The 2020 Essential Landlord Checklist
In its initial stages, letting a property is arguably the busiest and most stressful time for any landlord to go through. Be warned that mistakes during this process have the potential to be costly which is why we have formulated this checklist to simplify the letting process for you. A Landlord 101, if you like.
First things first, you need the best possible tenants to believing in your property. Speeding through finding a new tenant can often create a recurring headache for landlords throughout the tenancy. This is why 92% ofUK landlords reference their tenants, so don’t be within that mistaken 8%. Tenant referencing is for you to ensure that your tenants are not only able to pay their rent but are also suitable to live at that property.
There are a wide variety of ways to reference tenants. The single most effective and common method is to request a tenant reference from any previous landlords. Put it this way, when somebody applies for a job, they submit references for the employer to survey. Just as if a tenant applies to live in a property, it should be of no concern for them to provide you with their references.
This process is a series of checks into the tenant’s background, and so as well as references, the tenants should also provide some of their personal information like bank details for credit checks, their current employers details, and proof of address and identity. A credit check will help gage whether the tenant will be able to consistently pay rent on time, which is priority for you, especially if you have a mortgage to pay. If you wish to be thorough during the referencing, there are many more checks to consider: fraud checks, outstanding debt search, affordability rating.
2. Right To Rent check
Like referencing, this is a process which many responsible landlords followed as a matter of routine, however, unlike referencing, you are now required by law to do it. So, save yourself the legal fees and familiarise yourself with this check.
All private landlords in England; whether they are letting, subletting, or lodging, will have to check passport and immigration within the28-day period before letting out a property to the tenant. Landlords renting inWales, Scotland or Northern Ireland are exempt from this legislation. If you have read our 20 tips for new investors in the property market, we advised investors to consider investing in care-homes and/or student accommodation, these properties are also exempt from this law.
The process of checking the Right to Rent is:
1. Identifying who be living in the property
2. Receive and check validity of documentation, such as: Passport or National Identity Card, foreign non-EU passport,Home-Office certificate, or a Certificate of Naturalisation
3. Keep a copy of the documentation and record the validity check date
4. If the tenants Right to Rent is for a set amount of time, make a note of the expiry date to make a follow-up check.
3. Landlords Gas Safety Inspection Report
This is another legal requirement for you as a landlord to abide by. Every 12 months, you need to check every 12 months that all gas appliances, chimneys, pipework and flues within the property are safe for tenants. When the check is completed, you will receive your CP12 which you will need to provide your tenant with a copy of within 28 days as well as providing new tenants with one when they move in. It’s important to note that CP12s must be kept for at least 2 years so keep them handy as you never know when you might need them!
You should also let your tenants know how to turn off the gas using the mains within the property and what to do in the event of a gas emergency. Your tenants will also want to know who the gas transporter is as these will depend on whereabouts the property is based so you need to learn who your gas transporter.
4. Tenancy Agreement
This seems quite an obvious addition to your to-do list, but many landlords will choose to share a verbal tenancy agreement and neglect to draw up a written agreement which can become problematic down the line.
The tenancy agreement is between you and your tenant. This will give you both certain rights such as to the tenants right to occupy the property and your right to receive rent for the property. Now of-course this agreement can’t consist of absolutely everything to ensure you’re completely protected. Which is why by law, you and the tenant have statutory rights and responsibilities, but with this agreement you get more than just your statutory rights. However, this works both ways in that if there is term within the agreement that gives anyone less than their statutory rights, it cannot be enforced.
5. Inventory and Schedule of Condition
Many problems arise near the back end of a tenancy, where a tenant wishes to get back their deposit whilst you might feel the property has been left in an unfit condition worthy of making a claim. More often than not, this can be resolved, but if a compromise cannot be reached between either party then the next stage is adjudication. To have the best probability of winning this dispute is to draw up a properly agreed inventory and schedule of condition. This will give you the ability to prove that for whatever reason, the property has been left in a worse condition to what it was before the tenancy.
The inventory aspect of this covers all assets coming aspart of the building such as tables, chairs, counter ware and so on. This needs to cover the condition and cleanliness, and so if it can be proved these items are in a worser state then you as the landlord can charge for professional cleaning. Whichever items you believe to be in good condition at the start of the tenancy should be detailed and photographed on the report. The same applies to the schedule of condition, the only variance is this relates to the overall condition of the property which can include features like walls, floors, and doors.
The process of doing this can be very time-consuming when you do it yourself, and to ensure that it is done to the best standard it is highly advised for you to hire a professional to do this for you. We at Elavace have property managers who would be able to do this and ensure that you are completely protected. As well as this, it would help to have had a company like Elavace do this as opposed to yourself when it comes to making a claim for whatever portion of deposit you wish to retain, this is because adjudicators may consider your own evidence to be biased.
