Preparation for letting
- Presentation & Decoration
- Furnished or Unfurnished
- Preparing for letting
- Agent or Private
- Mortgagee's consent
- Superior Landlord's consent
- The Gas Safety (installation & Use) Regulations
- The Electrical Equipment (Safety) Regulations
- The Furniture and Furnishings (Fire)(Safety) Regulations
- The Smoke Detectors Act
Arranging a tenancy
- The offer
- Tenancy Agreement
- The Rent
- The Term
- The Deposit
- Release Clause
- Option Clauses
- Additional Clauses
- Payment of first rent & deposit
- Check-in & transfer of utilities
During the tenancy
- Rental receipts, processing & client account rules
- Income tax
- Withholding tax (FICO registration)
Termination and renewal
- Grounds for Possession
Regulation of letting agents
The next step
Preparation for letting
Presentation and Decoration
The decoration and presentation of your property substantially affects the level of rent that you will achieve and the time it takes to let. Equipment should also be practical. Follow the following guidelines for decoration and presentation to maximise your return:-
Neutral carpets and walls
A clean and simple appearance
A well-equipped kitchen is vital. Washing machines and dryers, joint or separate are essential. Dishwashers and microwaves are desirable.
Bathrooms should have good fittings and preferably with a power shower
Furnishings and fabrics should be durable to cope with regular cleaning
All items should be easy to replace
Wooden floors are popular and durable
Beds should be fully made up with new white linen for showing
The property should be professionally cleaned throughout
Furnished or Unfurnished?
Perhaps surprisingly there is little difference between rents achieved for furnished and unfurnished properties and legally there is no difference in the type of Tenancy Agreement. There is however more demand for furnished smaller properties (one & two bedrooms) than unfurnished ones. Larger properties generally attract larger families who tend to stay for longer and will bring more furniture and equipment with them. The relative demand for unfurnished larger properties is therefore higher. All properties must comply with the Furnishing & Fire Regulations.
Unfurnished - An unfurnished property will have only carpets, curtains and white goods. If a property is let unfurnished the Landlord will not be eligible for the 10% wear and tear allowance for taxation. For these reasons token furniture is often included.
Furnished - A furnished property should be ready for immediate occupation with carpet, curtains, white goods, furniture, pictures, linen, and kitchen equipment. Furnished lettings are offered on an 'as seen' basis (apart from personal effects) and only agreed items should be removed prior to the Tenancy.
Preparing the Property for Letting
Professionally clean the property (keep the invoice in case of a dispute over whether an item should be re-cleaned or replaced at the end of a Tenancy).
Services should be left connected and stopcocks/meters/fuses labelled. Leave a description of their location (even when outside the property).
Leave instructions on central heating time clocks, ignition, thermostats etc.
Leave all information leaflets, manuals, guides and guarantees.
List idiosyncrasies of equipment in the property.
Arrange for your mail to be re-directed for the duration of the Tenancy.
Sweep any chimneys that are in use.
Forward bank account details to your agent.
If you are an overseas Landlord, you will need to apply for an Exemption Certificate from the Inland Revenue
Agent or private letting?
The main factors affecting the choice of whether to use an agent or not are the type of property, the mortgagee and whether the Landlord can show the flat privately. It is rare for restrictive sole agency agreements to be used by letting agents (in contrast to the sales market). Without such an agreement fees will only be charged in the event that a Tenant is actually introduced by an agent. The terms & conditions of the agent should be read carefully. However, agent's fees are a significant cost that must be justified. A good agent should be more than able to do this:
He should be able to market the property at the correct level (too high risks a long void).
He will have access to the corporate market. Very few of the large businesses that relocate staff to the area will deal directly with private landlords. This also applies to relocation companies. In the areas favoured by the corporate this is a significant advantage.
He will take on the risk of mistake.
He will take on the work of showing the property, filtering out time-wasters.
Perry Bishop and Chambers are members of RICS.
Charges are generally 10% plus VAT of the rental for the introduction of a Tenant or 12.5% to 15% plus VAT for the management of the property. It is important always to read your agent's Terms & Conditions as there may be extra charges such as a fee for the preparation of a tenancy agreement.
