The following is based on a recent presentation to the BIG group.
When thinking about letting a property to a tenant, as in many endeavours in life, preparation is all.
Firstly, who is the legal owner? Although this sounds an odd question many people have followed their accountant’s advice and set up a limited company. If your rental property is in the name of the company, the tenancy agreement and any eviction notices should be also.
As the tenant moves in, it is advisable to have an inspection of the property so they can agree that everything is to their satisfaction. This should be signed and dated by the tenant. Remember to keep a copy. This can be used in evidence to contradict any possible claim the tenant may make later on that the property had defects at the time they moved in.
If taking a bond, remember that it has been a legal requirement for some time now that the bond be placed in a regulated scheme and the details of that scheme provided to the tenant within 28 days of the tenancy beginning. Failure to do so leaves the landlord open to a fine of between 1 and 3 times the level of the bond.
The property may be in an area designated by the local authority as requiring a licence to rent. This entails the authority making an inspection of the property and confirming that it meets housing standards. The authority will make regular inspections on an ongoing basis. Failure to have a licence could result in a fine of up to £30,000 and a trip to the local magistrate’s court. Local authorities designate so called “special licensing areas” by post code and these are available on the authority’s website.
It is highly recommended that landlord insurance is taken out which may include payment of legal costs in the event that solicitors have to be instructed to evict a tenant, in addition to loss of rent and damage to property.
Letting agents normally obtain a reference from a former landlord as well as undertaking a credit reference check to try and establish that the proposed tenant is credit worthy and reliable. It is highly recommended that the present address and name and address of the tenant’s employer is also taken.
An Assured Shorthold Tenancy agreement, often for 6 months (which can be renewed if both parties are happy to do so) is the basis for the relationship between the landlord and tenant. This gives the landlord the opportunity to set out what they will and will not allow at the property; pets, smoking for example, as well as the number of people who can live there and imposing obligations on the tenant, such as to maintain the garden.
As the tenant moves in, they should be given a copy of the Energy Performance Certificate, Gas Safety Certificate and a copy of the booklet “How To Rent” (available from the gov.uk website). Again, it is advisable to get the tenant to sign to confirm receipt, as failure to provide these documents leaves the landlord open to a counterclaim by the tenant in the event the landlord tries to evict them.
The property should be inspected on a regular basis to ensure it is being maintained and not damaged. In any event, the tenant should be provided with a copy of the annual gas safety check and electrical safety check. All visits to the property should be by prior agreement. If the landlord is in the habit of just turning up, they can be liable to a charge of harassment.
There are two legal routes to evicting a tenant, governed by s. 8 and s. 21 Housing Act.
S.8 includes instances of the tenant breaching the terms of the tenancy, most commonly failure to pay rent. The landlord should keep a copy of the rent payment schedule, clearly showing rent payable, rent paid and the arrears. For other breaches of the tenancy agreement, documentary evidence is required; damage to the property for example. Two months arrears at the time a Housing Act notice is issued, and at the time of the court hearing, provide mandatory grounds for eviction. If the arrears are less the judge will exercise discretion as to the reasonableness of making an order to evict the tenant.
Any failure to protect a bond, provide the documentation required or to have a licence will leave a landlord open to a counterclaim which may reduce or wide out any judgment for arrears.
The s. 8 process does have the advantage of speed in that usually only 2 weeks notice is provided before court proceedings can be issued. In addition, an eviction notice under s. 8 also contains a judgment for arrears.
S.21 is the process for a “no fault“ eviction. Confusingly sometimes referred to as the “accelerated” process, a notice under this section provides two months for the tenant to vacate, failing which court proceedings can be issued. In order to issue proceedings, the court form requires details of the Energy Performance certificate, gas safety check and deposit protection scheme. This process cannot be followed in the first four months of a tenancy and cannot be used in response to a tenant complaining about the condition of the property.
In the event that a tenant leaves, there must be a clear surrender of the property in order for the landlord to re-enter. This would involve the tenant handing over the keys, and clearly saying they have left. If a tenant is believed to have gone but has left possessions behind, especially a bed and a fridge, they could claim that they had simply been away for a short time and make a claim against the landlord for harassment, which in turn lengthens the period of time any court proceedings take in order to have them evicted.
Courts typically give a tenant 14 days to vacate a property once an order is made. Failure to abide by a court order to leave means that the landlord is able to instruct bailiffs to remove them.
Having read the above, be reassured that most tenants are fine and following the initial steps at the outset should normally mean that the tenancy cause the landlord little in the way of headaches.
The above should not be relied upon for legal advice as all circumstances are unique. For all your landlord and tenant legal issues contact Ian Clay on email@example.com