Landlord checklist, this may appear to be a push to really have a checklist to let a property out.
With ever evolving and changing regulations its in the best interest of landlords to have their own checklist in place.
Here is the reality:
The journey of securing financial stability does not end by investing in property and securing a portfolio, it actually starts when you start managing a portfolio.
All the pre-work you do as an investor building a portfolio is exactly that, pre-requisites.
Once you have built a small portfolio, the management of properties to ensure they are suitable to tenants is a never ending process.
Yes, you have letting agents to manage but the buck always stops with you and you can’t escape that.
If you are starting up in property and looking to understand what you need to do, to be able to let a property out…..
This post is definitely for you.
The post is specifically relevant if you are self-managing a property and have not had the house in order with required documentation.
1) Right To Rent Check
As part of letting a property to a prospective tenant, the landlord is legally obliged to verify if the tenant has the right to rent within UK.
Like it or not:
This legislation has been introduced in early 2016 and is not just restricted to verification but also, retain a copy of the document on file and record the date of check.
UK passport, immigration document, travel documents showing indefinite leave to remain in UK, European Economic Area passport are some of the acceptable forms of identity verification.
A must within landlord checklist, with a detailed documentation on right to rent published on gov.uk website for further reference.
2) Tenant Referencing
Tenant referencing is more for the landlord within the landlord checklist items to limit the risk of letting out a property to a rogue tenant.
In a nutshell:
Referencing includes identity, employment, credit history, address checks and further references from previous landlords.
If tenant fails above checks, usually the credit history side of checks, the acceptable way to proceed is to request a guarantor who can be referenced with above checks.
Below is a push though:
There were cases where we had a good feel speaking to the tenant in one of our property where we accepted a 6 month payment in advance via rent protection with letting agent when both the tenant and guarantor failed the checks.
We would not advise this in any way and will always prefer to stick to the rules that assures compliance as much as possible.
3) Tenancy Agreement
Assured Shorthold Tenancy (AST) is a non-negotiable item within landlords checklist and the most popular form of tenancy agreement.
Be it for buy-to-let properties or HMOs, AST is a must have to safeguard interests of both landlord and the tenant alike.
Tenancy agreement pretty much is the single point of reference should there ever be a conflict on what was agreed and what is in practice.
Agreed tenancy dates, rent agreed, notice periods, the conditions if any instructed by landlord or by tenant as part of tenancy are usually part of the agreement.
As per any contractual rules, the agreement cannot be changed unless both landlord and tenant approve the changes and re-sign the agreement.
4) Deposit Protection
A landlord has to protect a deposit from tenant in a government backed tenancy deposit scheme if there is an assured short-hold tenancy (AST) that started after 6th of April 2007.
Here is a less known fact:
If you don’t rent a home on an AST, then a landlord can accept valuable items like a car or a watch as a deposit instead of cash. Yes, such items aren’t protected.
Nope, this isn’t me saying but is an excerpt from the GOV.UK itself and is a legal requirement within landlord checklist.
5) Inventory Checks
Inventory check is nothing but a report that is produced by an independent party or agreed between the landlord and the tenant, that describes the condition of the property.
Its never that easy:
A landlord will need to have such a reference document to ensure there is a baseline for any claims he/she may want to raise for any damages, resulting from the tenancy.
It’s the easiest way to end most of the disputes even before they arise during end of tenancy and is must have landlord checklist item.
Should I say, it’s a must have from a tenant’s perspective as well before the deposit protection kicks in.
6) Home Insurance
As much straight forward item within landlord checklist as this may seem…..
A research states that about 6 million homes are uninsured out of 22.6 million homes in UK.
Every 1 in 4 properties are uninsured.
For a property investor though or a homeowner, this probably must be the highest priority to have an insurance as part of conveyancing process itself during exchange.
Any damage to property that occurs outside of landlords control is hard to take and even within landlord’s control its unthinkable to pay for heavy damages.
Be it purchasing a home or refurbishing a home, insurance forms key part of your portfolio including for funding the property via lenders.
7) Gas Safety Certificate
Gas safety is a legal landlord checklist item.
As a landlord, you are responsible for safety of your tenants.
The regulation mandates landlords to make sure gas appliances and fittings provided to tenants are safe fittings.
You are also responsible to engage and registered gas engineer to action an annual gas safety check and maintain the record for minimum of 2 years.
That’s not it:
You have to ensure that tenant has a copy of the safety record if you are managing the property yourself or rely on letting agents.
8) EPC Certificate
Energy performance certificate may be a legal requirement for a seller to show while selling a house, but as a landlord you need to have a copy to hand.
To ensure you have some form of proof to show that your property has a minimum required energy rating of “E” as per regulations enforced from 1st April 2018.
9) Utility Bills Check
Be it a property that you are tenanting for the first time or changing the tenancy from one tenant to another, utility bills must be checked to ensure they are paid in full.
Here is the most common issue:
Not being able to establish a correct date or meter readings from when you as a landlord are responsible to pay the bills when the property is out of tenancy.
In few cases:
Previous tenant not paying the bill in full or letting agents not updating the utility companies or council on time on change of tenancy.
This results in landlord being liable to pay the disputed amount first to avoid any penalties. The disputes whilst can be resolved later.
This can be easily avoided by just putting a clear process in place to release the tenancy only once outstanding bills are paid.
Marking yourself as responsible to pay further as landlord until the next tenancy is in effect.
That concludes the most common and essential checks that a landlord should adhere to for every property within the portfolio.
Should there be others that you wish to add to landlord checklist, feel free to add them to comments section of this post.
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