With many risks associated with letting property – from rent arrears to squatters – it is essential that anyone preparing to become a landlord understands the potential threats and how to solve them.
Common risks faced by landlords
Rent arrears and tenant evictions
One of the biggest risks faced by landlord is undoubtedly rent arrears.
Naturally all landlords try to minimise the risk of rent arrears; your tenant signs a tenancy agreement, the references you get all check out. However the tenant moves in and the payments don’t come. They fail to answer your calls and emails and are never home when you go round.
GW LET is highly experienced in issues such as rent arrears and can offer help and advice on how to evict a tenant as quickly as possible thus minimising your financial loss.
Standard home insurance will not provide the level of cover that you require so upgrade or change your policy.
If you have a standard home insurance policy in place you may find that it is insufficient for your rental property as it contains a number of exclusion clauses that would mean the policy would not pay out in the event of a claim.
Building on the previous risk of rent arrears, landlord insurance is essential in case troublesome tenants cause significant damage to your property.
Protection of Tenant’s Deposit
The landlord must protect the tenant’s deposit within 30 days of receipt and also supply the tenant with the prescribed information relating to the protection of the deposit within 30 days of receipt.
If the deposit is not protected and/or the prescribed information is not given to the tenant the tenant can, immediately after the 30 day period has ended, make a claim against the landlord for:
- The return of the deposit, or
- For the deposit to be protected, and
- A penalty payable by the landlord of up to 3 times the amount of the deposit.
In addition section 21 Notices will be invalid if they are served on the tenant before the deposit has been protected and/or the prescribed information has been supplied to the tenant. If a landlord fails to protect a deposit within the 30 day period then he must return it to the tenant (in full or with such deductions as agreed with the tenant) prior to the service of a section 21 Notice.
Energy Performance Certificate
When a property is being let in the social or private rented sector to a new tenant an Energy Performance Certificate (EPC) is required and, from 6 April 2013, must have a valid EPC before it can be marketed. More info on EPC changes
There are fixed penalties which are enforced by the Trading Standards department of local authorities for failing to provide an EPC/make one available when required. The fixed penalty is £200.00 for homes or 12.5% of the rateable value for commercial property.
Gas Safety Certificate
If your property contains gas appliances you will require a gas safety certificate for those appliances. Gas safety certificates can only be granted by registered gas engineers and are valid for a period of 12 months.
If you do not have a valid gas safety certificate, or if you fail to carry out the works highlighted by the gas engineer, the Health and Safety Executive (HSE) has the power to prosecute you. If you do not follow gas safety requirements it is a criminal offence and can be punished by fines or imprisonment.
You need to apply for a HMO licence if you own a property with:
- 3 or more storeys
- 5 or more occupants
- forming 2 or more separate households
In some cases a maisonette in a house or above commercial premises may need a licence if similarly occupied. Check with your Local Authority if you are unsure whether your property is a licensable HMO.
It is the landlord's responsibility to apply to the appropriate Local Authority for an HMO licence. It is an offence to operate a licensable HMO without having first obtained a licence. The current fine that can be imposed is £20,000.
The whole process was handled in a polite and professional manner. It was stress free from my end. The home visit to have documents witnessed made it so much more convenient.
Mr Davis - 10/10 - Equity Release