Your Tenant will need at least three sets of keys and a further set will be required for a managing agent.
The creation of an accurate inventory is essential. Ideally the property should be vacated and everything in its place when the Inventory Clerk attends to make the inventory.
Stored Effects: Any items left in lofts, cellars, locked rooms or locked cupboards will not be included in the inventory or checked by the clerk and will therefore be the sole responsibility of the Landlord.
If this is the first time the property is let the creation of an inventory will normally be undertaken at the same time as the check-in. If an inventory has been prepared for a previous Tenant this can usually be re-used.
Landlords should advise their mortgagee that they will be sub-letting their property. Written consents from the mortgagee are generally required. Some lenders may increase the rate of interest being charged and/or charge an additional administration fee. However it will normally be a breach of the loan agreement to let the property without consent.
If the property is leasehold, the head lease will specify whether you will have to gain permission to sub or under-let from the freeholder or their managing agent. They will generally require a fee for granting consents and in some cases special conditions may be imposed. These conditions will need to be added to the Tenancy Agreement.
It is important to let your insurance company know that the property will be tenanted. The property must have buildings cover - this will include third party cover. In the case of leasehold property, buildings insurance will usually be arranged by the freeholder, who will pass the cost on to the leaseholders with the service charge. Contents cover can be obtained for furniture and moveable equipment - although not legally required it is strongly recommended.
It is also recommended that you are covered for loss of rent. This will usually cover the cost of providing alternative accommodation to your Tenant if the property becomes uninhabitable, or will continue to pay the rent if the tenancy terminates as a result of the property becoming uninhabitable. Usually the cover will only continue for the duration of the current term of the tenancy.
Under Common Law, Landlords have a general duty to ensure the safety of rented property and its contents so that Tenants or Occupants do not suffer injury or damage. Additionally there are a number of areas of specific legislation relating to safety which impact on the letting of residential property:
The Gas Safety (Installation & Use) Regulations 1994 - amended in 1996 and 1998
The Furniture and Furnishings (Fire)(Safety) Regulations 1988 - amended in 1989 and 1993
The Electrical Equipment (Safety) Regulations 1994
Smoke Detectors Act 1991
The Gas Safety (Installation & Use) Regulations 1994 amended in 1996 and 1998
This is the most serious of the legislation relating to the safety of rented property in that there have been many deaths caused directly by faulty flues on gas appliances. The legislation itself provides for penalties for non-compliance of up to 6 months imprisonment and a fine of up to £5,000. However there have been a number of Landlords convicted and jailed for manslaughter where a faulty gas appliance has caused death and the Landlord had not complied with this legislation. On the other hand the legislation is straightforward and it isrelatively easy to demonstrate compliance.
This legislation places a statutory duty on Landlords in relation to the installation and maintenance of any gas appliances (gas boilers, water heaters, gas coal and log fires, gas hobs and gas ovens) and pipe work in their Tenanted Properties through annual inspection and safety checks. The Landlord is required to have all gas appliances and installation pipe work checked at intervals of not more than twelve months, which must be carried out by a registered CORGI engineer. The Landlord is required to keep accurate records of the date of inspections and remedial works carried out on all gas appliances within the property and retain these records for a period of 2 years. The Tenant must be given a copy of the Gas Safety Certificate each year within 28 days of the check being carried out. An ingoing Tenant must receive a copy of a current safety certificate prior to occupying the property. Tenants cannot be allowed to occupy the property if a current certificate is not available.
The legislation and penalties also apply to letting agents and therefore in order to protect our own position Perry Bishop and Chambers will always remind the Tenant of the requirement to be given a certificate. If Perry Bishop and Chambers is instructed to let or manage your property we will need to have a copy of a current certificate. If no inspection has taken place within the past year we will arrange for an inspection by a CORGI Registered Engineer. For managed properties we will keep the records up to date thereafter.
The Electrical Equipment (Safety) Regulations 1994
This legislation relates to any electrical equipment between 50 and 1000 volts a/c and requires that the apparatus must be safe and tested. In order to demonstrate compliance it is recommended that an annual check be carried out on electrical equipment in the same way as the gas check.
