Introduction – In this section we will detail the legal obligations as well as the practical on going activities (and subsequent expenses) that you or your agent (if you are using one) will undertake in the course of managing the let. In addition, we will examine how you should manage the end of the tenancy through giving notice at the end of the fixed term, and/ or in worst case, through legal repossession if serious problems arise with your tenants. Please not we are NOT a law firm and therefore we strongly advise you to employ a solicitor to advise you on any legal questions you may have – we have attempted to summarise the law in laymen’s terms in the context of the topic of this chapter and of the context of this e-book.

Landlord and Tenants Legal Rights & Responsibilities – both you and your tenant have legal obligations imposed upon you both.

Landlord Responsibilities - under the Housing Act 1996, and the Landlord and Tenant Act 1985, you, as the landlord, will have various obligations both to the Managing Agent and/or your tenant. Most have been described in previous sections. The main obligations areas follows:-

Paying Service Charges – including outgoings, apart from those agreed payable by the tenant. In addition, paying for buildings and contents insurance; Maintaining Appliances and Equipment - especially electrical apparatus and pay for the repair, or replacement, of faulty items; the structure of the exterior of the property, the sanitary equipment (baths, sinks, basins) and space and water heating apparatus and maintaining the garden. External decoration and fair wear and tear are also the responsibility of the landlord; Complying With Statutory Safety Regulations– soft furnishing fire, gas and safety certificate to the tenant, electricity and any other safety regulations; (see section 4.7); Allowing the tenant quiet enjoyment of the property; Confirming – the landlords contact address in the UK, actual ownership of the property, if requested and that landlord has the right to let.

Tenants Rights – you new tenant will, by law have certain legal rights, granted by statute:- Permissions - should you require access to the property, you will first need to seek the tenants permission; (unless in an utmost emergency). Notice period should be at least 24 hours; Notice - you must give the tenant at least two months notice of regaining possession and serve the correct legal notice asking to leave Peace & Quiet - the right of 'quiet enjoyment'; and enjoy it as your home.  Tenants Responsibilities – your tenant will have some implied obligations. Your tenant:- Permissions - should get written permission from the landlord before making any alterations to the property; Damages - is obliged to carry out and abide by the Tenancy Agreement. If the tenant or a permitted occupant; damages the property, the landlord can seek possession of the property under the Housing Act 1988; Bills - is responsible for paying the Council Tax (unless you are renting out an HMO), water & sewerage charges, gas and electricity bills; Rent - is obliged to pay rent as specified in the Tenancy Agreement

Practical On-Going Considerations – the week to week (or month to month) management activities that you, as landlord, will need to plan and undertake are as follows:-

• Collecting Rent - to simplify administration, it is advisable that the monthly rent is paid on the same day each month - this should ideally be the start date of the tenancy. For example, if a tenancy starts on 26th April the rent will be due on the 26th each month thereafter. We also recommend that all payments are made by standing order, direct from your tenant's bank to yours, to reduce the inconvenience and uncertainty of receiving late rent payments. Make sure you keep records of every rental payment and provide receipts to your tenant confirming the rent has been received satisfactorily. These receipts should clearly identify the payment from tenant X, for date Y, related to your property Z. If you are charging rent on a weekly basis, you must provide a rent book. These are standard books available from any stationary or law chains.

• Increases in Rent – add a clause to your AST detailing how any potential future increases are to be determined. If you do not add a clause, you will not have a legal right to do increase the rent. Make sure your AST states when and how the rent will be reviewed during the fixed term and/ or in a position of a contractual periodic tenancy.. You can only raise rent during the fixed term e.g. the first 6 months, with your tenant(s) permission.

With a contractual periodic tenancy, you can raise rent annually be using a procedure underpinned by the Housing Act 1988. This involves using an independent, Government appointed, rent assessment committee to set the rent by deciding what the fair rent should be. This committee is acting o the basis of the Rent Acts (Maximum Fair Rent) Order 1999. You must give the tenant one month’s notice in writing that this is your intention. Your tenant has the right of appeal to the rent assessment committee. A rent assessment committee is made up of two or three people (typically a solicitor, property valuer and lay person). Each committee is part of a wider rent assessment panel. These committees are independent of the landlord, tenant, local or central Government. The committee will order a hearing and will inspect the property on the same day in order to come to their decision. You cannot appeal against their decision after the event, (apart from on a point of law). The decision can make the rent go up or down and does not take into account market conditions of house prices.

Dealing with Tenants – if you are not used to dealing with people, then it might be wiser to use a letting to do it on your behalf. Effective communication is so critical. Treat your tenants fairly and with consideration but do not get personally friendly with them (even if you like them). If you set their expectations fairly at all times, avoiding confusion (whether it be personally, on the phone or via a letter), your tenancy should run smoothly. Remind them of their legal obligations (practical responsibilities) but also be as fair as possible. For example, they might ask for an extra single bed - a small cost but a very worthwhile perceived item for the tenant.

Most importantly, if the tenant reports a problem at 7am, (like a boiler might have unexpectedly burst) sort the problem out immediately! Imagine not having heat or hot water in the winter yourself. So make sure you are contactable - mobile and voicemail. Worry about the repair bills afterwards – the sooner you get it fixed the greater respect your tenant will have for you. The tenant is then more likely to treat you and your property with the same courtesy at a later stage. If there is going to be a time delay for the engineer to arrive – phone your tenant and update them. From your tenants point of view, knowing action is being taken is much less frustrating than not knowing if anybody is coming to help you out of this problem. Always follow up and phone your tenant (after you know the problem has been fixed) and check they are happy again now the problem has been resolved.

