THE LETTING AND MANAGEMENT
We offer a professional letting and management service to Landlords and owners of residential property. We are a regulated firm in accordance with the Royal Institution of Chartered Surveyors and National Association of Estate Agents rules and regulations as prescribed in respect of client accounting, complaints procedures, and tenancy deposits.
Please note that we cannot undertake a letting on a 'joint agent' basis.
We have prepared the following notes for your guidance and to explain the service we offer. This document is to be read along with the Terms of Business.
DUTIES NORMALLY CARRIED OUT BY US AS MANAGING AGENTS
Letting of property including advertising as necessary, accompanied viewing, negotiating the terms of the tenancy.
The taking up of references on proposed Tenants.
The holding of the Tenant's deposit in accordance with TDS regulations or arranging to transfer the deposit to a recognised TDS Scheme.
The preparation of a fully detailed inventory and schedule of condition with photographs.
Preparation of Tenancy Agreements.
Where properties are under mortgage, the submission of details as requested to Banks or Building Societies.
Notification of the utility readings to the relevant utility companies and the local authority of the council tax liability at the commencement of the Tenancy.
Collection of rents.
Arrangement of maintenance and minor repairs. Please note that if major repairs are necessary an additional fee will be charged for arrangement and supervision. If damages result from storm or otherwise, insurable acts would be happy to make all necessary claims on behalf of the client but this would again be subject to an additional fee.
Payment of outgoings.
Monthly accounting of monies received.
Monthly payments of monies to client or to client's bank account, as required.
Submission of information to H M Inspector of Taxes as required, but excluding any negotiations.
Inspections carried out as per arrangement between the parties.
PERMISSION TO LET
Many people have a Building Society or Bank Mortgage charged against their property and permission must be obtained before you, or ourselves as your Agents, enter into any contractually binding Tenancy Agreement that may affect their investment in your property. The majority of Banks and Building Societies publish a list of conditions and requirements to be met before their Agreement is forthcoming, and most Building Societies require the original of the Tenancy Agreement to be held by them and some even levy a nominal charge to cover their administration costs in giving permission. We will require written confirmation that your Mortgagors agree in principal to the letting of your property and will be happy to assist you in obtaining this.
Similarly in the case of Leasehold property, the Head Lease may make specific reference to the sub-letting and we will require your written confirmation that such approval from your Superior Landlord has been obtained.
FURNITURE, DECORATIONS AND FITTINGS
In letting out your house you are not only parting with posession for the duration of any contractual letting term, but you are undertaking to keep the house in structually sound and habitable condition whilst the property is let. It is therefore essential that all basic items of furniture and equipment are left in good order and it should be remembered that the maintenance of all mechanical equipment is the responsibility of the Landlord; Tenant proved misuse excepted.
All furniture must comply with The Furniture and Furnishings (Fire) (Safety) Regulations 1988 and have a permanent label clearly showing that they are fire resistant. Any renewals also now need to comply. If you are unsure as to what does or does not comply then please call us for advice.
It is strongly recommended that all items of exceptional or sentimental value are removed prior to you vacating the property. We will require you to prepare a priced schedule of any such items that you, none the less, choose to leave and which will be incorporated in any inventory.
Once an offer to rent the property has been received from an applicant they will be asked to submit a completed Tenancy Apllicant Form* we then carry out a comprehensive credit-reference check using Creditsafe online referencing, and we take up references from Employers, current or previous Landlords or Managing Agents etc. Once the referencing is completed we will contact you to discuss the appliation Tenancy for your approval before drawing up the Agreement.
*There is a charge to the applicant for this: £150 for the first applicant and £50 per each additional applicant aged 18 and over, per property including VAT.
We provide a service to prepare a Tenancy Agreement in accordance with current government regulations, Part 1 of the Housing Act 1998 as amended by the Housing Act 1996 and the Housing Act 2004, in a version acceptable to Mortgagors, on your behalf, the cost of which is included in the charges detailed below. If, however, you wish your solicitors to prepare the Tenancy Agreement then you will need to meet any additional costs as made by them accordingly. We do not reduce our fees if you do have your own Agreement drawn up, nor do we take any responsibility for such an Agreement.
We arrange to take a suitable deposit from all ingoing Tenants at the commencement of the Tenancy, this being returnable when the Agreement expires, subject to our representative finding everything in order when inspecting this property. We hold this money as 'Stakeholder' between parties of the Tenancy in accordance with the Tenancy Deposit Scheme under the Housing Act 2004. This is held in the event of default by the Tenant of any obligations under the lease.
