Many privately rented properties in the UK are rented by landlords and they self manage these properties. This can be a great idea on paper as you are saving the management fee of around 10% of the gross monthly rental, but do you know all the elements that you need to cover by law?
I am taking my letting qualification with Property Mark as one day I want Bannan and Sulley to have its own letting arm to the business, and I feel as a responsible owner I should know what my business and employees are doing, Plus its great knowledge for me to obtain. I have learnt that there is more to lettings then I gave my agent credit for. Its is estimated that more than half of landlords self-manage their rental properties (https://www.landlordzone.co.uk)
23% of tenants remember receiving a “How to Rent” guide at the start of their tenancy. www.landlordzone.co.uk
What are the consequences of not complying with the law?
The consequences can be very severe if you do not comply with the law.
When a new tenant moves in to your property you must provide them with the following or face the penalty ...
Gas Safety certificate. This must be renewed each year and a copy given/left in the property for the tenants. If you fail to do so there is a £5000 fine.
EPC is required to tell the tenant the energy efficiency rating of your property and states estimated energy costs. From 2018 you can only rent a property with an EPC rating of E or higher. If you do not have this, you can face a £4000 fine.
Government How to Rent Guide is an easy step to comply with as you can download a copy and pass to the tenant. You can use this link www.gov.uk/government/publications/how-to-rent
Tenancy Deposit Protection scheme. You must hold by law the tenant's deposit in a Government-backed Tenancy Deposit scheme. You must give the paperwork to the tenant within 30 days. The scheme can be from the Deposit Protection Service (DPS), the Tenancy Deposit Scheme (TDS) or MyDeposits. It protects both parties if any disputes arise and failure to comply will result in a fine of three times the deposit amount.
A real example. A friend of mine who was an accidental landlord took a tenant to court as they were in rent arrears and she wanted to evict the tenant. But instead of getting the rent arrears paid, the landlord had to pay the tenant £10,000 as they had not moved the deposit in a Government approved scheme. This was an expensive and harsh learning curve for my friend.
There are other things to consider:
Right to Rent states the checks that you need to carry out to ensure the tenant has the right to rent a property in the UK, and guidance can be found here https://www.gov.uk/check-tenant-right-to-rent-documents. There could be a five year prison sentence if you ignore this.
Tenant Fee Ban stops tenants being charged fees so their initial costs are reduced and fees charged reflect the real economic value of the services provided. It also sharpens the letting agents incentive to compete for landlords business. Please check out https://www.gov.uk/government/collections/tenant-fees-act or you can face a fine of £5,000 to £30,000.
One in every 14 landlords is an accidental landlord. www.thisismoney.co.uk
So what can you do?
As a landlord with a mixed portfolio I use a mix of full management and finder only services. As the HMO's are a lot more labour and time intensive I opted to pay a letting agent for a full management service. But as the single lets are located closer to where I live I have opted to manage these myself but I utilise a large UK agent to find, reference and carry out the check in/out for a one off fee. This gives me piece of mind that the elements I have covered in this blog have been fulfilled and we are legally compliant.
But the question I would put to you is would you be happy to pay an agent for a full management service or a finders fee for piece of mind you are compliant or would you do it alone and be confident you are legally compliant?