The Furniture and Furnishings (Fire) (Safety) Regulations 1988 - amended in 1989 and 1993
This legislation relates to the supply of furniture and furnishings. It is intended to ensure that furniture and furnishings are fire resistant and will not produce noxious smoke in a fire. In this case supply clearly includes the provision of furniture and furnishings in rented property. The legislation is not as straightforward as the gas safety legislation and compliance is more difficult, but the penalties for non-compliance are the same - up to 6 months imprisonment and/or a fine of up to £5,000. As with the gas safety legislation Landlords and their agents will also run the risk of more serious criminal proceedings in the event of death or injury as a result of non-compliance. Any furniture or furnishings supplied must be marked with a label to show that it complies with the Regulations and furniture manufactured since March 1989 for sale in the UK must comply. Unfortunately for Landlords these labels can become detached or fade and therefore in theory the item will not comply even if it was manufactured to the correct specifications. Furniture purchased new in the UK after 1 March 1990 must have complied with the legislation at the time of sale, therefore it is useful to keep copies of invoices. Reputable suppliers should be able to trace the item through their records and supply confirmation that the item complies. Upholsterers are also covered by this legislation and must only supply material that complies - again keep copies of their invoices. If you are buying a property as an investment which is already furnished you should try to obtain copies of purchase invoices.
Like all letting agents Perry Bishop and Chambers is required to check that all furniture and furnishings comply before letting a property. Non-compliant items can be re-upholstered, but it is often cheaper to replace or remove such items. The following items are covered by the Regulations:
Furniture for private use in a dwelling, including children's furniture
Sofas and chairs
Beds, headboards and mattresses
Sofa-beds and futons
Garden furniture, which is also suitable for use inside
Scatter cushions and seat pads
Loose and stretch covers for furniture
The following items are exempt from the Regulations:
Bed linen (including duvets and pillowcases)
Loose covers for mattresses
Furniture that was manufactured before 1 January 1950 (unless it has been re-upholstered since then)
Smoke Detectors Act 1991
This legislation requires any new building built after June 1992 to have smoke detectors installed. If your property was built after this date mains operated smoke detectors must be fitted.
Arranging a tenancy
If you are using an agent, the agent will keep you informed of the progress of viewings and feedback from applicants. If an applicant expresses an interest in a property and is considering making an offer, this will be discussed with the Landlord. A period of negotiation will follow, with the agent in telephone contact with both parties.
At this stage it is important that you are able to respond quickly to any new offer. Prospective Tenants will often be looking at more than one property, perhaps through several agents and there is nothing to prevent them from having any number of open offers. Speedy response at this stage can win a Tenant against a competing Landlord. If you are going to be difficult to contact it may be worthwhile giving a limited power of attorney to a friend or your agent.
Once agreement of the principal terms has been reached it will be confirmed in writing to both parties (subject to contract). This letter will include the names of the parties, the rent, the term, any deposit, any release clauses or option clauses and any additional special terms. At this point either party can back out of the agreement, the agent will therefore push through the next two stages quickly - the taking of references and the creation of a Tenancy Agreement which will bind both parties.
The Tenant will either be a company or a private individual. At least three references should be taken in both instances from a bank, solicitors, accountant, or a previous Landlord. An employment reference should be obtained if the Tenant is an individual. In the event that the proposed Tenant has not set up a bank account in the UK or has only had one for a short period a UK based guarantor may be required. All references must come direct from the referee. References passed on by the Tenant are not acceptable.
The Tenancy Agreement can be prepared by either yourself, your solicitor, your agent or sometimes by the Tenant Company. The Tenancy Agreement should be read carefully. It is a legally binding document between you and the Tenant. It will state the rent, the length of Tenancy, rental payments and your responsibilities during the Tenancy. There are five main types of agreement:
An Assured Shorthold Tenancy (AST) - for individuals using the property as their principal residence and where the pure rent is under £25,000 per annum. This Tenancy can be either periodic (no termination date in the contract) or fixed term up to a maximum of 3 years. In all cases the Landlord must give a minimum of two months notice to gain possession which cannot take effect until six months after the start of the Tenancy. Unless there is a break clause neither party can terminate a fixed term tenancy before the end of the term without the agreement of the other party. AST's are governed by the Housing Act 1988 (since amended by the Housing Act 1996).