The maximum amount of any deposit considered reasonable is limited under the 1980 Housing Act to one-sixth of one year's rent net of rates, we usually require a minimum of one and a half times the monthly rent. Additionaly deposits will be taken for pets.
Under the Tenancy Deposit Scheme written consent of both parties is needed to release the deposit at expiration which has to be within 10 days otherwise Alternative Dispute Resolute Service (ADR) comes into effect.
The Landlord agrees to indemnify the Agents against costs etc. incurred while managing the property that canot be recovered from the deposit.
We must advise you that in compliance with the RICS Code of Practice approved by the Secretary of State - Section 87 of the LRHUD (Leasehold Reform Housing & Urban Development) Act 1993:
Deposit will be held in clients' account.
No interest is credited to the clients' account.
No bank charges are deducted from the account.
Monies are client funds and no loan or overdraft can be deducted or off-set against the clients' monies held.
The money is held in trust for the client.
Deposits can no longer be transferred to Landlords without proof of membership of a TDP scheme. Please note that Landlords can lose certain repossession rights and incur a fine of 3 times the deposit if TDP procedure is not followed.
*Please see seperate literature outlining the full details of TDPS Schemes.
INVENTORY AND GENERAL CONDITION
Under the Tenancy Deposit Scheme (TDPS) a Landlord is unlikely to successfully claim any damages from the deposit in any end of Tenancy dispute with a Tenant, without the required back-up information. Please note that there is no guarantee even then that the Landlord's claim will be successful. However, an inventory and schedule of condition is highly recommended in all cases. This is a detailed document with notes and photographs and appended to the Tenancy Agreement. It is signed by the tenant at the start of the Tenancy and can be an important tool for ADR.
We account to our clients monthly or quarterly by cheque or BACS transfer to their bank account within 14 days of receipt of cleared funds. We must advise the client that if we do not receive cleared funds from the Tenant then no payment will be made to the Landlord. The Agent can retain interest earned on any clients' account. The agent retains rents paid up front and accounts to the client monthly or quarterly as above.
PROPERTY OWNER'S INSURING LIABILITY
It is recommended before letting your property, that you advise your Insurance Company or Broker that you intend to let the property as failiure to do so may result in the Company refusing to meet a claim made, if they are unaware of the property being Tenanted.
It is often possible for Client's insurance cover to be increased to cover Public Liability/Property Owner's Liability at minimal cost and it is recommended that you consider extending your cover accordingly.
Most Tenancies are trouble free but, if problems arise, the Landlord should be aware that rent money will ony be received if insurance cover has been taken out to cover this eventuality and that legal action to evict a Tenant is the Landlord's responsibility.
If you require further advice, please do not hesitate to contact this office or ask your own Solicitor or accountants to advise on any specific personal circumstances that may be affected by the letting of your property.
INSURANCE (BUILDINGS AND CONTENTS)
We will require to have complete details of your insurance cover on the premises, i.e. Insurance Companies and addresses, policy numbers etc. in order that we can, if necessary, pay any premiums on your behalf or make any claim which may become necessary. The Managing Agent is entitled to retain all commission earned while acting as Agent of the Landlord. Charles Head & Son Ltd is registered with the FSA (Financial Services Authority) in respect of insurance.
INCOME TAX - OVERSEAS OWNERS
(FURNISHED AND UNFURNISHED LETTING)
We have to draw your attention to the fact that all rents received from the lettings of your property are declarable for the payment of any tax due by deductions from rents received (under Taxes Management Act). It is advisable to consult a tax accountant on the following before making any decisions: -
Approval numbers if living abroad
An election if one spouse earns more then another
If the Landlords normal place of abode is outside the UK the following would apply:-
Non-resident Landlords can set off tax deducted from their UK rental income against their own tax bill when they complete their UK Tax Return. They can also claim repayment of any excess tax deducted from their UK rental income.
Non-reisdent Landlords can apply to the Inland Revenue's Financial Intermediaries and Claims Office (FICO) telephone 0151-472 6208/6209 for approval to recieve their UK rental income with no tax deducted.
If the Landlord does not have an approval number the Agent will deduct a set fee quarterly for retention of tax and payments to the Inland Revenue (25% less allowable expenses).
The Agent has the right to appoint a tax accountant to prepare the income and expenditure accounts if the Landlord does not have an approval number. The costs will be deductible from the Landlord's rent.
The agent will not accept the instruction to let the property unless the Landlord applies for an approval number at the point of instruction thus enabling all rent to be paid gross.
The Agent can only pay the rent gross from the date of approval number. If the approval is withdrawn, tax will be deducted at the current basic rate.
If the Tenancy is "introduction only" the Landlord must still obtain an approval number.
