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Landlords Guide: The Process
Important information for landlords
Landlords Guide: The process
1. Valuation and advice
During the initial visit, our experienced lettings consultant will meet with you at the property to carry out a rental valuation, taking into consideration the location, size and condition of the property, fixtures and furnishings, as well as local demand and your objectives. As a landlord you should consider the type of tenant that will be attracted and will be advised of any improvements/alterations that might achieve a better rental value. The aim is to let your property at the best price, in a timeframe that suits you; we are very experienced and our valuation assessment reflects this. Rental valuation is more sensitive than ever; overpricing by as little as £50 – £100 PCM can act as a barrier which could stop prospective tenants from finding your property online to consider it. Overpricing can result in void periods which can in a short time add up to greater losses than would be faced taking a slightly lower rent PCM. Our valuation appraisal will be supported by the provision of comparable let or to let properties for your reassurance. Click here to Request a Valuation
2. Service level
Often the preferred level is Full Management as this makes your life as a landlord as easy as possible. We also provide a rent collection or tenant finding services. The fee for each service level is a different percentage of the monthly rental income. In addition to the monthly fee there is an initial administration fee which will cover all the work involved in preparing the Tenancy Agreement. Additional fees may apply for the preparation of the EPC, professional photography and floor plan. When an existing tenancy is renewed for a further term there is an extended agreement fee. Guide to Mackenzie Smith Landlord Fees
Presenting your property correctly is a good way of attracting high quality tenants. This will enable you to secure the best rental return. Sticking to neutral classic, traditional or simple modern styles of decor will appeal to the widest audience of prospective tenants. Prior to marketing the property an EPC must be acquired, this is a legal requirement. The EPC (Energy Performance Certificate) is provided by a qualified Domestic Energy Assessor and provides a rating for energy efficiency and environmental impact. The EPC will be valid for 10 years so can be used for multiple tenancies during that time, we can arrange this for you. We let furnished and unfurnished properties; there is no difference in the legal rights or obligations for the landlord. An unfurnished property should include flooring, curtains and light fittings, a fitted kitchen with appliances and a fitted bathroom, the quality and level of furnishing will have an impact on which tenants are attracted to the property. Safety and fire regulations regarding furnishings do apply; this is detailed within the Important Information for Landlords section later in this guide.
4. Inventories and Schedule of condition
The Inventory provides a comprehensive, approved record of the condition of the property for both landlord and tenant. Although appropriate wear and tear must be considered, the inventory provides reassurance to both the landlord and tenant that there is a mutual understanding about the condition of the property to avoid any disputes at the end of the tenancy. We work with members of the Association of Independent Inventory Clerks who are able to supply detailed inventories for a property of any size and level of furnishing. The tenant usually pays for the check in cost. During check out, differences between the inventory and the present condition of the property are identified and appropriate action taken. The landlord will usually pay for the check out. Whether furnished or unfurnished, an inventory is crucial to record the condition of the property; including carpets, curtains, paintwork, sanitary ware and the kitchen. Prior to the tenants moving in, the inventory clerk will also take note of the meter readings for utilities, we will then make contact with the relevant suppliers informing them of the change of occupancy and correct meter readings. It is important for landlords to cancel any repeat payments such as standing orders to the utility suppliers, but services should not be disconnected. Ask us for a quotation.
Once instructed, we will create a description of your property which will include a summary, photographs, the EPC, floor plan and vital information such as the rental price and availability date. Good quality photography and a floor plan are essential as they will increase the response rate. Our lettings staff are supported by a central team that ensure all the marketing for your property is up to date and innovative. To guarantee your home is highly visible to prospective tenants, we list all property on nationally recognised property websites and their associated apps and affiliates, enabling us to reach a national as well as local audience. A growing percentage of property searches are taking place on mobile devices and we have responded to this by creating our own mobile optimised website. Feature property editorials allow us to generate extra promotion online through our Blog and Thistleblower newsletter as well as gaining local press coverage. We also use Facebook and Twitter to introduce properties to social networks. When you instruct us to let your home we use a very powerful marketing platform to support the process. Having our own in house marketing team means that we are able to react quickly to any requirement from our offices and deliver a solution. This can range from a bespoke advertisement, to editorial releases and targeted email campaigns. An email alert service is available to tenants via www.mackenziesmith.co.uk. We also use our intelligent software system to match applicants with your property.
