Legal warning for novice landlords

NOVICE landlords are flooding the buy to let market with properties they are unable to sell, according to reports released this week.

The Royal Institution of Chartered Surveyors (RICS) says the slump in house sales is forcing many more people to become either landlords or tenants. In July, RICS members saw new instructions from landlords rise at their fastest rate on record.

However, legal experts say people should beware of the potential pitfalls of becoming a landlord.

Claire Egerton, residential property partner at national law firm Lewis Hymanson Small, said landlord and tenant laws are complex:

“First and foremost, potential landlords need to check with their lender whether they’re able to let out the property before even considering becoming landlords.

“Landlords new to the game must recognise their legal responsibilities. For example, all gas appliances must be properly maintained and an annual safety check should be carried out by a CORGI approved contractor. The landlord should keep a record of these checks and any remedial work carried out, for at least two years.

“Landlords must provide a copy of the gas safety certificate to the tenant at the commencement of the tenancy. Landlords could still be liable for property damage or personal injury to the tenant.

“For tenants of course, this is good news as with an increasing number of properties on the rental market, rents are likely to be reduced considerably.”

Robert Jordan, chairman of Jordan’s and founder of the Rent-2-Buy scheme that helps first times buyers and novice landlords, said:

“New buy-to-let investors should ensure that they have a proper lease drawn up before they rent out a property. Failure to comply with the assured short hold tenancy legislation could result in not being able to evict tenants who could gain security of tenure.

“Novice landlords should also use a professional letting agent either a member of the RICS or ARLA. They will ensure the landlords money is bonded so if the agent goes bust the landlord will get their money. There are lots of Estate Agents offering rental services who are not members of these organizations and landlords money could be at risk.

Robert Jordan has produced a ten-point checklist for new landlords:

1) Notify your bank or building society if the property is mortgaged and you are planning to let the property.

2) Advise your insurers as your buildings and contents policy will need amending to cover the property against malicious damage and bursts if the property is left empty . There are specialist policies for landlords.

3) Confirm with the freeholder there are no restrictions or covenants which prevent you from letting the property

4) Pay taxes - if you are residing outside the UK and you are using an agent you need to register with HMRC to enable you to get your rent paid without tax being deducted.

5) Keys – have keys cut for the property, enough for each adult tenant plus a set for a lettings agency who should hold them in a secure way without the address on the label

6) Legal - The Landlord will be responsible for legal action against tenants plus any necessary costs incurred. Using a qualified solicitor is essential.

7) Inform Gas and Electricity suppliers of the date of transfer to the new tenants your professional letting agent should be able to do this for you

8) Water Rates and council tax are the Tenant's responsibility in most cases, but advise them of your new forwarding address. Beware there are charges for Council Tax if the property is left empty. Arrange the transfer for the actual day that your tenants will be moving in.

9) Money Don’t release the keys until you have all the rent and deposit. There is legislation requiring deposits to be registered if you do not there is a mandatory fine of three months rent.

10) Mail Redirection - the post office can redirect your mail. Arrange prior to vacating the property for the term of the tenancy.