Relief is obtained for rent never received provided that the Landlord proves:-
a) he has taken all reasonable steps to try to enforce payment; or
b) he has waived the rent to avoid hardship to the Tenant.
The Landlord must prove to the Inland Revenue that the rent has not been received and is a bad debt.
Some allowable expenses are:-
Repairs and maintenance including re-decoration during the Tenancy but not after the Tenancy has terminated.
Management costs including Agents fees, advertising for new Tenants, legal and accountancy charges.
Services Landlord provides for a Tenant for which no specific payment is received.
Payment for general, business and water rates and council tax if not paid by the Tenant direct to the local authority.
Periodic payments made by the Landlord in respect of the land such as ground rent, feu duty, service charges, etc.
Costs of lighting and maintaining common parts.
Upkeep of gardens, cleaning swimming pool or other annual payments.
Architect's or Surveyor's fees incurred for the maintenance of the property, but not for improvements.
Upkeep of private woods if it is for the benefit of the Tenant.
Depreciation for wear and tear on furniture if included in the property, contact your accountant for further details and allowances.
All records, including income relating to the property must be kept for six years.
Maintenance charges for the nine months prior to the letting are tax deductible.
Invoices or receipts are necessary for tax deduction. 'Black Market' payments in cash are not deductible.
It is the responsibility of the Landlord to provide information sheets for the Tenants detailing the procedure that should be followed, if there is a breakdown of any appliances.
The Landlord should provide a folder to be kept in the property detailing all maintenance contract numbers, telephone numbers (so that Tenants do not make alternative arrangements). This folder should also contain general information i.e the siting of the stopcock and any instruction booklets available for each appliance.
The Landlord is advised to fit secure locks, registered keys being preferable, as this prevents numerous copies being made. The Agent will arrange (if instructed) for the fitting of a new barrel and keys at each change of Tenancy - the cost to do this is tax deductible.
You must advise The Post Office of your forwarding address, and they will intercept any mail going to the premises for the required period of time. The Tenant and we cannot be responsible for re-directing mail.
When our representative calls to take your detailed instructions they will require to know your address, Bank/Building Society account, where the Landlord lives abroad a person in this country for us to contact in case of emergency and details of the property, buildings and contents insurance, together with the name and address of your solicitors, if any. We would like to see various notes to the Tenants giving details of the workings and maintenance of the various household machines (such as any vacuum cleaner, refrigerator, cooker or central heating boiler), which can continually remain in the property for reference purposes with any instruction books you may have kept.
When managing a property we normally request a £150* limit on repairs. This allows us to deal with any minor problems that may arise. Should a repair be necessary, which amounts to more than this, we will obtain, wherever possible, comparable estimates for the work and submit them to you for your approval unless we consider a matter urgently requires immediate action to protect your property from any major damage.
The Landlord agrees to respond promptly with instructions where necessary to any correspondence from the Agent, thus enabling the Agent to carry out their duties efficiently. If no response is received within 48 hours* then action deemed to be appropriate will be taken by the Agent on behalf of the Landlord.
*Or as agreed.
Under the Rent Act, the Landlord is responsible for all repairs to the property and contents, except those caused by the Tenant's neglect or misuse.
The carrying out of our management duties are subject to us being fully aware of any problems and all circumstances relating to the property. We cannot be held responsible if we have not been fully informed of all the facts. The Landlord is responsible for any defects at the property that can be clearly seen (avoiding any negligence claims for hidden defects such as dry rot or subsidence).
We recommend that final accounts are obtained from water, electricity and gas boards. We notify these services of subsequent changes in occupation and the Tenants will be asked to sign their Agreements with the suppliers.
If a telephone service is currently supplied to your property, then it is usual for you to terminate the supply Agreement with the telephone company. It is not, however, possible to require a Tenant to maintain a telephone at the property and since this becomes a private arrangement between the telephone authority and the Tenant, the telephone number may be altered by the telephone service then it will be terminated and re-connection charges will be due from you when you resume personal occupation.
Oil fired central heating systems- -If such system is installed in your property, please arrange a tank reading prior to your vacation of the premises and provide our representative with full details so that appropriate adjustments can be made at the expiration of the Tenancy. We recommend that you have the oil tank filled at the outset of the Tenancy and that the Tenant fills the tank when they vacate the property.
Gas fired central heating systems - If you have taken out a maintenance and service Agreement with the local Gas Board or other supplier it it essential that we are advised of the name, address, telephone number and relevant Service Contract Number since the use of other contractors to remedy any defect would invalidate any Gas Board Contract.