Prior to arranging a viewing, we will gain a strong insight into the prospective tenants’ needs and their circumstances to determine whether they are a suitable applicant for your property. We attend all viewings whether your property is occupied or vacant. If your property is currently let, we arrange an appointment with the tenants in situ, who will be given adequate warning to meet the requirements of the Assured Shorthold Tenancy Agreement and to prepare the property for the viewing. We normally hold a set of keys for the convenience of all parties. This enables viewings to take place at an agreed time when the occupants are not present.
7. Negotiating and agreeing an offer
Once we receive an offer we will notify you and advise of any special conditions to help you decide whether to accept the offer or not. We then negotiate on your behalf to ensure we achieve the best rental income for you. We will always act in your best interests to secure the optimum rental income with a suitable tenant. Once a mutually satisfactory conclusion is met we will put into action all the checks on the prospective tenant, the deposit procedure and other paperwork.
8. Reference and credit checks
Our aim is to find the best possible tenant for your property through a thorough selection process. Referencing and credit checks are essential to ensure that the tenant is reliable and meets the financial requirements to enable your let to proceed. This includes referencing the tenant by assessing their employment, renting and address history as well as their credit worthiness. If the tenancy is a corporate let, a company search will be carried out and trade references will be used. In some circumstances a guarantor may be required; references will still be carried out in the normal way. Strict referencing at this point reduces the likelihood of encountering potential problems during the tenancy. Marketing will continue until the referencing process has been completed. Mackenzie Smith carries out all referencing through an approved independent referencing company.
9. Signing the tenancy agreement
The Assured Shorthold Tenancy Agreement, or other agreement where applicable, outlines the agreed responsibilities of both landlord and tenant. It is important that this is thoroughly read and understood by both parties before signing as it is a legally binding document.
10. The deposit
At the commencement of a tenancy the tenant pays 1.5 months’ rent as their security deposit. This is registered with the Tenancy Deposit Scheme (TDS) and is then held by Mackenzie Smith in a deposit account as stakeholders for the duration of the tenancy. This deposit is held on account to cover any costs that need to be recovered from the tenant identified during the check out process. Provided there are no disputes, the deposit monies will be returned in full at the end of the tenancy. The deposit must be returned within 10 days of the tenancy provided there is no dispute, if this is not the case the matter is referred to the TDS. The Tenancy Deposit Scheme (TDS) is an insurance backed deposit protection and dispute resolution service run by The Dispute Service, established in 2003 to provide independent dispute resolution and complaints handling for the lettings industry. The TDS as an independent service provides a safeguard for both parties; their role is to resolve any dispute relating to the deposit and to hold disputed monies until disagreements are resolved. The decision by The Dispute Service is binding on both parties. The insurers will only do this for registered agents and as members of ARLA we are legally required to register a deposit on your behalf. Click here for further information on TDS. Click to view “Client Money Protection Explained”
11. Tenants move in
We will supply tenants with the agreed number of keys and ensure they have the correct inventory and agreement information in hand for their move in day. As part of the negotiation we will have agreed the number of inspection visits that will be carried out throughout the year to check that the property is being well looked after. Tenants will be advised of the correct contact, either for the property management team or landlord depending on the service option selected. Leaving a folder with instruction manuals is very useful and can help ensure the good care of your appliances. Finishing touches like labelling individual sets of keys or leaving a welcome card shows thoughtfulness a tenant is likely to repay. It is particularly important to leave full instructions for any security alarm systems that are in place. For systems with a 24-hour service contract keyholders and the local police should be advised of the arrangements. The maintenance of the security system is the responsibility of the landlord. For the various utilities supplied to the house the suppliers must be advised of any meter readings and the change of responsibility. Mackenzie Smith will take care of the gas and electricity suppliers, advising them of the meter readings and new contact details. Closing accounts will usually be sent to Mackenzie Smith for final payments. We will arrange the transfer of the water accounts to the new tenant. Metered charges, water and sewerage rates are the responsibility of the tenant. We will also contact the relevant local authority to advise them of the residents name and start date of the new tenancy; the tenants are responsible for paying Council Tax for the property during the tenancy period. Landlords are responsible for Council tax until a tenant moves in and become responsible again when they move out. Telephone lines and TV aerials are the landlords’ responsibility. The landlord must close their own account and the tenant initiate theirs as the associated suppliers will not accept third party nominations. We strongly advise any landlord to take up the Post Office’s redirection service. There will also be a number of contacts and suppliers that you will want to advise if you are moving out of the property; TV licence, banks, credit cards, loyalty clubs, charities, subscriptions to newspapers or magazines, the DVLA and media suppliers will all need to be updated. www.iammoving.com can provide a service that can make updating all these parties much easier.
