The following are our top ten tips for individuals to consider when looking to rent out their property:
Check your lease for restrictions
You may be restricted in your ability to rent your property. Check the clauses in your lease to ensure you are permitted to rent your property and if there are obligations you need to comply with e.g. obtaining consent from the freeholder, before the property is rented out.
Do you need a licence to rent?
You may need a license from your local authority to rent your property. To check, contact your local council before your property is rented out.
Check your current insurance cover to ensure it covers tenants; you may not be covered and need specialist insurance. Most standard building policies don’t protect you as a landlord and therefore you may need to take out specialist insurance.
Also be aware that if you do have insurance and do not inform your insurer that you are renting out your property you may be at risk of invalidating your policy.
Agent? Review the contract
If you are thinking of using an agent to find a tenant or manage the property make sure you review their contract for restrictive clauses that may be tricky at a later date.
Some agents have imperious clauses that prevent the landlord from being able to terminate the contract so long as the tenant that the agent found for the property remains in the property.
Whilst this may sound peculiar in this scenario, if you wanted to change your agent of manage the property yourself and the tenant remains in the property – you may have difficulty terminating the contract and find yourself paying the outgoing agent further fees.
Know who you are renting your property to
It is very important that you carry out due diligence on your tenant.
Rent arrears is one of the most common reason a landlord seeks possession of their Property. Whilst there will always be circumstances that are not foreseeable you can carry out checks before the Tenant enters the property to mitigate your risk.
Your checks should indicate if the tenant is reliable and able to make payments of the rent each month. Your search should include credit eligibility, employer checks, previous landlord references and that they are eligible to live in the UK.
The right to rent is crucial for landlords. If you fail to check your tenants Right to Rent (under the Immigration Act 2014) it can result in a fine or jail for the landlord. You need to therefore check that the tenant has the right to lawfully live in the UK.
Know your responsibilities
There are several requirements that landlords need to comply with when taking on a new tenant. If you fail to comply with the regulations, you can be fined and even prevented from managing your property.
Top Tip – Make sure you have a written and signed Tenancy Agreement
It is best practice to enter into a written signed agreement with the tenant which sets out the terms of their occupation of your property. The agreement should set out clearly what the responsibilities and obligations are of both the tenant and landlord and particularly the process for obtaining possession of the property in the event of a breach of the agreement.
Prepare the Property for renting
Take detailed inventories of the property including the furniture, appliances and condition of the property will be useful when the tenant is moving in and vacating the property.
Disputes over deposits can be assisted when the landlord has ensured they have taken a note, which has been agreed by the tenant, on entering the property.
To avoid surprises later down the line, it is best to arrange regular inspections of the property (in compliance with any obligation to give notice to the tenant in your agreement) to check for any unknown occupants and disrepair to the property that may need to be dealt with.
Do not neglect your landlord obligations
Landlords have obligations that must not be neglected. Whilst the landlords legal obligations and duties vary depending on the type of tenancy agreement the basic rules are always the same.
Whilst they include certain duties that are set out in Number 6 above there are further continuing obligations that a landlord is required to comply with throughout the tenants occupation of the property.
Failing to comply with your obligations can prevent you from being able to serve a valid Notice on the tenant, if and/or when you seek possession of the property. Further, you may be at risk of being fined.
Keeping up to date on the tenant is important. It is good practise to keep an open channel of communication with the tenant to prevent any unknowns cropping up that may have an impact on you.
For example, if the tenant is going to be away on business (due to a change in job or circumstance) the property may be vacant for extended periods. In these circumstances you may need to let your insurance company know and it could invalidate your policy and affect your ability to make a claim should the property be damages in the tenants absence.
Meaby&Co is authorised and regulated by the Solicitor’s Regulation Authority (SRA Number 447880) and registered in England and Wales with registered number OC322672 at 2 Camberwell Church St, London, SE5 8QY.