The Landlords Gas Safety (Installation and Use) Regulations 1994 (as amended) place duties on Landlords that cannot be ignored. By law Landlords are responsible for making sure that appliances are maintained in good order and checked for safety at least every 12 months. A Gas Safety Certificate prepared by a Gas Safe registered installer must be issued to every Tenant before they take up their Tenancy. We are happy to help Landlords in organising the necessary inspection. We cannot let a property, with any form of gas appliance, until a certificate has been prepared.
We advise that an Electrical Safety Test must also be obtained and carried out by a qualifed electrician able to provide a Safety Certificate prior to the commencement of letting a property. The recommendation is that this will need to be done at least every 5 years or more often if works are carried out between and at the discretion of the electrician who may recommend annual testing depending on levels of readings. A re-test should be undertaken at each change of Tenant. For a Thatched property an Annual Electrical Test is required and for holiday let properies.
Every electrical appliance (with a lead and a plug) left in the property that is not 'hard-wired' into the building should be a PAT (Portable Appliance Testing) tested.
We can arrange for this to be carried out by a qualified electrician, the cost of doing this will be the responsibility of the landlord.
Neither the Electrical Safety Test nor the PAT test are mandatory by law, however, we as agent cannot accept a property for letting if these are not carried out as we would be negligent in our duty of care to both the Landlord and Tenant.
ENERGY PERFORMANCE CERTIFICATES (EPC's)
Since the 1st October 2008 all rental properties with a new tenancy in England and Wales are required to have an Energy Performance Certificate (EPC). These are produced by an accredited Domestic Energy Assessor and remain valid for 10 years.
There is a fine of £200 for non-compliance.
All lettings are in accordance with the various Rent Acts (as amended). In general terms, the cumulative effect of this legislation has been to provide safeguards for both Landlords and their Mortgagors, and Tenants.
All residential Tenancies created are either Assured Tenancies or Assured Shorthold Tenancies. Of these two types of Tenancies, it is the Assured Shorthold that is proving to be the most popular. The term granted under an Assured Shorthold is most usually 6 months but can be weekly or monthly for less than six months. However, during the initial six months period the Tenant has security of tenure. It is not possible for the Landlord to obtain possession of the property prior to the sixth month. It is possible for a break clause to be included for the benefit of the Tenant. There is no maximum limit on an Assured Shorthold Tenancy Agreement, but it is our recommendation that a one-year limit should be the maximum considered, in order that both Landlords and Tenants options may be kept open.
The servicing of certain documents on Tenants is critical to the operation of these Tenancies.
We would point out that if the Tenant refuses to vacate the premises at the end of their lease, then it is necessary to obtain a Court Order for possession, but the Courts are under an obligation to grant this order provided that the documentation has been properly prepared. Your own Solicitor would need to be instructed to carry out this process.
We will be pleased to advise you on the specific type of Tenancy Agreement that will best suit your requirement.
Although properties may be let at contractually agreed rents, it is possible for a Tenant to make reference to the local Rent Assessment Committee to determine the rent. This determination would only relate to the particular Tenancy and is not binding upon any subsequent Tenancy to a new Tenant.
The foregoing is only an outline of the general scope of Tenant legislation, and we should be pleased to advise you further in this respect.
PROPERTY MANAGEMENT & TENANT FINDING
After you have read these notes, it is recommended that you contact us in order that we may inspect your property and provide you with our opinion of rental value, at the same time covering any particular queries you may have.
We are able to offer 3 levels of service to Landlords:
i) Tenant Finding Only
This entails advertising, finding a Tenant, referencing, taking deposit and retaining it under Tenancy Deposit Scheme (TDS) rules of transferring it to your scheme. Inventory: £100 unfurnished + VAT or £150 furnished + VAT.
ii) Full Management
Services as in i) above but to include full inventory and check-out and we undertake to deal with minor repairs and maintenance as agreed 15% inclusive, no extras + VAT.
iii) Paperwork Only
Drawing up the Assured Shorthold Tenancy Agreement. taking deposit and retaining it under Tenancy Deposit Scheme (TDS) rules or transferring it to your scheme OR for drawing up the Contractual Tenancy in the case of a commercial Tenant.
Referencing the prospective Tenants.
Drawing up an inventory and condition report to the required specification. £100 unfurnished + VAT or £150 furnished + VAT.
Checkout when the Tenant vacates the property at the end of the Tenancy: £50 + VAT.
We can also:
Obtain estimates and supervision of works to comply with regulations under any Housing Act, Rent or Landlord and Tenants Acts, or other legislation.
Obtain estimates and supervision of major works of repair or maintenance.