but a schedule for the condition of your property. This can then be compared to a schedule of dilapidation’s prepared at the end of a tenancy. Photographic evidence is also taken as part of the inventory process.

DEPOSITS

We will register the tenants deposit with the Custodial Scheme supplied by the Deposit Protection Service (Fully Managed properties only) under the new Tenancy Deposit Act which came into affect on the 6th April 2007, this scheme is free to use. Other insurance based schemes are available but involve registration fees and other criteria that landlords are required to comply with. If you wish to use the insurance based schemes, you will need to register for these yourself independently from Barons Property Centre.

TENANCY AGREEMENT

The tenancy agreement we use is very comprehensive. An initial contract is usually prepared for no less than six months. All tenancies are now Assured Shorthold, unless stated otherwise. The tenant will usually pay no less than one month’s rent in advance, with the equivalent being paid as a security deposit. The Security deposit can be paid back to the tenant at the end of the tenancy once we are satisfied that the property is left in the same condition as at the start of the tenancy. The landlord upon request can add additional clauses to the tenancy agreement.

TENURE

The initial tenancy will probably be for no less than 6 months. To gain possession the landlord should serve the tenant two months written notice. The tenant is required to serve the landlord one months notice, after the initial six months. Thereafter, it is perfectly acceptable for the tenancy to run on a month to month basis, with termination as above.

RENT COLLECTION

For managed clients, we will collect the monthly rent on your behalf. We then make deductions for management charges and other maintenance items, paying the net amount into your bank account.

INSPECTIONS

A regular visit by our management department is an obvious way of monitoring your tenants. Should you take advantage of our Inventory & Inspection package, we expect to visit your property at least once every three months.

REPAIRS

For managed clients we provide a repairs service, as every property at some point will require some remedial works. If things go wrong and the Tenant contacts us, we will then contact you immediately. In the majority of cases the problem can be resolved quickly. However, if a serious fault does occur and we are unable to contact you, we can authorise a repair agreed by you prior to the commencement of the tenancy. Authorisation for this is contained within the agency agreement you sign.

Once the tenant has occupied the property you do have an obligation to ensure it is well maintained. Carrying out repairs efficiently is as important for you as it is for the Tenant. Repairs caught early often can save money in the long run and tenants do have statutory rights. Tenants can contact the Environmental Health because repairs are not being attended to within acceptable time periods and the possible ‘enforcement order’ could include additional repairs and subsequent higher final repair bill.

Credit Control

We have a dedicated credit control department which carries out regular audits on all our clients accounts. If there are any outstanding payments these are monitored and appropriate action taken to bring the accounts up to date.

Technology

We have invested heavily in a state of the art computer system in order to assist us in the management of properties. The system monitors everything from rent payments, credit control, maintenance, gas safety, and landlords tax statements.

TAXATION

The following information is intended only as a guide. If you would like to know more about taxation when letting your property, you should consult your accountant or financial advisor.

Tax Consequences

The tax implications of property letting can be confusing. A Landlord has two types of taxes to be aware of, Capital Gains Tax and Income Tax.

Capital Gains Tax

As a Landlord there is a risk that you might be exposed to Capital Gains Tax, we would recommend that you take professional advice. If you are a non-resident landlord or you have let out a former home for no more than three years or you have let out a former home when forced to work abroad, then you may well be exempt.

 

Income Tax

Income tax is payable on the net income from property letting regardless of where you live. It is the responsibility of the landlord to inform the Inland Revenue of letting income whether they are resident or non resident. The income that the landlord is liable to pay tax on is the gross income minus expenses incurred whilst letting the property.

Allowable expenses are as follows:

• Loan interest
• Costs of providing services included in the rent (cleaning etc)
• Agents fees
• Costs of repair, redecoration and renovation
• Accounting and legal costs
• Ground rent and Insurance

Where a property is let furnished the Inland Revenue will allow a deduction for wear and tear of furniture, fixtures and fittings.

Non Residents

From the 6th April 1996, letting agents for non UK resident landlords have been required to deduct tax from the rent collected and pay it directly to the Inland Revenue. Tax is assessed at the basic rate on net income received after allowable expenses.

We are bound by FICO (Financial Intermediaries and Claims Office) to collect the tax and sufficient funds will be retained to meet this liability. However, a non UK resident landlord may apply to receive income without the tax having been deducted and we can provide you with further advice and information regarding this. In order for a landlord to avoid deduction of tax at source we must receive a certificate of exemption from the Inland Revenue.

Stamp Duty

The Stamp Act 1891 states that a document is not admissible as evidence in the civil court unless it has been stamped by the Inland Revenue stamp office. The duty payable varies depending upon whether the property is furnished or unfurnished and the length of the tenancy.

Furnished Tenancy for One Year or more

On the agreement signed by the Landlord the duty payable is 1% of the value of the gross rental for the fixed term rounded up to the next £5.

Unfurnished Tenancy

If the Tenancy is unfurnished which includes properties which contain carpets, curtains and white goods, but no other furniture the percentage rate of duty payable is the same regardless of the length of tenancy being 1% of the gross rental for the fixed term rounded up to the next £5.

Furnished Tenancy for Less than One Year

On the agreement i.e. the copy signed by the Landlord the duty payable as from the 1st October 1999 is £5. This charge is borne by the Landlord. On the counterpart i.e. signed by the Tenant the duty payable is £5 as from 1st October. This charge is borne by the Tenant.

INSURANCE

There are a number of insurance policies available to landlords including buildings, limited contents, legal expenses, rent guarantee and emergency repair. We can provide full details of any policies you may wish to undertake.

