Renting Your Property In Blackpool and the Fylde Coast The following document can be downloaded by clicking on one of links AN INTRODUCTION TO RENTING YOUR PROPERTY 2 (1).doc AN INTRODUCTION TO RENTING YOUR PROPERTY 2 _1_.pdf
AN INTRODUCTION TO RENTING YOUR PROPERTY The prospect of letting a property is a new experience to many and it is our aim to try and make the complexities a little easier to understand. This introduction guide contains advice on all aspect of renting out your property, including a brief insight into the responsibilities of the Landlords and Tenants under the 1988 Housing Act. We pride ourselves on our personal service and so we would naturally be pleased to meet with you to discuss your plans and objectives. INDEX Rules and Regulations Taxation of Rented Property Letting Only Service Letting and Management Service Important Information for Landlords Our Fees and Services Contract of Management RULES AND REGULATIONS There are a number of legal requirements concerning, primarily the health and safety of the tenant, which directly affects Landlords who are considering letting their property. These are summarised below and we strongly recommend that you familiarise yourself with the regulations and ensure that your property complies with them, as the penalties for non-compliance are severe. The rules are very largely a matter of common sense and it is likely that you will find that your property already meets the required standards. Our representative will be pleased to answer any queries that you may have. FURNITURE AND FURNISHING, FIRE SAFETY REGULATIONS 1988. Furniture and furnishings to which the regulations apply include beds, mattresses, headboards, suites, seat pads, cushions, pillows and loose stretch covers and such similar soft furnishings. If your furniture was manufactured or imported new since 1st November 1988, it will almost certainly comply and should bear a green edged label with a picture of a cigarette and a match, to confirm its fire resistance. Furniture manufactured prior to this date may or may not comply and will probably not bear a label. If you are unable to obtain confirmation of its fire resistance from the manufacturer, you should remove it from the property prior to the commencement of the Tenancy. Failure to comply with the regulations may lead to a prosecution with penalties of imprisonment or fines up to £5,000. GAS SAFETY (Installation and Use) REGULATIONS 1994 Regulation 35 of the approved code of practice imposes a duty on the Landlords to ensure that any gas appliances in a rented property are maintained in a safe condition, to prevent risk of injury to any person. More particularly each gas appliance must be checked for safety at intervals of not more than twelve months, by either the Gas Board or a Corgi registered gas fitter. Landlords should maintain a record of when each gas appliance was checked, the defects found (if any) and the remedial action taken. This record is in the form of a “Landlords” Gas Safety Certificate and should be available to the Tenants on moving into the property and within 28 days of the annual inspection being carried out. Please note that under our Terms of Business, we consider that it is the Landlord’s responsibility to ensure that these safety checks are carried out and we accept no liability should you fail to do so. However, we have been able to negotiate favourable rates with a local Corgi registered firm and, on receipt of your written instructions, will be pleased to arrange safety checks on your behalf. Failure to comply with these regulations my lead to prosecution with penalties of imprisonment or fines up to £25,000. ELECTRICAL EQUIPMENT (SAFETY) REGULATIONS These regulations cover all mains voltage household electrical grids, including cookers, kettles, vacuum cleaners, washing machines, immersion heaters etc and impose an obligation on the Landlord to ensure that the goods are safe so there is no risk of injury or death to humans or pets, or risk of damage to property. In practice, unless you are aware of any particular fault with an appliance, it is difficult to ensure that it is safe. In general though, you should remove any item with damaged or frayed wiring, badly fitted plugs etc and ensure that instruction booklets necessary for the safe operation of any appliance are available for the Tenants use. Any non-working appliance should be removed from the property, prior to the commencement of the Tenancy. At present there is no obligation imposed by law that states that the Landlord has to have any from of safety certificate for electrical appliances. However, we recommend that electrical appliances are checked on a regular basis. SMOKE DETECTORS Smoke detectors must be fitted to each floor and checked on a regular basis. IMPORTANT INFORMATION FOR LANDLORDS If your property is mortgaged, you will need approval of your mortgage, a copy of which should be sent to Progress. If any breach of covenant or arrears arise, any resultant legal action will be taken only after first discussing the situation with you and your solicitor. Any legal fees that should arise will be your responsibility. Any rental quoted to the tenant by Progress on your behalf is inclusive of all outgoings for which you are responsible, with the exception of gas, electricity and telephone services. Furniture should be of a good standard and décor should be as plain and light as possible. High standard properties attract good quality tenants. It is not necessary to leave a television, although some Company Lets would expect one. The Tenant is responsible for the licence in all cases. The property should be thoroughly cleaned, prior to the commencement of the Tenancy. If Progress feels that a “spring