A difficult tenant who turns out to be loud, untidy or worst of all a late rental payer is trickier. Here you must always remain objective, professional but remind them of their “legal obligations” verbally first or by letter for greater impact.

Upkeep and General Repairs – it is a fact of life that boilers break, roofs leak, washing machines stop working and so on. These types of unforeseen repairs also include painting and decorating, treatment of wooden furniture for damp, replacing leaking pipes etc. If you are using a letting agent, they will usually have pre-agreed responsibility to fix minor problems (up to a certain pre-agreed repair spend limit) using their own approved tradesmen. If you are not using an agent you must be prepared to accept phone calls at any time and be responsible enough to sort out angry tenants. Most repair expenses are offsetable against tax (see section 9.0).

Use Trusted Tradesman - if you do not have plumbing, electrical and carpentry skills to make minor repairs (or simply don’t have the time), find a good local handy man or general maintenance company that does. Don’t react when a problem occurs at the last minute; you are liable to get stung for large call out charges for rapid response – plan for little hiccups – safe in the knowledge if your tenant reports a problem you can resolve it fairly quickly using a trusted third party. Here, a letting agent is so invaluable in having links to local maintenance providers.

Emergency Home Assistance – to pay for unexpected repairs you may adopt to take out, at the beginning of the tenancy, and pay for, a form of protection cover called an emergency assistance policy. This type of policy covers 24-hour call out charges (which may be in the middle of Sunday night) and subsequent repairs. This type of cover can even be implemented in a way that your tenant calls the insurers 24 hour helpline for assistance to fix a burst pipe, etc.

Undertaking Home Improvements - you cannot undertake major works or improvements on your property (like converting the loft) without consulting and getting the permission of your tenant first. The tenant has right of “quiet enjoyment” and so works to improve the property will quite naturally not normally be allowed by the tenant. “Major works” cost approximately £1000 or more. Where the works are urgent, (like part of the roof needs replacing due to leakage), you still need to provide written notice and confirmation from the tenant, that you may proceed with the work.

Annual Gas Servicing – you must make sure all gas pipe work (valves, pipes, regulators and meters) and installed appliances (cookers, hobs, boilers, water heaters, fires, wall heaters, gas fridges, flues, central heating systems, fires etc) are checked, maintained annually and hence safe. The pipes or appliances must never be used if the landlord knows (or suspects) that:-

There is insufficient air for the appliance to allow for proper combustion The removal of products of combustion from an appliance cannot be safely carried out The room where an appliance is located is not ventilated properly

How to Comply - compliance involves annually employing a CORGI registered engineer (approximate cost of £100) to undertake the maintenance. CORGI is the National watchdog for gas safety. Their mission is to continually promote and enhance gas safety, standards and quality in a professional and ethical manner. The engineer will produce a “Gas Safety Report”. Upon successful completion, this report (certificate) details the engineer’s name, the property address, work carried out on each appliance, the location of appliances, defects identified, action taken, the CORGI registration number and the date. A copy of the certificate must be given to the tenants before they enter the property. This report must be retained for reference purposes for at least two years. Please see http://www.corgi-gas-safety.com/  for the very latest Health & Safety guidelines for landlords.

Failure to Comply - if you fail to comply with these Gas regulations you could cause a tenants death. The financial impact would be a £5,000 fine and a criminal conviction under Section 33 or Section 36 of the Health and Safety Work Act 1974. If a trading standards officer finds an appliance that’s does not comply with the regulations, the appliance can be disconnected immediately. In addition, if a fatality occurred as a result of you breaching these regulations, a civil case could also be brought against you resulting in you paying much higher financial damages than £5,000.

Half Yearly Inspections – make sure your tenancy agreement includes a clause about the requirement to do regular check ups (every six months) to ensure the property is being well looked after. This will also allow you to see if any repairs need undertaking that the tenant may not have informed you need doing (or they have overlooked the need to do a repair). Agree a mutually acceptable date and time with your tenants, confirm in writing at least two days beforehand.

Submission of Annual Accounts - any profit or loss as a result of your investment, must be declared to the Inland Revenue. Tax is usually charged at your highest band of income. In addition, it is helpful to submit a properly formatted P&L, Balance Sheet and Cashflow to summarise your tax submission. A professionally submitted set of accounts will go further in convincing the tax officer reviewing your annual return they are accurate and trust worthy. The correct accounting of all items according to statutory guidelines should always be done by a chartered account. Taxation and goal realisation is the topic of chapter 9.

Business Banking – regular expenses and rental income should ideally be managed using a separate business bank account. Having a separate account will simplify accountancy matters and allow you to understand your cash flow position, as well as provide a transparent report for the Inland Revenue.

General Administration – if you are managing the let yourself, there is an inevitable level of hassle and administration to deal with and pay for. This includes phoning, photocopying, office supplies, postage. These are offset able allowable expenses against tax. Remember to keep all keep a receipt for everything (no matter how small). This will ensure your accountant has accurate records to produce for your annual accounts. It will also provide evidence for the taxman to check your accounts quickly without queries

Items Tenants Need to Regularly Pay For – ensure it is clearly stated on the tenancy agreement which items the tenants must pay in addition to their rent. These items are utility bills (telephone, electricity, gas, water, sewage, Council Tax, TV licence). If you have a period where the property is not let out i.e. a void period, you must notify all utility companies that you are responsible for paying the bills/ standing charges associated with the service(s). If your property is an unfurnished property and in a void period you only have to pay 50% of the council tax due – charges can be less at the discretion of your local council. Add a clause in your AST that states that your tenant must legally register to pay council tax as the dweller of the property. Also, advise the tenants that they are responsible for insuring their own possessions, as you are not responsible for insuring them.

This section is continued....

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