7 STEPS TO LETTING YOUR PROPERTY

Letting your property for the first time can be a daunting experience, here at Oliver Jaques, we have put together a step by step guide to the letting process which will help you through and inform you of all that is required of you as a landlord and the importance of selecting the right agent.


image

1 Research

Firstly, finding the right agent is essential; you need to do your homework thoroughly.

Go onto the major web portals Rightmove and Zoopla where you can find and look at similar properties to yours that are currently on the market.

Have a look at local publications and magazines to see which agents are advertising in them. This will give you an insight into the quality of an agent’s adverts and an idea of how your property will be marketed.

How long have the agents been trading in the area? Longevity is a good indication of the service both you and your potential tenants are likely to receive.

Are their offices in prominent and accessible locations?

Are they regulated? There are several organisations that agents can voluntarily join, which have strict codes of practice, therefore agents who are members of such schemes, should be taken more seriously.

Ask your neighbours or friends in the area if they have any recommendations of agents they have dealt with. This should give you an idea of the professionalism and level of service that you can expect of that agent.

Visit a few agents and have a chat with the Lettings manager and get a feel for them, both professionally and personally. Trust your instincts, if you trust them and believe they could work well both with you and for you, then this is a good sign.


Draw up a shortlist of three agents and invite them to your property to give you a free market appraisal.

image

2 Market Appraisal

Be prepared, compile a list of questions to ask that will assist you in making an informed decision of who to choose.

 Some good starting points are the following:

How are your potential tenants sourced?

What is the structure of your team?  Are any elements of your services outsourced? I.e. Maintenance, Rent Collection?

Will I have a main point of contact?

What are the success levels you have achieved with similar kinds of property (rent amounts, length of time to secure a tenant)

What do you feel is the highest achievable rent, and what have you based that on?

What are your fees? And what do I receive for that fee?

Are there any extra charges (will there be fees for drawing up the tenancy)?

Is your team incentivised?

Will I incur any additional fees for marketing?

Can you provide a specimen copy of the tenancy agreement you use?

What tenancy deposit protection scheme are you a member of?

How will you present my property i.e. floor plans, photographs

Is there anything the property needs to make it more marketable

What sets this agency apart from the others?  


There is no wrong or right way of picking an agent, but most agents will come prepared with a copy of their terms and conditions, specimen copy of the tenancy agreement they use, a brochure detailing their services and literature about the company, literature on legal requirements such as gas certificates, portable appliance tests, Energy performance certificate and price lists of recommended companies that can carry out these requirements.


For information regarding the legislation for gas installation and appliances please see the link below:

http://www.hse.gov.uk/pubns/indg285.pdf


For information regarding electrical installation and portable appliances regulations please see the link below:

http://www.direct.gov.uk/en/HomeAndCommunity/Privaterenting/Repairsandstandards/DG_189195


Likewise information regarding fire and Furnishing regulations can be found on the following

http://www.nihe.gov.uk/index/advice/renting_privately/advice_landlords/safety_landlords/furnishings.htm


Many landlords assume that using more than one agent will result in their property being let quicker, it doesn’t – using a single agent (called ‘sole agency’) avoids your property being overexposed in the market and can help you to achieve a better price and tenant in the long run.


image

3 Which service do I require from my agent?

The extent of services offered, can vary amongst agents, and can be dependent on your own requirements.

Most agents offer landlords three types of service as follows:

Let Only


Rent Collection


Full Management



In order to decide which service is right for you, you need to ask yourself the following questions.


Are you looking to be a “hands on” landlord?


Are you in a position to take calls at any time of the day or night from your tenant?


Are you happy to deal with both the financial and legal implications of the let, directly with your tenants?


Are you able to establish a professional relationship with your tenant and ensure that they receive a level of service that they would expect if they were dealing with an agent and maintain this throughout the tenancy?


Can you attend the property at short notice should a problem arise?


Are you in touch with reputable and reasonable maintenance contractors, whom you trust to attend in the absence of either yourself or your tenants?


Do you have the facility to check that the rental payments are received on their due date, and feel comfortable contacting the tenants if they are not?



If you cannot definitely answer YES to the above, then opting for the full management service is probably more suited to your needs.


Many landlords tend to go with full management as it has the advantage of keeping a comfortable distance between landlord and tenant. The agent can mediate between the parties and offer advice with the benefit of knowledge and experience.


Should you feel that Oliver Jaques is “YOUR” agent, then our services offered are outlined below:


Full Management Service:

Leaving your property in our capable hands.