clean” is necessary at the termination of a Tenancy, in between lets, we will arrange a cleaner at the previous tenants expense. An Inventory of the contents and condition of the property must be drawn up for the incoming tenants. Please see our Management Details regarding this Service. The Council Tax will remain the responsibility of the tenant throughout the tenancy. Some properties such as those occupied entirely by students, will be exempt. INSURANCES The Landlord confirms that he/she has obtained permission from their mortgager and that they will advise their insurance company, in writing, that the property is to be let. The Landlord will check that the buildings insurance cover includes public liability cover. Should you require quotations for buildings and contents or Landlords insurance, then Progress would be delighted to arrange for this on your behalf. TAXATION OF RENTED PROPERTY The following is intended as a rough guide to the taxation liabilities which may arise from letting of furnished accommodation by a private Landlord. It must be stressed that the rules surrounding this subject are extremely complex and that an individual’s personal circumstances can greatly affect their liability to tax. This is only a basic guide and should not be relied upon to provide definitive information. Progress can accept no responsibility for any losses arising from so doing. Progress can recommend a reputable firm if required. Alternatively your local tax office can provide you with booklet IriSO which supplies detailed information. Rent received from rented accommodation is taxable. The taxable income is arrived at by calculating the rent received during the tax year and deducting allowable expenses. Expenses which are allowable include such items as: Ongoing maintenance, repair and redecoration (but not improvements) Of the property and garden. Any rent payable by the Landlord (e.g. Ground rent on a leasehold property). Property insurance premiums. Agents managing fees. Accountancy fees and certain legal fees. Renewal of furniture and equipment (not initial purchase) OR you may elect a ‘wear and tear’ allowance, calculated at 10% of the annual rent received (less water rates). In certain circumstances interest payable on loans or mortgages to finance the purchase of the property. A Landlord is non-resident for tax purposes if he is living outside the UK for a period of more than six months. On 6th April 1996, a new scheme for the taxation of rental income of non-resident Landlords came into force. From that date Progress, if appointed as managing agent, are obliged by law to deduct tax at the basic rate (23%) unless we have received a certificate from the Inland Revenue, giving us approval to pay rents gross. There are no exceptions to this. To obtain this approval, it is necessary to submit a form NRL1 to FICO (Financial Intermediaries & Claims Office) declaring that :- Your UK tax affairs, including payment of tax, are up to date; Or You have had no prior UK tax obligations; or You comply fully with your UK tax obligations i.e. submit tax returns and pay tax on time. Notify the Inland Revenue without delay, if you expect to have to pay UK income tax. If a property is jointly owned, each joint owner who is non-resident should complete a separate form. For those Landlords who wish to apply for this approval themselves, Progress can supply the necessary form or they can be obtained from FICO (address and phone number below). We can also supply details of reputable accountants experienced with dealing with the affairs of non resident Landlords. Certificates can be applied for before a Tenancy commences and we strongly recommend that any Landlord going overseas applies as early as possible. These certificates are not transferable, so if a certificate has been obtained previously, naming another letting agent, a new application will have to be made. For those Landlords who do not obtain an approval certificate the new regulations impose a considerable administrative burden on the letting agent, as each quarter the tax has to be calculated on the rent received, less any allowable expenses and the tax paid over to the Inland Revenue. A certificate of tax deducted also has to be provided to the Landlord for each year ended 31st March. There are stringent regulations for record keeping and these records must be available for Inland Revenue inspection at any time. There are also strict time limits for payment of tax, which can lead to large interest payments if they are not met. Because of this additional administrative burden, we will charge any non resident Landlord, who has not got an approval to receive rents gross £50 + VAT for each quarter that no approval is held, to cover our additional costs. If Progress do not manage the property and each individual tenant pays more than £100 per week in rent, then the Tenant must operate this scheme. The Inland Revenue produces several leaflets which explain the above scheme and other aspects of taxation in more detail, these are:- IR20 – Residents and non residents, liability to tax in the UK IR58 – Going to work abroad IR138 – Living or retiring abroad IR140 – non resident landlords, their agents and tenants These can be obtained from any tax office or from: FICO (Non Residents) St John’s House Merton Road Bootle Merseyside L69 9BB Phone: 0151 472 6208/6209 Fax: 0151 472 6067 In general, property which is used for letting will become liable to Capital Gains Tax when sold. However, in the case of an individual letting a property which has at some time been used as his/her only or main residence, extensive relief’s and allowances are available and in most cases, it is unlikely that a liability to capital gains tax will arise.
