Property Management - Assured Shorthold Tenancy

Whether you own a property for investment, or are going abroad for a time, or simply cannot sell your property but wish to move letting is an important decision and professional advice will be essential.

Most types of furnished and unfurnished property can be let. Anything from a studio flat to prestigious homes. Letting Agreements are undertaken for a minimum period of six months to normally one or two years, which can be renewed as required.

Symon Smith will be happy to carry out a free market appraisal, advise you on the likely rent to be achieved and answer any questions you may have. Therefore, if you do decide to rent your property you will be able to do so with complete piece of mind.

On receipt of your instructions, we will prepare marketing particulars of the property for our Letting Consultants to contact applicants already registered with us. The property will then be advertised in the local newspapers and wherever else necessary to attract other good quality tenants. We will accompany all prospective tenants to view the property. (It is advisable for us to hold a set of keys for convenience).

Once we have an interested tenant, we take a non-refundable holding deposit and apply to a specialised research company for references on the potential tenant's creditability. When satisfactory references have been received, together with proof of residence and proof of I.D., we will then prepare the necessary letting agreements together with The Notice Requiring Possession. The tenants will then be required to provide us with one month's rent and the equivalent of another month's rent plus £100 as a deposit against damages prior to their occupation (the deposit should be returned to the tenants at the end of their agreement, subject to everything being left in a satisfactory order). If required we will prepare an inventory of items to be left at the property for guidance on your behalf (charges relating to this can be obtained from our negotiators). Once the monies are cleared and all documents are signed, we will move the tenants into the property. In order to minimize any void periods, one month prior to the end of the contract we write to both you and the tenants to see if there is a wish to re-new the tenancy.

Our Management Service:

In addition to our finding suitable tenants, we will also offer the following:

• Collection of the monthly rent, which will be credited directly to yourself on a monthly or quarterly basis, whichever is required.
• Inform various authorities such as Gas, Electricity, Water, British Telecom and Council Tax of the new occupier.
• Preparation of statements of accounts.
• Property Inspections.
• Arrange for check in and check out reports on the condition of the property.
• We can also arrange to pay property related bills on your behalf if required i.e. ground rent and service charges (flats), garden maintenance charges, insurances etc.
• Deal with any problems concerning maintenance of the property such as repairs and decorations up to a maximum of £250. For repairs in excess of this amount we will obtain your approval first (Except in the case of an emergency.

Our Rent Collection Service:

Alternatively, we can combine our let only service with collecting of the rent on your behalf.

RENT

The rent is normally exclusive of gas, electricity, water rates, telephone charges and Council Tax, but inclusive of building insurance, contents insurance (for your own items) and maintenance costs, unless otherwise agreed. Under The Assured Shorthold Tenancy Agreement, which is for a minimum term of six months, the rent remains static. At the expiry of the agreement, we would normally seek to review the rent, having regard to inflation and current rental values, subject of course to market conditions.

AGREEMENTS

It is essential that an appropriate Tenancy Agreement be drawn up for a stated term, together with the relevant notices, in accordance with the terms of The Housing Act 1988. (As amended by The Housing Act 1996).

INVENTORY OF FURNITURE AND FITTINGS

It will be necessary for a full inventory of the furniture, fittings and condition of the premises to be taken, for attachment to the Agreement and signed by the tenants. If required, for a minimal cost we will arrange for our representative to call and prepare an Inventory prior to the tenancy commencing.

EXTERIOR

If there is a garden with the property, please ensure that the following items are left to enable the tenants to keep the grounds in order: Lawn mower, rake, spade, hoe, hedge cutters, etc.

REPAIRS

Under existing legislation, you are responsible for all repairs to the property and your contents, except those caused by the tenant's negligence or misuse. Should a repair be necessary we will arrange for this to be carried out up to the value of £250, if the value exceeds this we will supply you with an estimate for your approval, unless we consider the matter requires immediate attention. All repair bills will be charged against the rent received on your monthly/quarterly statement.

Note:

Under the rules of the Royal Institute of Surveyors we are not permitted to meet expenditure out of our own Clients accounts, unless the landlord's individual account is in credit.