12. Tenants extensions and checking out
Approximately 10 weeks before the tenancy is due to expire, the appropriate notices (under the Housing Act 1988) will be issued to the landlord and tenant. The landlord must decide if they wish to continue to let the property and if so the tenant must decide if they wish to extend their tenancy. We will draw up an agreement outlining the length of the extension and any other changes, such as rent, so that the extended tenancy is officially documented. There is a charge for this, please ask for further details. If the current tenant is checking out, the independent inventory clerk will check the condition of the property and contents against the inventory prepared at the beginning of the tenancy so that any disputes can be raised and resolved in regard to the deposit, they will also collect all keys and make the property secure, as well as taking the closing meter readings for utilities and the forwarding address of the tenants for billing reasons. The property should be returned in a professionally clean condition for your next tenant or for you to move in to. Fair wear and tear must be considered, making an allowance for the ages, quality, original conditions and the expected usage over a tenancy period. A copy of the check out report will be supplied to you for your records and for your instructions regarding any proposed deductions from the tenant’s security deposit. Properties that are maintained to a good standard will secure better rental levels and tenants who are more likely to renew their tenancy. This avoids costly void periods. We can provide a list of approved contractors who will be able to estimate for maintenance and refurbishment. Guide to Mackenzie Smith Landlord Fees
Important information for landlords
The Landlord and Tenants Act 1985 makes it an implied term of every tenancy that the landlord will “keep in repair the structure and exterior” of the property and “keep in repair and proper working order the installations in the dwelling for the supply of water, gas and electricity, and for sanitation, space heating and heating water.” The Landlord cannot make the tenant responsible for these repairs. There are several vital safety documents that must be obtained prior to letting a property to fulfil a landlords’ responsibility to prove the property is safe at the beginning of the tenancy and maintained for the duration in compliance with the Landlord and Tenant Act 1985, these are detailed below. The Housing Act 2004 relates to the risk assessment for residential properties called the Housing Health and Safety Rating System, this was developed to guide landlords to assess all hazards that may be found in a residential property and address the health impacts of poor housing, from lighting and socket provision to fire detection. Click here for guidance on the Housing Health and Safety Rating System provided by the Department of Communities and Local Governments. The Building Regulations 1991 require that all properties constructed since June 1992 must have mains operated smoke alarms fitted on each floor, though the rule does not apply to properties built prior to this we recommend that any rented property has a smoke alarm fitted on each floor. The Regulatory Reform (Fire Safety) Order 2005 is law and builds on existing regulations to ensure the correct responsible person is able to take general fire precautions, to ensure as reasonably practicable the safety of people in the property and the immediate vicinity. Thorough guidance is provided within the LACORS Housing- Fire Safety guide which you can download by clicking here. The Plug and Socket etc. (Safety) Regulations 1994 and Electrical Equipment (Safety) Regulations 1994 are concerned with the safety of consumer goods, applying here to the rental accommodation and the electrical appliances within which should be inspected. Landlords are responsible for ensuring electrical appliances supplied with the property are safe to use, this also applies to the mains wiring, sockets and lighting. We recommend general checks are carried out prior to the commencement of a tenancy, that appliances are checked annually and that the mains wiring and circuits are checked at least every five years. We can arrange for one of our reliable contractors to carry out the work on your instruction. Click here to view A Landlords’ Guide to Electrical Safety provided by the Electrical Safety Council. The Gas Safety (Installation and Use) Regulations 1998 mean the landlord has a duty to make sure gas appliances, fittings and flues are safe and well maintained by using a Gas Safe registered engineer to provide an annual safety check. Records should be kept