A landlords guide to property letting. The residential lettings market has grown from strength to strength in the the past few years, with many people renting rather than buying. The following information is guidance to assist landlords with their rental journey. If after reading the information, you have any queries, please feel free to contact us and we will be happy to assist in any way we can.
Once instructed [as sole agents] we will commence a search for a suitable contract holder, with all viewings accompanied.
As soon as a suitable prospective contract holder has been found we will negotiate the terms and commence the vetting procedure.
We take references appropriate to the potential contract holder. This involves using a specialist agency to carry out a detailed check including the credit and employment history of the prospective contract holder. If there were any question of doubt about the ability to pay the rent, or perhaps job security, we would only advise proceeding if a suitable guarantor could be provided.
(Not a legal requirement in Wales but is best practice under Rent Smart Wales)
Under the Immigration Act 2014 agents and landlords in England must ensure that all occupiers have a Right to Rent which is verified by a single document or a combination of documents that have been listed by the Home Office. This is considered as ‘Best Practice’ under Rent Smart Wales.
We will discuss with you the best terms and conditions then prepare the appropriate legal agreement. In most cases, we will use an Occupation Contract under the Renting Homes Wales Act (2016) and will discuss the changes within the Act which was introduced on the 1st December 2022 and how this may affect you. For further information please click on the following link - https://www.gov.wales/renting-homes-frequently-asked-questions-landlords
It may be that your property is mortgaged to a building society, bank or other lender. If so, the mortgage deed will almost certainly require the written consent of the lender to be obtained before you let the property. If your property is mortgaged, you should apply for consent. Lenders will not deal with us in relation to the mortgage; you will therefore need to fill out their application form, though we would be happy to help and provide any information necessary. Occasionally, it will be a condition of consent to the proposed letting that your mortgage interest rate is increased and it is therefore advisable for you to approach your mortgage lender at an early stage to see what the financial consequences are likely to be. Some lenders also charge an administration fee.
If your property is leasehold, you may require the consent of the freeholder for your proposed letting. We will require a copy of the head lease to append to the contract so that the occupier is able to ensure that they do not breach the conditions of the head lease.
Whether your property is freehold or leasehold there may be special rights or restrictions affecting it (for example, a prohibition on more than one family or the parking of a caravan on the drive). We will need to have details of these to include in the contract.
We do not inspect the above areas, but we may ask you to confirm the contents of these areas (if any) as this may affect safety issues. It is strongly recommended that you do not store items at the property once let.
We always advise landlords to make sure that the property and its contents are adequately insured (unfurnished properties may still have contents such as curtains, white goods etc). It is extremely important that you advise your insurance company that you are proposing to let your property and that you confirm to them once this has been done. Failure to do so could result in you losing insurance cover. Some insurers impose letting conditions and we would require details as this may affect the choice of occupier. If your insurer is not happy with you letting the property, we may be able to introduce you to companies that specialise in insurance for the rental market.
Income received from letting your property will be subject to income tax and you will need to include details of the income and allowable expenses when completing your income tax return. HM Revenue and Customs may ask us directly for details of any income we pay you and we are obliged to supply these details.
If you live abroad, we, as your agents, will be required by HM Revenue and Customs to pay any tax liability that arises on rents collected by us on your behalf. We will therefore deduct income tax at the basic rate from rent payments received and these monies will be paid to HM Revenue and Customs. You may be entitled to receive rent without deductions of tax and we strongly recommend you consider this. If you live outside the UK we will be happy to advise you on this and supply the necessary application form.
Under laws introduced in 2007, any monetary deposit we take from a contract holder in relation to any occupation contract must be protected with one of the Government approved schemes within a specified time period. In addition, the required prescribed information must be given to the tenant and any person who funded the deposit, again within the specified time period. In the event of non-compliance with the above, the consequences can be twofold; being (a) a penalty of between one and three times the deposit value, due to the tenant/person funding the deposit and/or (b) the inability to serve a valid section 21 notice unless the deposit is returned in full or less agreed deductions (or you have already been sued for the financial penalty).
We normally collect a security deposit from the contract holder. For occupation contracts covered by the Renting Homes (Fees etc.) (Wales) Act 2019, the amount of a deposit may be limited by regulation. This is held in our client account and protected under the Tenancy Deposit Scheme.. At the end of the letting this is returned to the contract holder, less any deductions made to cover breaches of the agreement. Where we hold the deposit, we will hold the deposit as stakeholder. This means we will hold the deposit on behalf of both parties and will be unable to refund or pay all or part of the deposit to one party without the consent of both parties. We are therefore unable to deduct monies from the deposit without the tenant’s consent or the decision of adjudication or the court. We have a procedure for dealing with disputes about the deposit and we will always use every endeavor to settle matters quickly and satisfactorily. If we are not able to settle the dispute, it can be resolved by the deposit scheme adjudication or a court order. We do not pay interest on client monies held.
