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Many flats are purchased with a view to subletting and when it comes to how to manage their rentals, landlords have three options:

1: Lettings Only/Landlord Management

In this option the letting agent will carry out the following:

  1. The marketing of the property;
  2. Providing advice about what rent the landlord should ask for;
  3. The finding of a tenant and subsequent reference checks if required;
  4. Providing the tenancy agreement.

Once the tenancy agreement has been provided the landlord then takes on all the management of the property when the tenancy starts. The agent will usually charge a one-off fee for their work in getting to this point and payment will normally be based on the rent (usually one month). The agent is also likely to charge the tenant an administration fee (for the same reason). Both the landlord and agent must be in agreement about what the amount of the tenancy deposit should be and make sure that tenants receive protection for those deposits .The landlord will then have to give proof to the tenant that the money is in one of the three government-approved deposit protection schemes (2 insurance-based and 1 custodial-based).

2: Tenant Finder/Rent Collection

Self explanatory and again whilst the agent will usually charge a one-off fee they may also add a small monthly percentage for rent collection. The landlord will deal with repairs, and regaining possession at the end of the tenancy if the tenancy is not renewed.

3: Full Agent Management

This covers all aspects of management including repairs that can either be carried out without requiring the permission of the landlord or those which the landlord prefers to deal with. Rent collection, commencement of the tenancy and the first steps of bringing a tenancy to an end such as serving notice (but not proceeding to court action) are also provided.

This level of service will naturally be the more expensive option.

LEGISLATION

Not only do leaseholders who operate as landords have to adhere to the terms of their leases, they also have to abide by a large amount of legislation regarding the renting of their properties. There are far too many to put them all on this site but some of the main ones are:

  1. The Tenant Fees Act 2019 is due to become implemented on 1st June 2019 and will ban letting fees paid by tenants in the private rented sector as well as capping tenancy deposits;
  2. The Homes (Fitness for Habitation) Act 2018 now implies a covenant (promise) into a residential tenancy to ensure that the property is fit for human habitation at the beginning of the tenancy and throughout and expanding on s11 of the Landlord and Tenant Act 1985 which defined landlord liability as only repairing things which were damaged or broken, in other words in disrepair;
  3. The Deregulation Act 2015 which introduces 2 different regimes for the serving of s21 notices under an Assured Shorthold Tenancy. Which one is actually used depends on whether the AST commenced before or after the 1st October 2015. The Act also provides new protections for tenants under what has become known as ‘retaliatory evictions’;
  4. The Immigration Act 2014 which requires private sector landlords to check the immigration status of their tenants under the Right to Rent Scheme;
  5. The Localism Act 2011 which requires the landlord to pay 1-3 times the deposit amount if it is not placed within a deposit protection scheme;
  6. The Housing (Tenancy Deposits) (Prescribed Information) Order 2007 which requires the landlord to supply the tenant with prescribed information regarding any tenancy deposit that is required to be dealt with under either a) the custodial scheme or b) the insurance backed schemes;
  7. The Housing Act 2004 which is the overarching legislation governing the standard of rental properties and consisting of 7 parts;
  8. The Housing Act 1988 which provides a number of grounds for landlords to use if tenants breach the tenancy agreement.
  9. The Protection from Eviction Act 1977 which has as one of its key areas that of harassment;
  10. The Tortes Interference With Goods Act 1977 deals with tenants leaving items behind when they vacate the property.

HEALTH AND SAFETY OF RENTED FLATS

Where the leaseholders rent out their properties for under 7 years duration, as a landlord both they and their letting agents (if they use one) have a duty under common law to ensure the safety of the property and its contents so that no injury or damage is caused to the occupants, neighbours or to the public.

So, the properties must be gas safe, smoke and carbon monoxide safe, and electrically safe and even if such obligations are not contained within the tenancy agreement they are implied by the statutory obligation under s11 of the Landlord and Tenant Act 1985 (repairing obligations in short leases).

Other key legislation that covers the health and safety of rented flats are:

  1. The Smoke and Carbon Monoxide Alarm (England) Regulations 2015 which requires private rented sector landlords to have at least one smoke alarm installed on every floor of their properties on which there is a room;
  2. The Electrical Equipment (Safety) Regulations 1994 which requires that all appropriate electrical equipment supplied in a property must be safe to use;
  3. The General Products Safety Regulations 1994;
  4. The Furniture and Furnishings (Fire) (Safety) Regulations 1988 (as amended).

