Can’t Afford To Move or Buying To Let?.
A Landlord Today Comes With Many Obligations!
Rising property prices over the last two years can produce mixed outcomes. Potential buyers may find they are no longer able to afford to buy a new home. The recent increase in property values has, in some cases, exceeded average net earnings at nearly 1 in 3 local authority districts, according to a recent report by the Halifax Bank. Local property prices in Redbridge Borough, for example, are reported to be around £50,000 above average wage levels, and also in Newham Borough.
It could lead to some home owners who took advantage of the current high values by placing their property on the market finding it more difficult to attract a buyer. Difficult and sometimes lengthy delays also arise because of a potential buyer pulling out and causing a break in the property chain.
What this means is that homeowners struggling to sell their property may decide to play the long game and wait until market conditions change to attract a buyer able to afford to pay nearer the asking price. Instead, they may opt to turn their home into a rental property and use the monthly income for the mortgage repayments… in other words, become a ‘landlord’.
Legal obligations and responsibilities
Becoming a landlord today, even for a short period, comes with considerable legal obligations and responsibilities. If you are thinking of going down the landlord route, just a brief look at some of the first basic requirements even before advertising your house on the lettings market may give pause for thought.
It’s often why many new ‘buy to let’ landlords are advised to use a local, reputable property management agent, who will provide a number of basic as well as customised service options. Property management includes responsibility for rent collection, pre-tenancy preparation, general day to day management, property inspections and emergency repairs. At the very least, it’s important to ensure that you don’t inadvertently fall foul of new complex landlord legislation whilst at the same time being able to maintain rental values and protect your property investment.
Proof that a property is up to standard
At the outset, and most important of all, it is absolutely critical to arrange for a lettings valuation, which will be invaluable for better understanding of prevalent market values and property conditions. Another of the first actions you should be advised to do is to change your standard house insurance to a landlord insurance, which should cover against damage to the property caused by a tenant, loss of rent and other potential risks.
In some cases, a landlord may also have to purchase a license. Landlord licensing schemes, which operate in various locations across the UK (and throughout Wales) are proof that a property is up to standard. A tenant’s deposit is now legally protected and must be placed by a landlord in a government-backed tenancy deposit scheme, such as the Deposit Protection Service.
A landlord is responsible for ensuring their property is safe for tenant occupation. Among a long list of legal safety requirements is the requirement for a registered engineer to carry out a gas safety check on each gas appliance and providing a copy of the safety check record to the tenants. Similarly, with ensuring the safety of all electrical fittings, compliance with fire safety regulations and making sure all furniture is fire resistant, according to legal specification.
Tenant screening and new legislation
Tenant screening is undoubtedly the big concern for all landlords. A new landlord needs to quickly gain an understanding of how to assess and formally check the likelihood of a potential tenant’s ability to proceed with the tenancy. There was a time when the one piece of legislation a landlord would want to know about would be Section 21 of the Housing Act 1988, which enabled a landlord to gain an order for possession. Today, a landlord needs to comply with a many more new rules and procedures.
For example, new legislation known as the Immigration Act 2014, also now requires landlords to check that their tenants have a legal right and the necessary documents to even rent in the UK. Failure to carry out the checks can result in a prosecution. At the start and end of each and every separate tenancy, a formal inventory of contents and the conditions of the premises must be made, and a full report issued.
A new and inexperienced landlord would be advised to seek out the advice of a local high street lettings agent who can offer considerable expert experience as a vital part of a property management service. It could just prevent some costly mistakes or worse…