Where we, as the agent, receive a deposit from the contract holder on behalf of the Introduction Only Service, we as the party who received the deposit, are responsible for ensuring that the deposit has been registered within 30 days of receipt and for the issuing of the Deposit Prescribed Information. We will transfer the deposit to the landlord and require proof within 10 working days that that the deposit has been registered and that the Prescribed Information has been issued. If it becomes necessary, we will take steps to ensure our compliance.
The rent is payable monthly in advance. Under our Full Management service, we will collect the rent and account to you at agreed periods (usually monthly).
If more than one month’s rent is paid to us, we will only be able to account to you monthly, to ensure we hold funds to be able to manage the property. On receipt of cleared funds rent is paid to the landlord the same day, (with the exception of Bank holidays and weekends). We will always use our best endeavors to collect the rent on time. Should a contract holder be late with a rental payment we will advise you and pay the rent due as soon as it is received. In common with all letting agents, we cannot be liable for non-payment of rent. However, we can offer a full rent guarantee scheme to landlords and can discuss on your request.
It is usual for the contract holder to pay charges for council tax, electricity and gas and water. We will notify the authorities and service suppliers and, if necessary, take meter readings. Contract holders are, of course, entitled to change suppliers for gas and electricity.
Rent Smart Wales
The Housing (Wales) Act 2014 requires all landlords to be registered with “Rent Smart Wales”. In order to act on your behalf, we need you to provide us with your registration number, alternatively, if you intend to manage the property, we require your landlords licence details.
For more information, please refer to the following link - https://www.rentsmart.gov.wales/en/home/
It is a landlord’s responsibility to keep the property and the services such as central heating in repair under the The Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022.
Under our Full Management service, we will agree with you provision for emergency repairs such as a burst pipe. When major expenditure is required in a non-emergency situation, we will endeavor to obtain quotations for you before proceeding.
Whether the property is furnished or unfurnished, it is important that it is clean throughout before the occupation. We strongly recommend that the property, including carpets, is professionally cleaned and, if necessary, the garden made tidy. An inventory will be taken to help evidence the condition at the start of the occupation.
The Renting Homes (Fees etc.) (Wales) Act 2019 precludes landlords from requiring the contract holder to have the property professionally cleaned at the end of the occupation. However, if it is not as clean at the end as it was in the beginning, a claim could be made against the deposit.
A detailed inventory of the property including a schedule of condition will be carried out within our full managed service. When a contract holder is checked into the property, we give them a fair opportunity to check the inventory and we will deal with any discrepancies. We also do a detailed check out when the contract holder vacates, and we may report our findings to you.
There are strict regulations relating to the fire resistance of soft furnishings that are included in the letting. There are some exemptions, but a breach of these regulations can result in criminal proceedings. If you propose including soft furnishings, we will advise you on the appropriate regulations. The regulations make it clear that there must be no non-compliant furniture on any part of the property including in the garage and attic.
Under current safety regulations it is the landlord’s responsibility to ensure that the gas and electrical systems and appliances at the property are maintained in a safe condition and serviced by a qualified contractor. A gas safety check must be carried out and a safety record issued to the tenant before they occupy the property. Also, under guidance from the Health and Safety Executive, landlords have a legal duty to carry out a risk assessment for legionella in each rented property.
A landlord also has a duty of care to ensure all electrics in the property are safe and comply. Under Rent smart Wales guidance, electrical wiring must be in a safe, working condition. All electrical fixtures and fittings must be free from breakages, cracking or defects, and be properly and securely fitted. Electrical work must be carried out in accordance with part P of the Building Regulations28. 4.13 All electrical appliances provided must be in a safe condition.
The property must be a safe environment for contract holders, and we will assist you in checking all safety aspects of the property prior to the tenant moving in.
If any appliances are included in the letting it will be the landlord’s responsibility to ensure they are safe when the property is let. The law may also require the landlord to repair or replace these should they become defective. We advise excluding old or defective appliances such as cookers from the letting. Plugs and socket regulations apply, and we must ensure that all plugs, leads and sockets are checked for safety and correctly fused before occupation.
Where electrical appliances are included, we are obliged to supply safety instructions; please provide us with any that you have for the appliances.
An energy performance certificate is legally required for the marketing and let of a residential property. Details of a qualified “domestic energy assessor” who could conduct such a certificate on your behalf can be found via this web link https://www.epcregister.com/searchAssessor.html or please contact this office as we can arrange a certificate on your behalf using one of our approved contractors. To comply with the Minimum Energy Efficiency Standard (MEES) the EPC rating must have an ‘E’ rating or above. If the property has a rating of either ‘F’ or ‘G’ then unless there is a valid registered exemption, or an EPC is not legally required, the property cannot be let. Please click here for further information: https://www.gov.uk/guidance/domestic-private-rented-property-minimum-energy-efficiency-standard-landlord-guidance
To meet obligations, a working carbon monoxide alarm must be present in any room which has a gas, oil or solid fuel-burning appliance.
There are no exceptions, and this includes if it is a converted contract.