Repairs Procedure

There should always be a repairs procedure in place for tenants to follow and whether the landlord or the letting chooses to be informed verbally or in writing, a record should be kept of all problems reported. Tenants should do the same. Alternatively repair forms can be issued which can be filled in and then passed over for action. If no agent is used there should be an emergency procedure in place such as the issuing of a list of contractors names and numbers. Tenants should never be left with no-one to contact.

Landlords should deal with all repair requests promptly, with the Association of Independent Inventory Clerks (AIIC) outlining the recommended time scales for landlords to respond, depending on the problem:

  1. Emergency response – gas and water leaks, serious electrical faults;
  2. 24 Hour response – heating and water systems and other non life threatening electrical problems eg broken windows if not caused by tenant negligence;
  3. 72 Hour response – kitchen appliances and other items that affect the daily life of a tenant;
  4. Less urgent responses – broken lawn mowers, a fallen fence panel or a dripping tap.

Note: The landlord can include a sum to cover the cost of repairs in the rent but cannot pass the costs to tenants in the form of a separate service charge.

Access to a Tenanted Flat

Landlords also need to be aware of the process for accessing tenanted flats to carry out repairs under s11 (ss6) of the Landlord and Tenant Act 1985 which reads as follows: ‘in a lease in which the lessor’s repairing covenant is implied there is also implied a covenant by the lessee that the lessor, or any person authorised by him in writing, may at reasonable times of the day and on giving 24 hours’ notice in writing to the occupier, enter the premises comprised in the lease for viewing their condition and state of repair’.

So landlords wishing to carry out repairs do not have the right to turn up unannounced to check on a property or a tenant. Instead a mutually convenient date and time must be arranged which must be at a reasonable time and after giving the tenant not less than 24 hours notice in writing. More notice can be given if the works are to be prolonged or disruptive and in such cases tenants should be given details of the works to be carried out and a rough idea of a finishing time or completion date.

If the landlord or the contractors attempt to enter without permission the tenant can launch a claim for trespass as they have the same rights over the premises just as an owner-occupier does. Therefore landlords should be wary about entering the property when the tenant is not there. Where a tenant has given permission, but has advised they will not be at the property themselves, it is recommended that landlords/agents are best accompanied by a witness.

SUMMARY

The PRS has taken over from councils and housing associations as the biggest provider of rented homes in this country but not only has there been a slow down of new landlords entering the market but many established landlords are selling some or all of their portfolios. There are a number of reasons for this:

  1. The introduction of the stamp duty surcharge of 3%:
  2. The scrapping of the 10% tax relief for wear and tear to the property by 2020 (landlords can now only deduct the cost of replacing household items like for like);
  3. Landlords can only offset 75% of their mortgage interest when calculating their tax bill with that reducing to zero by 2020 although they can claim a tax credit of 20% of their mortgage interest;
  4. Under ‘right to rent’ legislation, landlords have to check the immigration status of their tenants with a £3k fine if found to be renting to a someone here illegally;
  5. The requirement for landlords to be licenced is spreading across the UK after its introduction by the London Borough of Newham;
  6. Landlords who live abroad  are also bound by the same responsibilities and if out of the country for more than 6 months they must pay tax on any income they get from renting out property in the UK. If the landlord is a company or trustee, the rules about their usual place of abode apply.
  7. Signs that the tenancy deposit schemes may be changing such as deposit free renting in the build-to-rent sector and apps offering tenancy insurance;
  8. On 24th January 2019 the Communities Secretary announced that all landlords will be legally required to join an Ombudsman scheme with a 5K fine for non-compliance. The link to this will appear when published.

There is no doubt that renting can work but far too many people are forced to rent because they cannot afford the deposits needed in order to purchase their own homes. It seems strange though that so much legislation has been introduced to the detriment of landlords when the PRS is so heavily relied upon to offset the lack of social housing. Or is it that the rental sector is moving toward build to rent as the norm? Only time will tell!

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