MAIL

You must advise the Post Office of your forwarding address and they will re-direct your mail for the period of time you require. We cannot accept responsibility for redirected mail. More information can be obtained on this service by phoning the Post Office direct on 0845 774 0740

RENT ARREARS AND TENANT PROBLEMS

Symon Smith has many years' experience and a well-proven system of vetting prospective tenants. We also have an excellent track record, which greatly reduces the risk of any of these problems arising. In the unlikely event that a problem should occur with rent arrears, The Housing Act gives Landlords very strong grounds for repossession.

However, Symon Smith recommends to all its Landlords that either a Landlords Legal Protection Policy or a Rent Guarantee Scheme is taken out. Symon Smith regards these insurances as additional security in the unlikely event of any problems arising and is entirely at the landlord's discretion.

As part of our continued commitment to minimize the risk to Landlords of Tenants rent arrears payments, our initial referencing system in most cases now offers a 6-month rent guarantee scheme (for further details please contact one of our consultants). This can be renewed for a nominal charge.

INSURANCE

We suggest that you advise your Insurance Company of the proposed letting at an early stage, to ensure that cover for the property is not being prejudiced in any way. Failure to inform your Insurance Company that the property is being let may result in their refusal to meet any claim made. Remember that it is the landlords's responsibility to insure their own items.

BUILDING SOCIETY (OR MORTGAGEE)

If your property is mortgaged, you will require approval from your Building Society or Bank, before you let. In most cases consent is given readily, but it is wise to seek this consent as early as possible. A small administration fee is usually payable to the mortgagees, although this varies from lender to lender.

LEASEHOLD PROPERTIES

It is wise to check that your lease does not have a covenant, which forbids letting. You can check this with your solicitor. If you have any questions over freeholders consent, please call our office.

The Housing Act 1988 became law on 15th January 1989 and created two new types of tenancies. The Assured and The Assured Shorthold. The Act superseded the Rent Act 1977 and The Housing Act 1980. This was amended again in part III of the Housing Act 1996.

Therefore, The Housing Act now provides Landlords with the most favorable legislation for letting in the post-war years.

The Act ensures that the private rented sector is now freely open to market forces without rent control. A tenant has security of tenure for the period of an agreement only and must pay market rent.

ASSURED TENANCIES

An Assured Tenancy would give a tenant Security of Tenure (albeit at a market rate) unless certain relevant Housing Act notices are served. The Act gives several grounds for repossession. One of the grounds is Ground 1 of Schedule 2 of the Act, which relates to the right of an owner of a dwelling to return to the property as his or her home. Letting to Limited Companies cannot be an Assured Tenancy.

ASSURED SHORTHOLD TENANCIES

An Assured Shorthold Tenancy is a form of an Assured tenancy and many of the rules governing an Assured Tenancy including the criteria necessary to create an Assured Tenancy in the first place applies. The major difference is that an Assured Shorthold offers limited security of tenure to the tenant and guarantees possession, at the end of the tenancy, to the Landlord - provided that at least six months of the tenancy have elapsed. With the advent of The Housing act 1996 there is now no minimum length of term for an Assured Shorthold Tenancy. Possession will not be granted by the Courts during the first six months, so to avoid confusion, and as long as the tenant agrees, it might be easier to draw up Assured Shorthold Tenancies for 6 months or longer. You can of course offer a periodic Assured Shorthold Tenancy, but again, the Courts will not grant possession to the Landlord until 6 months of the tenancy have elapsed.

Symon Smith generally recommend both owner-occupier and investment landlords to let on an Assured Shorthold Tenancy.

Landlords and Tenants often express concern regarding safety matters. This information gives you the brief details of your responsibilities, but for further information contact one of experienced Lettings Consultants, who will be happy to answer any questions you may have.

Note:

Please remember that failure to observe safety regulations can lead to prosecution and to a substantial claim for damages by the injured party.

FURNITURE AND FURNISHINGS

The regulations cover all upholstered furniture and furnishings manufactured after 1950 (including loose fittings, permanent and loose covers but not curtains). This applies to all furniture in properties let after 1st March 1993. Generally, items manufactured in the UK after 1990 are likely to meet the required standards and display the appropriate permanent label confirming its compliance. For further information please do not hesitate to contact our offices for a free guide to the regulations.

GAS

The owner (i.e. Landlord) of any gas appliance, pipe work or installation must ensure that a CORGI registered engineer carries out a safety check every twelve months. (Servicing is not sufficient without a CORGI safety certificate). A record must be kept of all safety inspections and the results of which must be open to the tenant's inspection.