A Company Tenancy - for bona fide companies or embassies only. This is governed by contract law and is not regulated by the Housing Act 1988 or 1996.
A Contractual or Common Law Tenancy - for individuals where the rental income would be above £25,000 per annum. This is also governed by contract law and is not regulated by the Housing Act 1988 or 1996.
A Deed – For individuals where the term of the tenancy is in excess of 3 years.
A Premium Lease - an agreement of one year or more under which the Tenant will pay a lump sum in advance for the entire Tenancy (the Premium), with only a nominal rent payable during its term. Although the Tenant will lack flexibility to terminate early and be liable for stamp duty on the premium there can be significant tax advantages to a company Tenant. The Landlord may be similarly disadvantaged. For a Landlord with the right tax circumstances (large brought forward eligible losses) this can be very attractive. It is strongly recommended that you get good tax advice before entering into such an agreement. Perversely, because of the tax implications, the Premium agreed to be paid may work out as more per week than would be achieved where the rent is paid monthly or quarterly.
The cost of preparing the Tenancy Agreement is shared between the Landlord and the Tenant. The Tenancy Agreement is between the Landlord and Tenant, and where appropriate, the Guarantor. The Agent is not a party to the agreement and has no contractual relationship with the Tenant. It will set out all the things that the parties agree to do and not to do, and any warranties regarding circumstances in relation to the tenancy. For example the Tenant will agree to pay the rent, the Tenant may agree not to play loud music, the Landlord will agree to permit quiet enjoyment to the Tenant, the Landlord may warrant that he is UK resident for income tax purposes. Agents will usually have a standard agreement that will be tailored to fit the circumstances. In the case of a corporate Tenant this may be substituted for the Tenant's standard agreement.
Rent is normally paid monthly but can be paid quarterly or even bi-yearly depending on what terms are negotiated at the start of the Tenancy. The rent is always payable in advance.
In all cases the timing of payments set out in the agreement is only a payment schedule, it does not necessarily equate exactly to the period for which rent has been paid. This is because the length of the months and the quarters vary. The only practical effect is if the lease is terminated prior to the end of the term when the number of days since the start of the current term of the lease will be used to calculate a total amount due based on the daily rate. The total amount paid will be set against this to reach a final adjustment due to or from the Tenant.
Unlike commercial leases where rent is usually paid on the traditional English Quarter days (Lady, Midsummer, Michaelmas and Christmas days), quarterly residential rentals are usually paid based on the start date of the tenancy (i.e. start on 6 February, subsequent payments will be on 6 May, August & November).
A Long Let will usually be for one year, but can be anything from 6 months to several years. Anything under 6 months is normally termed a Short Let and will command a higher rent - the shorter or more flexible the term the higher the rent.
The Housing Act 2004 (Chapter 4, sections 212-5; & Schedule 10) made provision for both the protection of tenancy deposits and the resolution of disputes over their return. The legislation came into effect on 6 April 2007. All deposits taken for Assured Shorthold Tenancies have to be covered by a tenancy deposit protection scheme. The deposit is generally equivalent to either one month or six weeks rent and should be held in a Tenancy Deposit Protection Scheme, against unpaid bills and dilapidations at the end of the Tenancy. Any money owed to the Landlord from the deposit or to be returned to the Tenant at the end of the Tenancy can only be released with written permission from both parties or following arbitration.
A Release Clause (or break clause) can allow either party or both (but more usually only the Tenant) to terminate the Tenancy during the term, usually with either 30 or 60 days notice which can only be served after a specified period (usually six months). Release clauses can be "general" (no reason need be specified) or "business" (can only be exercised in the case of say relocation or redundancy of the occupier). Most large companies will require some kind of release clause in the Tenancy Agreement. Landlords can also request a release clause in their favour; however this is unusual and can put the Tenant off the property.