We can provide you with peace of mind by handling communication between tenants, contractors and you the owner.

In short our property management team is the Anchor of our Lettings Department.

The rent will be paid by your tenants directly to us every month, it will then be transferred to you within the specified period as outlined in your terms and conditions.  Should there have been any agreed expenses incurred for your property, these will be deducted from your account and you will be provided with a copy of the relevant invoice along with your monthly statement.

You can rest assured that we will always act in your very best interest keeping you fully informed of any aspects of your tenancy that require attention. We will ensure that any issues are resolved quickly and effectively so neither you, nor your tenants are inconvenienced.

We carry out property inspections every six months, whereby we check the tenant/tenants are keeping the property in a clean and tidy condition and that the tenancy is being conducted in the correct fashion as outlined in the tenancy agreement.

Over the years we have built up solid working relationships with a wide range of local tradesmen, suppliers and contractors to ensure that you receive both a high standard of works/goods at the most competitive price. We hold copies of all contractors relevant qualifications and insurances so you can rest assured that your property is in safe hands.

We will write to both you and your tenants prior to the expiration of the initial tenancy agreement, with regards to the tenancy renewal. As your agent, we will keep you updated with the current market value of your property, and should an increase of rent be in line with the current market value, we will negotiate this with your tenant, to ensure that you receiving the best rent possible. Once new contract terms have been agreed, we will draw up the new tenancy agreements, and re-protect the tenants deposit (where applicable).

Should you decide that you require your property back, then we will serve the required notice on your tenants in accordance with the Housing Act. If your tenants have decided they are not staying in the property, we will ensure that they have provided the correct notice period. We will re-market your property immediately to ensure that you are not left with a significant vacant period.

We will protect you as a landlord by keeping you informed of any legal requirements and safety regulations. We will hold and protect the tenants deposit (with the relevant deposit protection scheme)


Rent Collection:


As per points A, E and F.



Let Only:


Tenants are found and secured for your property, we draw up the tenancy agreements for you and protect the deposit with the relevant deposit scheme (should we hold it).


As per points E and F.



Who should you consult before letting your property?


Your mortgage lender – they may request that the let is on an Assured Shorthold basis.


Your insurance company – failure to notify them that the property is let, could result in your cover being void


Your Freeholder (if applicable) – This is necessary should your property be a leasehold flat. Be advised that some freeholders do charge you a small fee for letting the property out.

image

4 Costs involved in letting your property

Whilst you will have agreed the amount of rent you are looking to achieve for your property, it is important to consider and budget for the following costs:


Any monthly mortgage payments you pay for the property


Expenses incurred in ensuring the property is up to the required standards, both physically, and more importantly in terms of the regulatory safety standards of furniture, utility equipment and appliances


Furniture and furnishings (if required)


Letting agent /management fees


Insurance costs


It is advisable to have a contingency budget for ad hoc repairs and maintenance. Having access to funds to make essential repairs if and when they are required, will put you in a better position to keep a satisfied tenant.


LET ONLY 10% PLUS V.A.T

RENT COLLECTION 12.5% PLUS V.A.T

FULL MANAGEMENT 15% PLUS V.A.T

N.B – fees are based on annual rent.  These fees may be negotiable.  Please discuss with our Lettings Staff.




image

5 Preparing your property for marketing

Externally

This will be the first view that potential tenants have of your property, so it is important some care is paid to optimising its appearance.

Tidy up both front and back gardens where necessary. Remove weeds, trim hedges, remove unsightly plants and mow the lawns. It will then become the tenants responsibility to ensure that it is kept in this condition throughout their tenancy.

Make good any cracks, marks, or holes in the driveway or the walls.

If window frames are looking a little untidy, it may be an idea to freshen up with a little paint.

Keep rubbish and recycling bins out of sight.

Internally

Ensuring that your property is presented in the best possible light is very important when letting your property. It is advisable to detach yourself emotionally and to view it as a prospective tenant would.

De-clutter – make the property appear more spacious by removing unnecessary furniture.  Remove any little knick-knacks, books, ornaments and clear out cupboards and wardrobes of non-essential items.

If there are any niggling minor repairs that need doing, get them fixed. i.e. leaky taps, cracks to the walls, missing light bulbs. Make sure everything is in working order.

Eradicate any unpleasant odours, like cooking smells, cigarette smoke, or pet smells.    

It is imperative that the property be presented in a clean and tidy condition and in good decorative order including carpets, windows and walls.