COMPLIANCE

There are three compliance matters, which need to be considered when planning to let your property: Gas, Electricity and Foam Furniture. It is now a criminal offence to let your property without first having a Landlord's Gas Safety Certificate (CP12). Similarly, any furniture included in your property must comply with the foam furniture regulations.

GAS SAFETY

More often than not this is a simple inspection carried out by a CORGI registered inspector. Upon satisfaction, a certificate is issued for 12 months. This certificate must be placed on file at our offices. A gas safety certificate typically costs in the region of £70.00 + VAT, but may cost more if work is required for your property to comply.

The Gas Regulations

Landlords must maintain gas appliances annually. Gas appliances must have detectors, which cut off the gas supply before dangerous levels of Carbon Monoxide build up. Gas appliances such as open flue boilers are banned from bedrooms due to incidents when lives have been lost because of faulty appliances. A CORGI or registered installer must carry out maintenance of appliances.

If an appliance is faulty, both Landlord and Tenant must be notified, only CORGI registered installers will be allowed to carry out re-connection, repairs or fit new appliances. If a faulty appliance is not disconnected, an installer who will use their Statutory Rights to disconnect the appliance should inform British Gas. The tenant has the right to complain to the Health & Safety Executive if they believe an appliance to be substandard. The Gas Safety (Installation & Use) Regulations are in addition to the Gas Cooking Appliances (Safety) Regulations 1989.

Our advice, in summary, is to have a service contract on any gas appliance with either British Gas or a reputable CORGI engineer. Further information can be sought from our lettings manager.

FIRE & FURNISHINGS SAFETY REGULATIONS

The above regulations place a responsibility on the landlord of a furnished or part furnished property to ensure the furniture which is supplied in the property complies with current legislation. The following notes have been prepared as a guide to enable you to comply with the law.

In General

Upholstered furniture must have a fire resistant filling material cover fabrics must have passed a match resistant test (covers in certain fabrics such as cotton or silk maybe used in non-match resistant form, provided the furniture has a fire resistant material between the cover and the filling material.) The combination of the cover and filling material must have passed a cigarette resistance test.

Furniture Included in the Above:

• Bed Bases
• Headboards
• Mattresses
• Sofa/Sofa Beds
• Armchairs
• Futons
• Convertible Beds
• Nursery Furniture
• Garden Furniture
• Scatter Cushions
• Seat Pads
• Pillows
• Loose & Stretch Covers for Furniture

Items Not Included

• Sleeping Bags
• Bed Clothes (Including Duvets)
• Loose Covers for Mattresses
• Pillow Cases
• Curtains
• Carpets
• Any items manufactured before 1950

Identifying Compliant Furniture

The majority of the above items, with the exception of mattresses and bed bases that comply with existing legislation will carry a label that states "Carelessness Causes Fire". The label will also state whether either the covers or the interliner will pass the match test. Items that should, but do not carry the appropriate level can not be included in the tenancy. If there is any doubt, we would recommend that it be left out.

Non Compliance

The penalty for non-compliance carries a maximum punishment of up to 6 months imprisonment or a level 5 fine currently £5,000 or both.

ELECTRICAL TESTING

The regulations on electrical testing

The Electrical Equipment (Safety) Regulations 1994, mandatory since 1 January 1997, state that all electrical appliances supplied with let accommodation must be safe. This applies to both new & second hand appliances and covers all electrical items supplied for the intended use of the tenant. The regulations also cover fixed appliances such as cookers, showers & immersion heaters, which must also be safe. The only sure method of ensuring that these appliances are safe is to have them tested by a trained competent person using the appropriate calibrated portable appliance testing equipment (PAT).

Failure to Comply with the electrical regulations may constitute a criminal offence under the Consumer Protection Act 1987 that carries a maximum penalty on summary conviction of a £5,000 fine and/or 6 months imprisonment.

Landlords and/or letting agents could also, in addition, be sued in Civil Law under THE DUTY OF CARE for the failure to ensure the tenants safety and face punitive damages.

We also offer flexible packages tailored to suit individual landlord needs and charges will vary on the service required. Please speak with the lettings team to discuss this option further and the costings.

 

Standard Charges & Fees

Our fees are payable from the rent we receive on your behalf. We do not make charges in advance of successful letting. Management fees are deducted monthly and are subject to VAT. Letting fees and ancillary charges are deducted from the first month's rent and are subject to VAT.

Tenant Introduction Only

A one off payment of 50% of the first months rent plus £120.00 (plus VAT) inspection and inventory fee and £65.00 (plus VAT) for tenancy and legal fees.

Landlords using the Tenant Only Introduction Package will be responsible for registering their tenants deposit with one of the relevant schemes in accordance with the Tenants Deposit Act.

Managed

10% of the monthly rent received plus setup charges for the first month of only £120.00 for the inspection and inventory fee and £65.00 for the tenancy and legal fees. If you have two or more properties to let, we will also be prepared to offer discounted rates. This option provides a smaller initial outlay and provides added value, services as well as peace of mind throughout the tenancy.

Inventory & Inspections

Once a tenant’s application has been placed and accepted we will prepare an inventory. This is not just a list of included furniture and chattels, but a schedule of the condition of your property. This can then be compared to a schedule of dilapidation’s prepared at the end of a tenancy. As well as preparing a written document we also take multiple photographs, this is essential if a dispute arises at the end of the tenancy.

Unfurnished 1-2 bed property	£120.00
Unfurnished 3-4 bed property	£120.00
Furnished property	£150.00

If you are interested in letting your property, please do not hesitate to contact James Grimsted or Darren Knebel in the Residential Lettings team on 01761 411 411.