Tenancies are frequently renewed and the right to renew can be agreed at the start of a Tenancy by the way of one or more "options". This will allow the Tenant the option for a further term or terms by giving, say, 60 days notice prior to the end of the current term. There will normally be a rental increase specified in the option, generally based on the RPI. Any options will be incorporated into the Tenancy Agreement.
In addition to all the standard terms that could appear in most tenancy agreements, there may be special terms agreed. For example, the norm is that pets are not allowed. If the Tenant wishes to keep a pet there will need to be a clause specifying the type and number of animals which may be allowed to be kept. Any special terms required by the Tenant should be incorporated into the offer letter and must be included in the agreement.
Utilities and other charges
Normally Electricity, Gas, Water Rates and Telephone supplies will all be payable by the Tenant, but in the case of a short let some or all of these will be included in the rent. Council Tax will be payable by the Tenant. Ground Rent and Service Charges (leasehold properties) are the Landlord's responsibility.
Where the agreement has been prepared by an agent it will be sent to both parties in draft form for approval. Once approved it will be prepared in two parts, an Original to be signed by the Landlord and kept by the Tenant and a Counterpart to be signed by the Tenant and kept by the Landlord (or the agent on his behalf). Both parts will be returned signed to the agent. The agent will normally effect exchange at the time that the tenancy starts by dating both parts. The agreement may be exchanged prior to this if both parties agree. Once exchanged both parties are bound by its terms.
With effect from 1st December 2003 the requirement to stamp Tenancy Agreements was removed from the Landlord and the requirement placed with the Tenant. More information is available from the Inland Revenue website at www.hmrc.gov.uk.
Initial instalment of rent & deposit
Sometime before the start of the tenancy the Tenant must make payment (usually to the agent) of the initial rent and deposit. This money will remain to the order of the Tenant and cannot be used to pay the Landlord or any liability of the Landlord until the tenancy agreement is exchanged. Almost invariably, and in the absence of any agreement to the contrary, possession will not be granted to the Tenant without the payment being cleared funds.
New legislation came into effect on 6 April 2007. After that date all deposits taken for Assured Shorthold Tenancies have to be covered by a tenancy deposit protection scheme.
Check in and hand-over of keys, and transfer of utilities
Once agreements have been exchanged and the initial payment has been made keys can be handed over to the Tenant and possession granted. Normally an inventory check-in will be undertaken at the same time, but this can sometimes be dealt with prior to possession (for example when funds are not cleared in time or for practical reasons).
If the property is managed by the agent, the agent will arrange for the utilities (gas, electricity, council tax, water as required by the tenancy agreement) to be transferred into the tenants name with effect from this point. Perry Bishop and Chambers like most agents will also undertake this for a small extra charge if the property is not managed.
DURING THE TENANCY
Rental Payments and Client Account Rules
Cheques take at least five working days to clear. Although funds appear in a bank account on the second day after banking, the holder of the account will not find out until at least the fifth and usually the sixth day if there is any problem. As for any solicitor, accountant or surveyor in the UK, Perry Bishop and Chambers client account rules prohibit any payment against cheques until this period has passed. However, these rules are for the protection of clients - designed to ensure that there are sufficient cleared funds in a client account to cover each and every liability to every client at every point in time. From an Agents point of view to be in breach of these rules is to risk its membership of the RICS NAEA, NALS & ARLA.
Most other forms of remittance are cleared on the day or at the time of receipt and payments can be made against them the following day or immediately.
It generally takes 1 working day to process receipts following 4 days clearance and then a further 3 working days for the banking system to process the payment instructions into a Landlord's bank account. We recommend you allow 10 working days and you ensure that there are adequate funds in your bank account for the first month of a Tenancy to meet your mortgage payment and any other standing orders you have on your bank account. Also that any monthly payments from your account are timed as long as possible after the due date for the rent - this will allow the best chance of being in a position to make alternative arrangements if the Tenant is late paying.
Statements are sent out either as receipts are processed or on a monthly or quarterly basis depending on the agent. By default Perry Bishop and Chambers will prepare a statement every time rent is processed.
