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Landlord responsibilities: How Buy to Let regulations can increase your return

POSTED: 12th June 2015
IN: Landlord helpful guides
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Landlords have a number of legal responsibilities to ensure that rental properties are in good condition and fit for tenants.

Buy to letNot only do property investors have to pay income tax and abide by strict health and safety rules, the Government is currently placing a strong emphasis on deposit protection and energy efficient homes.

However, while the primary goal of such regulations is to improve the quality of tenants’ homes, drive sustainability, and ensure tax is paid, they can also have significant financial benefits for landlords.

By providing tenants with homes that are in good condition, energy efficient, and affordable, landlords can reduce maintenance costs and encourage tenants to stay for longer. As a result, a steady flow of rental income can be maintained.

Licensing

The rules surrounding landlord licensing can vary depending on the local authority in question. For this reason, it’s vital that investors research which licensing rules apply to them before looking for tenants.

Not all private residential properties require a license, but in some parts of the UK, landlords must acquire one by proving that they’re acting within the law and managing their portfolios effectively.

To find out whether they require a license, landlords should contact their local council or speak to a letting agent in the area.

Energy Performance Certificate (EPC)

An Energy Performance Certificate (EPC) assesses a property’s energy efficiency and carbon dioxide emissions. Landlords must provide new and prospective tenants with an EPC so that they are aware how efficient the building is.

Each certificate displays a rating from A to G. A-rated buildings are considered extremely energy efficient, while those rated G are considered inefficient.

Following the announcement of new government regulations from 2018, landlords could find themselves unable to let their property if it falls in the F or G categories.

Homes with higher energy ratings may prove popular with some tenants as they could result in lower energy bills. By striving for energy efficiency, landlords could increase their profits by encouraging existing inhabitants to stay longer. 

Repairs and Maintenance

Landlords must maintain the properties they own by ensuring that baths, showers, heating and hot water installations are all in working order. They are also responsible for maintaining the building’s structure and exterior. However, landlords are not responsible for damages caused by tenants.

Landlords with a reputation for keeping their properties in working order could benefit from high quality tenants and longer term contracts. This could in turn lower the chances of the property standing empty in between tenancies. By addressing necessary repairs quickly, landlords could also minimise the likelihood of faults escalating.  

Safety

In order to ensure that tenants are safe, landlords must meet stringent health and safety regulations.

Gas safety

Landlords must comply with a number of gas safety measures:

  • Ensure gas equipment has been installed by a Gas Safe registered engineer
  • Arrange for a registered engineer to conduct an annual gas safety check on each appliance
  • Give tenants a copy of the gas safety record before they move in or within 28 days of the safety check

Electrical safety

Every electrical appliance supplied by the landlord must be safe to use. There is no legal requirement for electrical items to be formerly checked, but landlords can lower the risk of accidents by carrying out regular inspections themselves.

There are a number of things to look out for such as visible live parts, frayed leads, or loose plug sockets.

Fire safety

It is a landlord’s duty to ensure that the home they provide is safe and complies with building regulations.

The rules surrounding fire safety vary depending on the type of property in question. However, in order to reduce the likelihood of a fire, and help to minimise the impact if there is one, all landlords would be wise to provide tenants with all the necessary precautions. Not only could this save lives, it could also decrease the risk of damage to the property and its contents. The cost of implementing fire safety equipment is likely to be very small compared to the cost of fire damage.

Tenants’ Rights

Tenants in private rented accommodation have a number of rights. Many of these rights have been put in place by the government to ensure that tenants can live in an environment that is safe and in good repair. When renting out a property, landlords must consider the following:

Secure tenants’ deposits

Although taking a deposit is not a legal requirement, landlords are entitled to request one if they wish to do so. By taking a deposit, investors can protect themselves against some unforeseen costs such as damage to the property or rent arrears.

However, landlords that do choose to take a deposit must secure the money under a government-approved Tenancy Deposit Protection (TDP) scheme.

If there are any disagreements over a deposit, a third party will step in and assess whether a tenant should receive their deposit back in full, in part, or not at all. 

Eviction guide for landlords

Eviction requirements vary depending on the type of property and the contract held by the tenant.

Most private rented tenants are classed as assured shorthold tenants. If this is the case, the landlord must follow these rules:

  • Two months’ written notice must be given in the form of a 'Section 21'
  • If a tenant refuses to leave, the landlord can take them to court
  • Only a bailiff can evict the tenant and they must have a valid warrant to do so

Tenants that fall under the assured tenant category can only be evicted if the landlord can provide a valid reason (also known as a ‘ground’) to the court. If the ground is proven, the court may make a possession order to repossess the property.

Landlord Insurance

Although landlord insurance is not a legal obligation, most Buy to Let mortgage lenders will insist that property investors have this type of insurance before agreeing to provide them with a mortgage.

Paying Tax

Landlords must pay tax on the rental income that they receive. However, there are various tax exemptions that can reduce a landlord’s taxable income and in turn, increase their profits. By keeping a record of businesses expenses, landlords can offset some of the tax that they pay.

Business expenses could include:

  • Insurance
  • Maintenance costs
  • Repairs
  • Utility bills

Investment benefits

While many legal requirements have been put in place to maintain property standards and ensure tenants are safe, abiding by such laws can have positive effects for landlords as well as renters.

By following the various landlord rules and regulations, Buy to Let investors can improve the quality of their portfolios, attract and retain quality tenants, and in turn, boost their returns.

Aldermore is a British Bank that specialises in providing landlords with the mortgages they need to invest in property. To learn more about Buy to Let mortgages, please don’t hesitate to get in touch.  

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