Many people decide to rent out their property, whether a house or flat, or a room in their home, as a means of generating extra revenue.

Unless you take specialist advice first, you can end up with a legal and financial headache; with disputes arising between you and your tenant which can sour the relationship and cost you money and time to resolve.  You also need to consider whether you will have to pay tax on the income received.

Your solicitor can help you should legal disputes arise – they are experienced in resolving disagreements – but far better to try and avoid such issues arising in the first place, by clearly setting out the agreed terms of the letting in a written tenancy agreement.  Your solicitor can help here too.

New legislation — ensuring a tenant’s right to rent

Under new Government legislation, the landlord is now expected to carry out checks to ensure that the prospective tenant has a legal right to rent a property. Failure to carry out these checks can result in a heavy fine.

Please click here to find out what is required and how you must proceed.

Tenancy Agreements

A tenancy agreement can be written or verbal.  There is no legal requirement in England and Wales for a Landlord to provide a written agreement, although the Landlord does have a duty to provide written details of specified  terms (eg. the rent payable, and rent payment dates) in certain circumstances.   However, as arguments over the terms of a verbal tenancy agreement can boil down to one person’s word against another, it is a good idea to have a written agreement which clearly sets out what has been agreed.

The agreement is a contract between the landlord and tenant and sets out the rights and responsibilities of both parties in  a way that is enforceable by Law.  It ensures that both parties know where they stand and disputes are kept to a minimum.

There are many types of tenancy agreement but the “Assured Shorthold Tenancy” and the “Assured Tenancy” are the most commonly used.

Assured Shorthold Tenancy

These are often for a period of between six and twelve months but the tenant has fewer rights to stay at the end of the agreed term.  Popular with private landlords as it is easier to obtain possession at the end of the term

Assured Tenancy

Most often used by housing associations and registered social landlords.  Less common for private landlords.

Contacting a Solicitor

Before you start renting out your property it is a good idea to contact your solicitor to discuss the terms you will offer a prospective tenant.

Your solicitor will be able to:

  • Discuss the different types of agreement available and what will be best for you.
  • Prepare the agreement for you
  • Explain any related legal issues.
  • Advise of any potential problem areas, such as how to end an agreement.
  • Advise what references you should request from your prospective tenant.

Drawing up the Tenancy Agreement

Your solicitor will explain your rights and responsibilities and you can cover your specific needs and concerns. A tailor made agreement can then be drawn up. You should give some thought to the following points before meeting your solicitor and take with you any relevant documents.

Points that your solicitor will raise will include:

  • Length of tenancy – how long will the tenancy last and what notice will you require to bring it to an end?
  • Type of tenancy – what type of tenancy do you want and how many people will live in the property?
  • Restrictions – do you want to impose any restrictions – such as not keeping pets or playing loud music?
  • Rent – you must decide how much to charge and when you can increase the rent. When will payment be due and what penalties will be imposed for late payment? Who will pay Council Tax,  gas, electricity and other utility bills?
  • Furnished or unfurnished – if furnished, you will need a detailed list of furniture and fittings, and their condition at the start of the term.
  • Deposits – what deposit will you require, when should it be returned and under what circumstances may some or all of it be retained?  All deposits must be held in one of three government-approved deposit schemes.  These schemes are intended to make disputes over deposits easier to resolve.   You have 30 days from receipt of the deposit to advise the tenant under which scheme the money is held.  Failure to do so can result in a fine.
  • Service charges and repairs – will you provide additional services such as laundry, cleaning  or general maintenance and if so, will you charge extra for such services?   What will your responsibilities be for repairs to the property?  Your solicitor can advise you on your statutory repair obligations as a Landlord.
  • Rights of access – what rights do you have to access the property during the period of the tenancy?

Copies of the Tenancy Agreement

Make sure that both you and the tenant sign the agreement at the start of the tenancy. If requested, you have to provide the tenant with a copy, and it is sensible to do so anyway, to ensure both parties have a record of their obligations.

Energy Performance Certificate

This certificate provides a rating for the energy performance of the property and recommendations for improvements.  It lasts for 10 years and the tenant must be provided with a copy free of charge.

Disagreements

Should a disagreement arise, your solicitor has the knowledge and experience to help in a number of ways.   This may be by simply explaining your rights, adapting the agreement, negotiating a solution, or if necessary by taking court action.

If you have issues with tenants or a dispute concerning home ownership, please click here full details of where we may be able help you.

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