If any white goods are to remain in the property, they should be in good working order with instruction manuals provided. (If you don’t have these most can now be downloaded from the internet or a copy sent via the manufacturer). If any are still under manufacturer’s warranty or extended warranty please leave details in the property. Please remember that should any of these items cease to work it is your responsibility as a landlord to repair or replace where necessary.



Furnished / Unfurnished

Letting the property with or without the furniture does not have too much of an impact on the rent you can expect, this will be dependent on the tenants requirements. If you are prepared to be flexible with this, you will appeal to a wider audience.

If you are letting your property furnished, it’s best to ensure that you don’t over furnish it, as this may result in tenants requesting for items to be removed and then you are left with the problem of storage etc.


What’s included?


Whilst there is no legal definition of what constitutes an unfurnished property, generally speaking they still include basics such as carpets, curtains and white goods. Furnished properties will come with sofas and beds as a minimum and will normally include items such as wardrobe, drawers, table and chairs etc. Apart from the white goods, we would not recommend that landlords provide further electrical goods nor any kitchenware, bedding or towels.




The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 state that all premises from 1st October 2015 must have at least one smoke alarm installed on every storey of the property as well as a Carbon Monoxide alarm in every room that contains a solid fuel burning appliance (coal fire, wood burning stove).  Whilst these regulations do not apply to gas appliances, we advise all landlords to consider the installation of alarms to protect the Occupier and help prevent any legal action being taken against a landlord as gas appliances still emit carbon monoxide.  It is the sole responsibility of the Landlord to ensure these alarms are working at the beginning of every tenancy.

 A landlord failing to comply with these regulations will be subject to a fine of up to £5,000 from local authority enforcement bodies.   Your chosen agent would then arrange the fitting of alarms at your expense and the cost will be deducted from the Rent.


Inventory Reports


Whether you let the property furnished or unfurnished, we strongly recommend that you have a detailed independent report drawn up; it could be decisive in any future deposit discussions. This is something that an agent will organise on your behalf. Tenants pay for a check in report, which is a comprehensive report, should you require a full inventory then you will be responsible for the cost. The landlord pays for the check-out report at the end of the tenancy.  Ask the agent to provide you with a sample copy of these reports.


As well as detailing the property and its contents, the report will record the condition of everything in the property.


Where possible it will include, photos and details of sets of keys, fobs etc, plus where access is allowed, they will take any relevant meter readings when carrying out the check in of the tenant to the property.

image

6 The Process

When agreeing a rental figure, your agent should have provided you with a selection of comparable properties that they have recently let in the area and the prices they have achieved; this should guide you to make an informed decision on the right price to market your property.  Unfortunately there are some agents, who may advise you of a higher unrealistic figure, in order to secure your property from you. It is advisable to not make the mistake of going with the agent that gives you the highest figure, as your property could sit on the market for a longer period, which will lose you money in the long run.


How long should I wait before marketing?


Generally tenants start looking about 4-8 weeks before moving; therefore it is recommended that the property be marketed at least 10 weeks before your property is available to move into.


To maximise amount of people that see your property, your letting agent should have prepared a bespoke marketing campaign, which will usually include local property magazines and newspapers, online coverage with a range of websites, as well as property details with colour photos and a detailed floor plan.


Your agent should accompany prospective tenants on all viewings. This allows the agent and the prospective tenant the time to discuss the pros and cons of the property and the agent to get honest feedback which would not necessarily happen if you were to be present.



Vetting offers


If you have chosen the correct agent, and are in the fortunate position of numerous offers to choose from, there are number of considerations to take into account when choosing the tenant whom to proceed with:



The monthly rent they have offered


How many tenants will there be


The length of the contract they are looking for


Does their offer come with any conditions?  i.e. have they asked for any additional furniture, or for any items to be removed, redecoration, do they have a pet?



It is the role of the letting agent, to notify you of all offers, however unrealistic they may be and to then negotiate the best possible deal with the best possible tenant.


It’s vital for you to have in mind and discussed with your letting agent, what type of tenant you are hoping to find, i.e. professional couple, sharers, families or students.


Once you have accepted an offer, both you and the future tenant should receive written confirmation outlining the following:

The rental amount


The amount of deposit


The length and type of tenancy along with details of any break clauses.


The proposed move in date


Any conditions of the offer i.e. remove dining table or kitchen to be repainted etc.


Contracts


The types of contracts most commonly used are as follows:

Assured Shorthold Tenancy. Most of these are for 12 months, with a six-month break clause


Company let


Common law tenancy



At this stage the tenants will be required to complete referencing forms. Specialised referencing companies generally carry out referencing. .