A management service provided by an agent will typically include:
Dealing with all maintenance and running repairs, except for the items that are the Tenant's responsibility.
Collection of the rent, initial arrears procedures and liaison with solicitors thereafter
Arranging for the utility companies to transfer the accounts
Paying all appropriate bills from rental income
Arranging cleaning at the start and end of tenancies
Processing any insurance claims
Negotiating dilapidations and reconciling the deposit
When managing a property a float is not usually retained to cover any expenses between rent receipts but can be if required.
UK income tax is payable on the net income from a let property if the property is in the UK regardless of the residence or tax status of the Landlord. The net income on which you are taxed is the gross income less certain expenses incurred in the letting such as:
The Finance Act 1995 and The Taxation of Income from Land (Non-Residents) Regulations 1995
This legislation (often referred to as "FICO" after the department of the Inland Revenue that deals with it) clarifies and simplifies the mechanism for taxation of overseas resident Landlords in relation to UK property. If you are, and will remain, in the UK this legislation does not affect you. Under this legislation Letting Agents and Tenants are required to withhold tax from rental income unless specifically exempt by written authority from the Inland Revenue. For this reason most Tenants who are aware of this legislation will insist on paying rent to an agent who is resident in the UK (although it does not have to be the agent who let the property).
Letting Agents (as defined by this legislation) must:
Register with the Inland Revenue scheme
Withhold Income Tax at the basic rate from any rent received (but deductions are allowed for any eligible expenditure handled by the agent)
Account for all tax so withheld by payment to the Inland Revenue on a quarterly basis
Register with the Inland Revenue details of ANY Landlord (and property) for whom the agent has received income during the year with details of the gross income of each by 5 July after the end of each tax year
Forward to the Inland Revenue an Annual Statement detailing income and expenditure and showing any payments made to the Inland Revenue on behalf of each Overseas Landlord by 5 July following the end of each tax year.
Provide a certificate of tax deduction to each client on whose behalf any payment to the Inland Revenue has been made which agrees to the annual statement sent to the Inland Revenue. Overseas resident Landlords are able to set off amounts shown in the tax deduction certificates against their liability for that year, or obtain a refund in the event that the certificated amount is greater than the actual liability for the year.
In practice, most overseas resident Landlords obtain an exemption certificate to allow the agent to transmit rent without deduction of tax. Any Landlord can apply for an Exemption Certificate from the Inland Revenue but it should be noted that only Landlords can make the application and only the agent to whom the certificate is addressed can use it. The certificate will specify a date from which the exemption is effective. The Inland Revenue will normally only issue a certificate if the person applying is up to date with their tax returns and payments. They may issue a notice withdrawing exemption if a Landlords tax affairs are not up to date.
Residential rent is at present exempt from VAT and is likely to remain so. The only exception is where the accommodation is closer to that of a hotel in that other (standard rated) services are included. Very short-term tenancies where utilities and perhaps cleaning are included would come under this category; however few private Landlords will be providing sufficient services to reach the £50,000 turnover threshold for compulsory VAT registration.
Services relating to UK property are subject to VAT regardless of the residence of the person to whom the service is given - letting and management agency services provided to an overseas resident are not considered to be an export! Some accountants and tax advisers providing services to overseas resident Landlords will treat their services as an export and not charge VAT on the grounds that the service doesn't relate directly to a property.
Capital Gains Tax (CGT)
This is the most complicated tax affecting property letting. Very simply, the sale of a person's own home is not normally subject to CGT, but CGT would be payable on the sale of a property held for investment. Where a property has been both a home to the owner and let the gain will be apportioned, with no tax payable on the gain during occupation. However, some or all of the time that a property is let may be treated as under owner-occupation depending on the timing and reason for letting.
CGT is only payable by persons who are resident or ordinarily resident in the UK at any point in the year of disposal. If you are considering selling a property which has been let it is recommended that you get good advice before you sell as the tax payable may have a bearing on your decision to sell or the timing, and there may be scope for tax planning to reduce the tax payable.