A landlord is required by law to ensure:
• That the electrical installation in the property is safe when a occupation contract begins
• That the electrical installation is maintained in a safe condition throughout the occupation contract and supply the contract holder with a minor works or equivalent record when caried out within 14 days.
• Any appliance provided is safe and has at least the CE marking (which is the manufacturer’s claim that it meets all the requirements of European law).
• In order to meet the requirements a landlord will need to carry out regular basic safety checks to ensure the electrical installation and appliances remain in good working order. A copy of the inspection report (known as a periodic inspection report) should be made available to the contract holder and if the appliances have been checked then each electrical appliance in the property should have a PAT (portable appliance test) sticker on the plug showing the date it was tested.
• Mains wired interlinked smoke detectors must be fitted
There are 3 types of test forms:
We are able to supply a quote with an electrician on behalf of a landlord or alternatively are happy for a landlord to arrange this independently by a qualified electrician.
If the property has working open fireplaces, we recommend that you arrange for these to be regularly swept. We can arrange these matters on your behalf.
A contract holder or another party may ask the local authority to carry out an inspection of the property under the Housing Health and Safety Rating System. The local authority has significant powers to require property owners to make the property safe. The system is based on whoever may be considered the most vulnerable person to occupy the property. We will explain how these regulations may affect you. We will also assist you with outcomes of such an inspection. However, this is not included in our standard fee structure and we will charge fees based upon an hourly rate applicable at the time if you require our assistance.
There are definitions about what constitutes a house (residential property) in multiple occupation. We will advise you about this as there are legal consequences in letting a property to sharers.
Under the Consumer Protection from Unfair Trading Regulations 2008 landlords could be held criminally liable for misleading statements or misleading omissions in the marketing details that they approve.
The General Data Protection Regulation (GDPR) came into force on 25 May 2018. Amongst wide ranging regulations concerning the processing of personally identifiable information is a requirement for Data Controllers to pay a data protection fee to the Information Commissioner’s Office and details of the fee will be placed on the register. Our understanding is that landlords are Data Controllers and therefore must pay the fee and be complaint with the GDPR.
The Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022
There is an implied covenant in all occupation contracts that a property should be fit for human habitation at the start of the occupation. Landlords (or their agent) will be responsible for attending to disrepair/fitness issues once they are notified although where this is in a communal area the responsibility begins immediately any such issues occur It is vitally important that documented routine visits are carried out in order to identify disrepair or potential problems before they give the contract holder any cause to go to court. We recommend that landlord respond promptly to reported issues and implement an ongoing maintenance regime.
We will try and identify any issue which is apparent to us; however, if you have any concern about issues that are not so obvious, we recommend that you discuss the situation with us at the earliest opportunity.
Renting Homes (Fees etc.) (Wales) Act 2019
Schedule 1 of the Act identifies payments that are permitted to be paid by the contract holder for some lettings. Any other payments are prohibited and requiring or taking a prohibited payment may lead to fixed penalty notice of £1,000 or a criminal prosecution and an unlimited fine. We will consider the guidance offered by the Welsh Government and ensure that, as far as possible and until the courts provide decisions, our occupation contract is compliant.
With our Full Management service, we make regular visits to the property on your behalf and advise you of any potential problems. The main purpose of such visits is to check if there are any matters that require your attention. We also aim to check that the contract holder is abiding by the agreement. We also give the contract holder advice, if necessary, on any defects we may find. However, contract holders do have a right of privacy and we, and you as landlord, can only enter the property under limited circumstances. Similarly, we are not able to comment on the contract holders lifestyle or cleaning ability unless the property is being adversely affected.
No matter how well prospective contract holders are vetted, there is always the risk that they could prove to be unsatisfactory, sometimes due to unforeseen changes in their own circumstances. Whilst court proceedings can be taken to enforce the terms of the contract this is often expensive, and it is unlikely that you will be able to recover the full costs involved. We strongly recommend that you consider taking out legal protection insurance to guard against the risks involved. Similarly, insurance is available so that your income from rent is not lost if the contract holder stops paying.
In the event of difficulty, whether because the contract holder is failing to pay rent or has broken other terms of the occupation contract, we will be pleased to discuss with you the steps to enforce the terms of the contract. However, we would stress that most lettings we manage are uneventful and trouble free. We will assist with any eviction proceedings, but our management fee does not cover this. We will charge fees based on time and will always be happy to give details of the charging rate and an estimate where appropriate.
It will be a condition of the contract that the contract holder must return the property in the same condition in which it is provided less allowable wear and tear. Under the Renting Homes (Fees etc.) (Wales) Act 2019 we are unable to require a contract holder to make a payment to a third party (getting the carpets professionally cleaned/flea treated), although they may choose to do so. If the contract holder does not return the property in the required condition, a deduction from the deposit may be agreed or a dispute raised which may include a carpet clean and pest treatment.
Contract holders are required to keep these areas neat and tidy. Standards of gardening ability and knowledge can vary considerably. If the garden is particularly important or has special features, we usually suggest that the landlord employs a gardener.
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