These references are comprehensive and include the checking of the following:

Employment - who is their employer, what is their annual salary, length of employment, length of employment contract where necessary.


A credit check, to ensure they have no adverse credit history


References from their current / previous landlord, (if applicable) which will check how their previous tenancy was conducted.


Are they located at the previous addresses they have given?


Once the referencing is complete a report will be produced which will state whether the tenant(s) are acceptable for the tenancy.


Your agent can provide you with a copy of the references.


Most referencing companies now offer additional services such as Rent Guarantee & Legal Expenses cover. For peace of mind it’s worth enquiring with your agent regarding these services.


Once you have seen and approved the references, the contract will be drawn up with a move in date agreed by both you and the tenants. Contracts will not be produced to the tenants for signing, unless all applicable move-in monies payable by them have been received.

Under the terms of the Right to rent legislation as part of the Immigration Act 2014, landlords should check identity documents for all new tenants and take copies. The scheme has been designed to make it straightforward for people to give evidence of their right to rent and a range of commonly available documents can be used.  Your agent will take copies of passports, identification cards and any UK Visas where applicable.

https://www.gov.uk/government/news/right-to-rent-checks-introduced-for-landlords-in-england


It is on the day of move in, which the inventory company will attend and carry out the Check in / inventory. This is generally sent to the agent by email in a PDF format and will be forwarded on to both yourself and your new tenants. It is important that these reports are carried out for both your peace of mind, and that of your tenants. It is strongly recommended that these reports always be carried out by an independent third party company.



The Deposit


The standard deposit is usually the equivalent of six weeks rent. The deposit is normally held by the agent and registered with one of the 3 government approved schemes which are as follows:


My Deposits - www.mydeposits.co.uk


Tenancy Deposit Solutions Ltd  - www.thedisputeservice.co.uk


The Deposit Protection Service -   www.depositprotection.com



Since April 2007 any deposit taken from a tenant on an Assured Short hold Tenancy (AST) in England and Wales, must be protected in a government-authorised deposit protection scheme within 30 days of receiving the deposit.


Should at the end of the original tenancy, your tenants renew into a further Assured Shorthold Tenancy at your property; their deposit is legally required to be re-protected.  If their contract was to continue onto a periodic agreement, then the deposit does not need to be re-protected.


Whichever scheme your agent is a member of, they will at the end of the tenancy deal with any disputes that arise out of any proposed deductions.



Tax Implications


The Non-resident Landlord Scheme


If you have rental property in the UK but your usual home is outside the UK, your tenants or the letting agents you use will need to operate the Non-resident Landlord (NRL) Scheme. They need to deduct basic rate tax from rental income before they pass it onto you. You can set this tax off against your own tax bill at the end of the year.


Who are non-resident landlords?


Non-resident landlords are persons (this term includes individuals, companies and trustees) who have:

UK rental income


A ‘usual place of abode’ outside the UK


Conditions for applying to HMRC for approval to receive rental income with no tax deducted


Non-resident landlords can apply to receive their rent with no tax deducted on the basis that either:



Their UK tax affairs are up to date


They have not had any UK tax obligations before they applied


They do not expect to be liable to UK Income Tax for the year in which they apply


They are not liable to pay UK tax because they are sovereign immunes (these are generally foreign Heads of State, Governments or Government departments)




For more information regarding this please see the link below:


http://www.hmrc.gov.uk/international/nr-landlords.htm




image

7 Commencement of tenancy

Once the tenant has moved in, the letting agent should forward to you within 10 days your paperwork including:

Welcome letter

Rental account statement with copies of any relevant invoices

Check in report

Signed copy of Tenancy Agreement


The letting Agent should also write to the utility companies informing them of the commencement date of the tenancy and the tenant’s names.


Once the tenants have moved into the property and everything is up and running, depending if you opted to manage the property yourself, this will involve, dealing with any maintenance that’s arises and collecting the rent each month and as well as quarterly or six monthly inspections on the property, whichever you are more comfortable with.


Normally about three months before the expiry date of the tenancy the Agent will write to you and your tenant and ask them what their plans are, if they intend on vacating or are interested in renewing for a further term. If they are interested in renewing, your agent should advise you of the current market value of your property and discuss with you if there should be a negotiation regarding a rent increase or if the rent should remain the same and to also decide on the length of any renewed tenancy depending on yours and the tenants plans.

If the tenants are intending to vacate and you wish to continue to rent your property out, then the process will start all over again.