Related Legal Updates

Considerations for Landlords Letting Residential Properties

by Kyle Wyness | Sep 11, 2013
According to research undertaken by the Association of Residential Letting Agents (ARLA), landlord investment in residential property increased significantly during the second quarter of 2013, despite a slight easing of tenant demand during the equivalent period.  

Becoming a professional landlord is synonymous with starting any other business. With the “buy-to-let” market apparently going from strength to strength it is all the more important for landlords to keep up to date with the legislation in relation to residential lettings which continues to be a minefield for the unwary.  Equally there are a number of important issues which landlords should consider to avoid some of the most common pitfalls.

The Terms of the Tenancy  

Although not a legal requirement, having a formal signed tenancy agreement in place is strongly advised as this clearly sets out the rights and obligations of both the landlord and the tenant.  This in itself helps keeps disputes to a minimum.  In addition, in the case of assured shorthold tenancies (which make up the vast majority of residential tenancies granted today) the lack of a written tenancy agreement limits the options available to landlords in the event that it is necessary to take formal legal steps to obtain possession of the property from the tenant.

There are several different types of tenancy agreement and it will depend upon the status and identity of the parties as to which is the most appropriate to use.  We can advise you on which tenancy agreement is most suitable to use; draw up or check the tenancy agreement and advise on any related legal issues.

Checks on the Tenant

More and more tenants are fraudulently completing tenancy agreements with false names and details.  It is therefore important to take up references (through the numerous credit reference agencies which exist) and/or undertake thorough checks on the tenant which can include obtaining certified identification documents, proof of residency, contacting previous landlords and asking for employment references, copies of payslips etc.

If a landlord is concerned about a prospective tenant’s ability to pay rent, he/she should consider whether to take a guarantee from a third party and, as with the tenant, take up references and undertake credit checks on the guarantor.  It has been known for tenants to forge guarantors’ signatures.  Ideally the guarantor should therefore sign the tenancy agreement in the presence of the landlord or his/her managing agent.

Protecting the Deposit

Since 6 April 2007, landlords who rent properties under an assured shorthold tenancy must protect any deposit received and provide certain “prescribed information” (which will include details of the scheme within which the deposit is being protected) to the tenant within 30 days of receiving the same.  Those time limits are strict and a failure by the landlord to comply with these requirements will result in certain sanctions being imposed.  These include the landlord being precluded from serving a section 21 notice upon the tenant as a means of obtaining possession of the property, and the ability for the tenant to apply to the Court for “compensation” which can be awarded at a figure up to three times the amount of the original deposit.  

Notifying the Mortgage Lender

The landlord should consider the terms of his/her mortgage agreement as usually there is a requirement to obtain the mortgage lender’s consent before granting any tenancy.  If the landlord grants a tenancy in breach of the mortgage terms and then defaults on the mortgage payments, the mortgage lender will not be bound by the tenancy and in any subsequent proceedings to recover possession of the property will be entitled to evict the tenant.

Act Proactively when Problems Arise

If the tenant fails to pay the rent or is causing neighbours to complain as a result of antisocial behaviour, most landlords will want to take steps to recover possession of the property as soon as possible.  It is essential to ensure that the correct notice is served upon the tenant as a precursor to issuing possession proceedings.  We can provide advice on how to deal with nuisance/defaulting tenants and on the procedures which will have to be followed to recover possession.

At Spratt Endicott, we have a team of experts who can offer advice on all aspects of property related issues and it may give you peace of mind, as well as saving money in the long term, if you get the right legal advice from the outset.  If you would like to speak to someone about landlord and tenant issues or another property related matter, please contact Kyle Wyness, solicitor on 01295 204135 or email Kyle at kwyness@se-law.co.uk.

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