Tax is payable on the “gain” i.e. the difference between the price for which the property is sold and the price for which it is purchased – (amended by certain allowable expenses and an indexation allowance). Again, the legislation surrounding this subject is very complex and we recommend that you consult an accountant or professional advisor to establish any potential liabilities.
Letting only Services FREE RENTAL APPRAISAL…..Our senior negotiator will visit and inspect your property to assess its rental value. You are welcome to accompany our negotiator, any queries that you have can be discussed at this time and we will advise you on all aspects of letting your property. To arrange an appraisal complete the form or call us now on 01253 627111. As part of our service, We will prepare a brochure and display your property in all our offices and forward details of your property to awaiting clients on our mailing list. We will erect a “To Let” board and advertise your property in the local newspaper.
We will interview all prospective tenants before sending them to your property, or accompanying them on a viewing. Full details are taken of individuals circumstances to assess their suitability as tenants. Upon finding a suitable tenant, we will undertake an extensive credit check and obtain satisfactory references. Prior to the commencement of the tenancy and your approval will be gained before drawing up the Tenancy Agreement. Where appropriate, we will prepare a Guarantor agreement. Guarantors will be home owners and will be asked for payment to enable a credit check to be done. We will prepare an Assured Short hold Tenancy Agreement to include any individual instructions and the tenant will be checked into the property by our Inventory clerk. We collect the first months rent and a security deposit (Please note that the security deposit will be held by the Deposit Protection Service and not by ourselves.)and will forward the balance to you, after deducting our fee. We will, prior to any tenancy, visit the property and list all items which are to remain in the property and their condition. This includes décor, carpets and furnishings.
LETTING AND MANAGEMENT SERVICES In addition to the services detailed in Letting Only , our Letting and Management service includes the following:-
We will collect the rent and forward a statement of account. Payment to the Landlord may be by cheque or direct into a nominated bank account.
We will take meter readings for gas, electricity and where relevant water. We will then inform all relevant utilities of the new Tenants details, including meter readings and we will also inform the Council Tax office.
We will organise any minor repairs during the Tenancy and obtain estimates for more serious works. It is our normal practice to contact the Landlord before any works are carried out. The cost of repairs will be deducted from your rent and a copy of the bill will be attached to your rent statement.
We will carry out inspections every 3 months, to ensure that the property is being maintained in a good condition and that no problems have arisen. A report will then be forwarded to the Landlord.
If you are resident abroad then we will operate the Inland Reserve Scheme for taxing the rental income of a non resident Landlord, unless you can provide us with a tax exemption certificate (Non Resident Landlord Scheme).
Should the property become vacant we will of course, on your instruction, organise the re-letting of the property. We will always try to ensure that the property is unoccupied for the shortest possible time.
We will, where required, deal with any insurance claims (subject to additional charge).
We can arrange garden maintenance and cleaning services with local firms, if required. (subject to additional charge).
OUR FEES AND SERVICES Select one of the our main services and as many of the conditional services as you require. (please note that a minimum term of six months applies with full management). Letting Only Service One months rent + VAT with no ‘set up’ fee. This fee is payable at the commencement of the Tenancy. This is a fully inclusive fee and no further charges are made, unless we are re-instructed at the end of the Tenancy. Full Management Service 10% of the rent + VAT payable for the period of the Tenancy and all extensions. Setting Up Charge (Mandatory) £100.00 plus vat
Check-In Accompanying the Tenants to the property and agreeing the inventory with them, (whether supplied by the Landlord or by ourselves), explaining how to operate central heating systems and appliances, taking gas and electricity meter readings and supplying these to the relevant boards. Check-Out Acting on behalf of the Landlord to ensure that the property and its contents are left in the condition stated on the Inventory (fair wear and tear excepted), consulting with the Landlord with regard to any deductions from the security deposit (if appropriate) taking gas and electricity readings and notifying the relevant boards Insurance Claims Acting on behalf of the Landlord to liase and co-ordinate between the insurance company, broker and contractors, to ensure all re-instatement works are completed in a satisfactory manner. To organise if applicable, the replacement of contents and to invoice, if applicable, loss of rent claim to the insurance company, on the completion of all works. – 10% + VAT of total claim. Maintenance We can arrange any general maintenance including gutter cleaning, gardening and clearing services on the Landlords instructions, with local firms. – 10% + VAT of cost of works. Tax Administration Fee For those non-resident Landlords, without tax exemption certificates – for each quarter - £50 + VAT. Tenancy Agreements In the event of an existing Tenant wishing to renew the Tenancy at the expiry of the present agreement (with the Landlords consent), or at the Landlords own instruction, then a charge of £50 + VAT becomes payable for preparation of the new agreement.