6. Tenancy Deposit Protection Documentation and PrescribedInformation
When your new tenant pays their deposit, you are required to give them the following documents:
· A copy of the deposit protection certificate/receipt(this is provided by the deposit scheme upon deposit)
· The deposit protection scheme leaflet for tenants
· Prescribed information (keep reading)
Within 30 days of receiving the deposit from your tenant, it must be placed into a protected deposit scheme with the tenants being provided with all the documentation specified above.
What is prescribed information?
The prescribed information is to be handed to tenants so they can learn how their deposit has been protected by the custodial/insurance-backed scheme. Believe it or not, by law, you are required to do this as well as place the deposit into a secure scheme, under the tenancy deposit protection legislation. If a third party has contributed funds to the deposit then they too, are entitled to the prescribed information.
Failure to do this would result in the deposit protection being invalid. As a landlord, you will already/need to know what the Section 21notice is. The deposit protection not being valid would mean that this notice could not be served which removes your ability as the landlord to remove a tenant from your property if necessary. Don’t even get us started on the sizeable penalty you could be dealt with which is potentially one to three times the amount of the deposit!
Landlord insurance is a must, especially from the point of view of the mortgage lenders. This insurance usually covers you from risks to your rental property which should include buildings and contents insurance. You need to ensure that landlord-specific covers are included, such as: property owners’ liability, loss of rent, and tenant default insurance. Essentially, there are different types of landlord insurance available to cover different risks.
Most of the different insurances to choose from are worth considering, but an important cover particularly if you have one fixed income to live off every month is tenant default insurance. If your tenants fail to pay or you are having difficulty finding new tenants to fill a void property, then this would prove to be an absolute must for you. Next you have property owners’ liability insurance which would cover you in the event of any injury or damage being imposed on a tenant or visitor by the property.
The insurer will work out your premium based on how likely it is you will need to make a claim, thus the cost of the policy depends on the property and tenants. Obviously, prices may vary depending on the type of insurance you choose, and the cover levels you might need.
8. Waste Management
As a landlord, you are responsible for much of the waste in that property, however you need to know the difference between commercial and household waste. Household waste is the tenant’s responsibility to dispose of because this is produced by them on a day to day basis. Although you may not be responsible for the household waste, under an HMO license, you are responsible for ensuring that there are bins available for them to dispose of waste.
Commercial waste might have been created during property maintenance by you as the landlord. Anything ranging between demolition and construction is what you as the landlord are solely responsible for disposing of. Unlike household waste, the council wont collect commercial waste so you may potentially need to hire a skip.
There are instances where tenants have left waste at the property after their tenancy has run, then that is now your responsibility. You should also be wary of any waste found on the streets or in outdoor areas would put at risk of a big fine or potentially even prosecution.
9. Good State of Repair
The property is your responsibility, which means you need to keep it in a good state of repair and ensure that all water, electric and heating systems are working functionally. There have been recent regulation changes around tenant evictions, and so it is now important for you to respond to any complaints about the state of the home. It is ideal to be compliant with the law, but at the same time, thorough diligence in the care and safety of your tenants could help you in the event of disputes with tenants.
As a landlord, you may need to have a maintenance schedule to manage more than one property, which will outline what and when something might need to be resolved. We’ve already discussed the gas safety check, but another check which is equally important is the electrical installation check.This is should be completed by a ‘Part B’ registered electrician every 5 years.
Something else which needs to be done is a fire safety risk assessment. This will involve checking and testing any smoke detectors, heat sensors and carbon monoxide detectors within the property, don’t forget to keep a record of the dates these were carried out! There is also the requirement of a legionella assessment to be done to see if the property is at risk of water carrying that lethal bacteria.
You need to make sure that your property is not at risk of any potential risks or hazards, so you should ensure that items like the drains and gutters are not blocked or that there are no trip hazards putting tenants at risk. Remember the landlord insurance we discussed? Well it is highly likely there will be a ‘Reasonable Precautions’ condition. This is detailed as, “Take all reasonable precautions to prevent or minimise loss, destruction, damage, accident or injury and maintain the premises, machinery, equipment and furnishings to a good state of repair.” So, in layman’s terms, you get out what you put in!
10. Hire a Property Management Company
By now, you can probably tell that being a landlord will be a challenge throughout the tenancy. We chose the most important responsibilities to compile this checklist together and hopefully this can simply the process for you. However, there are plenty more duties for you to clue yourself up on. This is why we strongly advise you to hire a property management company who will thoroughly take care of all these responsibilities ensuring that you are compliant with each and every regulation.
At Elavace, we meet all UK regulations and utilise our 65+years of management experience in the property industry to make owning a property as simple and as safe as possible. We provide our clients with comprehensive support and information to most informed decisions. If you are worried you may make mistakes and incur vast legal fees onto yourself, then we are here to help! One of the many services we provide is professional property portfolio management and we will cover the ins and outs of your property running and management. Other services that we offer include market leading research on the performance and security of the UK market and also conduct extensive due diligence on your behalf.