The regulations cover ALL appliances and all types of gas i.e. mains, propane or calor. The responsible person defined as the Occupier (i.e. Tenant). Owner or person with authority must not allow a supply to remain connected if they are aware of any potential danger or leak. If any pipe work is defective or dangerous it must be repaired or replaced immediately.

Failure to hold a current safety record is a criminal offence and you could be liable for a fine of up to £20,000, imprisonment or both.

ELECTRICITY

There are a number of pieces of legislation, which relate to the supply and maintenance of electrical equipment, household appliances and/or the cables, plugs and sockets that connect them.

Examples of such items might include:

• Electric cookers, microwaves.
• Toasters, kettles, TV's, video players.
• Washing machines, dishwashers.
• Immersion heaters, electric blankets.
• Fuses, circuit breakers.
• Electric lawnmowers or similar garden equipment.

The basic concept is that a landlord has a duty to ensure that any such items supplied as part of a property letting are "safe", and not dangerous. Whilst there is not at present a specific statutory requirement placed upon a landlord to prove that such items are regularly checked or tested by a qualified electrical engineer we strongly recommend to landlords that a (PAT) Portable Appliance Test of such equipment should be scheduled and kept up to date.

Any equipment or appliances identified as being potentially unsafe or showing obvious defects such as:

• Badly frayed or damaged insulation.
• Old or exposed wires, poorly fitted or cracked plugs.
• Scorch marked or badly damaged sockets.
• Plugs without sleeved insulated pins should be immediately repaired or removed and replaced with brand new equipment which complies with current BS and EC standards.

SMOKE DETECTORS

All new homes must be fitted with mains operated smoke detectors. They must be installed on every floor and they must be interlinked. These rules are incorporated in the Building Regulations 1991 and apply to property built after June 1992 There are no specific regulations governing older buildings but Fire and Safety Officers recommend the installation of at least a battery operated device should be fitted.

Note:

There is little or no Case Law to refer to on some of these regulations and it is the courts that will make the final decisions.

This information is for the general guidance only.

OVERSEAS LANDLORD TAXATION - SELF ASSESSMENT

The Inland Revenue's self-assessment rules changed the treatment of Overseas Landlords Tax with effect from 6th April 1996. Under the Taxation of income from Landlord (Non Residents) Regulations 1995, the rent-receiving agent is required to deduct basic rate Tax from the rent (after taking deductible expense paid out into account) and to pay the Tax to the Revenue each quarter. If you decide not to have your property managed by Symon Smith, you should be aware that your tenant would be legally responsible for the collection and payment of tax to the Inland Revenue.

However, overseas landlords can apply to the Revenue for exemption from this requirement providing your Tax history is good and up to date. The overseas landlord will be issued with a certificate, with a copy sent direct to our management department authorizing us to pay rent without Tax deductions.

We strongly advise that applications for exemption are submitted as soon as you are aware you are going to move overseas in order to ensure that the rent can be paid to you gross.

THE ALTERNATIVE

As letting agents unless we receive an Exemption Form we have to deduct Tax of 22% from all rents paid, after deduction of certain expense and then account for this tax to the Inland Revenue. We also have to submit annual returns providing information about you and details of your property, the gross rent paid, the tax deducted etc. We will in turn provide you with a tax certificate for use when preparing your own Tax Return.

FURTHER INFORMATION

We have copies of Inland Revenue Tax Guides and application forms available on request. If you would like to speak to somebody in person regarding this matter, please call the Inland Revenue's Financial Intermediaries and Claims Office (FICO) on 0151 472 6208/6209. Application forms to receive your rent gross are available at our offices.

You can off set all expenses relating to the property against the gross rents received.

In the case of furnished lettings a further deduction will also be allowed to cover the wear and tear of furnishings.

But, remember all of these deductions will only be granted if they are claimed and that it is for this reason that the submission of annual accounts is very much in your interest.

Allowing Accountants to attend to these matters for you will ensure that you receive the full benefit of all the available deductions.

SUGGESTED ALLOWABLE EXPENSES

• Loan and mortgage interest.
• Water (if not paid by tenant).
• Building insurance premiums.
• Contents insurance premiums.
• Legal insurance premiums.
• Agents charges.
• Nominal postage and telephone costs relating to the property.
• Building repairs.
• Decorating.
• Wear and tear (if let furnished approx. 10% of gross annual rent).

Note:

Remember, Tax returns are the responsibility of the landlord.