for 2 years with a copy issued to the tenant at the start of the tenancy or within 28 days to an existing tenant. For further information click here to see A Guide to Landlords’ Duties for Gas Safety (Installation and Use) Regulations 1998 from the Health and Safety Executive. The Furniture and Furnishings (Fire) (Safety) Regulations 1988 and The Furniture and Furnishings (Fire) (Safety) (amendment) Regulations 1993 requires that all furniture in rental properties must pass the “match and cigarette tests”. Approved furniture represents a lower fire risk and is less likely to produce noxious gasses if there were a fire. Most upholstered furniture will have a sewn in label showing that is has passed this test. If this label cannot be found the item cannot be used within the accommodation. Bed bases and mattresses are not required to bear a permanent label but compliance will be indicated if the item has a label stating that it meets BS7177. Period, antique or pre 1950 furniture is exempt from these regulations as are carpets and curtains. If a landlord is found to be negligent of these duties they may face fines or even a custodial sentence.
Income from rental properties is subject to taxation and as such should be declared by UK residents to the Inland Revenue. Failure to do so can result in penalty and interest charges being imposed on unpaid tax. For landlords who are non-resident in the UK, the Inland Revenue holds the agent liable for deduction of tax from rental payments. These are held by us and paid on a quarterly basis to the Inland Revenue. If you live, or are intending to live overseas and have a good tax history, you can obtain exemption from being taxed at source. A tax exemption certificate must be acquired by the landlord. This has to be supplied to your agent to prevent tax deductions from your rental income. We can provide landlords with the appropriate application form and our agent reference number on request. Certificates are not transferrable between agents. Any reimbursements must be arranged directly between the non-resident landlord and the Inland Revenue.
All landlords are allowed to make certain deductions from income before calculating profit, these usually include:
- Agent commission, management fees and administration
- Tax accounting fees and certain legal expenses
- Ground rent on leasehold properties
- Buildings and contents insurance, rent guarantee premiums and any insurance claim fees
- Maintenance charges on leasehold properties and repair and maintenance of grounds, communal areas, roads and drains, the cost of lighting to common parts where the landlord is responsible
- Wear and tear allowance for furnished property
- Interest on loans for the purchase and improvement of investment property
- General repairs to the property and items during the property
It must be noted that deductions only apply whilst the property is let or to let. We recommend that landlords take advice from a suitably qualified accountant.
Take care to confirm that any existing policies will provide appropriate cover for the property and it’s contents. If required, the policy should be amended to suit the new property use. A failure to inform your insurer could invalidate any subsequent claim. As a landlord you must insure the building and any contents. The tenant must arrange their own contents insurance. If you have not selected the full management service, Emergency Assistance Insurance can provide peace of mind and a cost effective solution in case of severe emergencies such as failure of electricity supply or cooking facilities, lost keys, plumbing problems, leaking roofs or the security of doors and windows. It must be noted that these policies are not a repair service through lack of routine maintenance. Mackenzie Smith can provide contact details for suppliers of this service.
Legal Protection and Rent Guarantee
Applicants are carefully assessed to determine their suitability and their ability to meet the requirements of the Tenancy Agreement; however tenants circumstances can change (illness, redundancy etc.) which may impede the tenant’s ability to pay the rent. Mackenzie Smith would strongly recommend taking up suitable rent and legal protection insurance to guard against unforeseen circumstances. We are unable to advise on specific products as we are not regulated by the FSA.
If any of your questions have not been answered here, please call Mackenzie Smith Lettings on 01252 514000 or email email@example.com and we will be glad to be of assistance. > Click here to Request a Valuation
Mackenzie Smith Lettings is the trading name of Mackenzie Smith Property Lettings and Management Ltd Registered Number 8538125 England & Wales