Termination by notice or effluxion of time
Tenancies will terminate either by effluxion of time (the term of the tenancy expires) or by notice. Who can give notice and when depends on the tenancy agreement, and in the case of an Assured or Assured Shorthold Tenancy, on the provisions of the Housing Acts. If an assured shorthold tenant is allowed to continue in occupation after the end of the term this will become a periodic tenancy under the Housing Acts at the same rent, and the Landlord may only terminate by giving 60 days notice. In this situation the Tenant may not have to give any notice. It is therefore desirable that a new tenancy agreement is put in place prior to the end of the term.
At the time that a Tenant hands back possession of a property and inventory check-out should be undertaken, usually by an independent inventory clerk. Corporate Tenants may have their own clerk.
If a property is managed, once the inventory check-out report is complete the agent will obtain quotations for any replacement items needed and any works that are required. The dilapidations will be negotiated with the Landlord and former Tenant to settle the deposit return. The dilapidations will be calculated based on the check-in, the check-out and by reference to the tenancy agreement itself. Tenants are not liable for fair wear and tear of the furniture, fixtures and fittings.
Where a property is not managed the Landlord will have to undertake this process. Once agreement has been reached with the Tenant joint instructions can be given to the agent holding the deposit as stakeholder.
Sometime before the end of the tenancy the agent will contact both parties to find out what are their wishes in relation to renewal. If the Tenant has an option and he exercises it this will bind the Landlord. Otherwise a new rent will be negotiated. In any case a new agreement or memorandum of renewal will be prepared and exchanged prior to the termination date.
Grounds for possession
In the event your Tenant either defaults on their rental payment or acts in an unsuitable manner it is important to act quickly and correctly. It is recommended that you contact either a solicitor or your agent to take any action as fast repossession is the key to minimising losses and is dependant on absolutely correct procedures. For this reason most agents will hand-over to a solicitor as soon as repossession proceedings are in contemplation. A good agent will know a solicitor who is experienced with residential tenancies and who will act quickly and decisively.
Non-Payment of rent
Tenancies governed by the Housing Acts (including ASTs but not company or individual tenancies) can rely on statutory Grounds for possession. Grounds 8, 10 and 11 of the Housing Act relate to non-payment of rent, but only Ground 8 is mandatory. If the Tenant is two months in arrears at the time the notice of proceedings under Ground 8 is served and also at least two months in arrears at the time of the hearing, the Court must order possession under Ground 8 (providing procedures have been followed to the letter). Grounds 10 and 11 cover other arrears and persistent delay in paying rent, but possession will be at the discretion of the Court.
In the case of a Company Tenancy or an Individual Tenancy the Tenancy Agreement itself is the only documentation that can be relied upon for possession.
Tenant neglect, nuisance or annoyance, illegal or immoral earning
All the above are covered by discretionary Grounds under the Housing Act, however in the event of a Company Tenancy or Individual Agreement the Tenancy Agreement itself is the only documentation that can be relied upon for possession.
REGULATION OF LETTING AGENTS
There is at present no professional body or specific legislation governing all letting agents, or any requirement that letting agents belong to any professional body. This is surprising given the amount of private clients' money handled by letting agents - probably somewhere between £5bn & £10bn per annum in the UK. There will almost certainly be some sort of regulation in the future, which will probably include a requirement to be a member of a trade organisation that has rules for its members concerning the conduct of business. Organisations that are likely to be eligible include:
The Royal Institute of Chartered Surveyors (RICS) - personal membership based on a professional qualification
The National Association of Estate Agents (NAEA) - personal membership based on a test of competence
The Incorporated Society of Valuers and Auctioneers (ISVA) - personal membership based on a professional qualification
The Association of Residential Letting Agents (ARLA) - corporate membership based on the business having been trading for two years as a letting agent
Perry Bishop and Chambers are members of RICS.
In addition to the entry qualifications listed above all have similar rules & requirements covering the conduct of business, the most important of which relate to the handling of clients money. All require similar annual client account audit certificates and proof of Professional Indemnity insurance.
There is also a government backed voluntary scheme called the National Approved Letting Scheme (NALS). Membership of this requires membership of one of the bodies above and that the business is covered by a bonding scheme.