The Essential Guide to Letting out a Residential Property

With pension pots increasingly depleted, buying property to let can be an effective way to boost income and create a nest egg for retirement.

Sangita Manek, Property Litigation lawyer, offers her top tips if you are considering becoming a landlord:

1. Inform your mortgage lender
If you are buying to let, inform your mortgage lender. You will need a buy-to-let mortgage, which reflects the rental use of the property.

2. Tell the tax man
You must declare your rental income to HMRC and seek advice from an accountant on deductions that can be set off against it.

3. Carry out safety checks
It is your legal obligation to ensure the property is safe for the tenant. There are strict safety standards you must meet and document. Failure to do so could expose you to criminal charges and fines.

Paper trail
Landlords must provide these safety assurances to tenants:
• Electrical safety certificate for electricals from a registered electrician
• Annual certificate from a gas engineer approving gas appliances
• Insurance policies covering the building
• Proof of compliance with Furniture & Furnishings (Fire) (Safety) Regulations 1988
• An Energy Performance Certificate (EPC)

4. Carefully check-in
Even if the property is unfurnished, it is important to make an inventory of its condition at the start of the tenancy. Damage can be caused to walls, skirtings, architraves and bannisters. A check-in report ensures that you can prove the tenant’s responsibility and deduct money from their deposit for repairs.

5. Take meter readings
Take readings for gas, electricity and water prior to the tenant moving in. Change the name on utilities accounts to that of your tenant. In the event of any unpaid bills, this means that you will not be liable to pay.

6. Read the tenancy agreement
This document protects your rights; so do not sign it without reading. As a standard document, it may not contain clauses that are necessary in your case. Take time to pick through the detail and add items. A good lawyer can help you draw up a tenancy agreement.

Must-have clauses
• Protect your right to recover legal costs in the event of bringing court proceedings against a tenant for breach of your agreement.
• Claim your right to reasonable access to inspect and carry out repairs.
• Add a break clause, enabling you to terminate the tenancy agreement if your relationship with your tenant breaks down.

7. Register the deposit
If you are renting out a property on an assured shorthold tenancy that began after April 6th 2007, you are under statutory obligation to put the deposit into a government-backed deposit scheme. There is also a requirement to give specific information about this to your tenant. Failure to register the deposit can result in having to pay back the tenant three times their deposit.

8. Stick to the rules of serving notice
Three months before your tenancy agreement expires, open discussions with your tenant about whether they would like to stay for another term.

Regardless of their plans, you must serve statutory notices to terminate their occupation at the end of their tenancy agreement. You can set up a new agreement if both of you are happy to do so.

Serving notice is important because, if the tenant doesn’t move out voluntarily at the end of the agreed term, the Protection from Eviction Act 1977 says that you can’t evict them without a court order.

If notice hasn’t been given in advance, then, depending on the type of agreement in place, you may face a delay of upwards of two months before you can start court proceedings.

9. Check-out properly
It is important that either you or your agent is at the property when your tenant checks out, so that you can identify any damage they may have caused. Follow the rules of the tenancy deposit scheme to deduct money from the tenant’s deposit if required.

10. Get legal advice
Although there are guidelines that every landlord should follow, every situation is different. It’s important to take independent legal advice to ensure that you get the best possible reward from your property investment.

If you are thinking of letting a property, please contact Sangita at or call 0208 515 7574.