UK: Letting Residential Property To Tenants - Getting The Paperwork Right

Last Updated: 14 April 2009
Article by Tessa Shepperson, BA, LLB, Solicitor

INTRODUCTION

People often see renting out property as being 'money for nothing', or at least an easy way to earn a living. However this is far from the truth and landlords now have to copy with a plethora of regulations, most of which require having the right paperwork in place. Failure to do this can often result in financial penalties.

Here is an outline of the main things you need to do. Although it is not an exhaustive list, it contains most of the paperwork you will need (and some you might not).

BEFORE YOU LET THE PROPERTY

Building Regs etc. If you get building work done on the property, you need to have planning permission (if required for the type of work you are doing) and building regulation approval.

HMOs. If you are going to let to more than two unrelated people sharing accommodation, then your property may be classed as a House in Multiple Occupation (HMO). You should speak to your Local Authority Housing Officer about this. You may need to apply for a license, particularly if your property is more than three stories high.

Permissions. Ensure that you have permission (if appropriate) from your mortgage company and your own landlord (if you have a lease or tenancy), for renting the property out.

Insurance. You should also have suitable insurance for a rented property, normal domestic insurance is generally inadequate.

Gas Certificate. If there are any gas appliances in the property you should have them checked by an engineer registered with the Gas Safe Register (no longer CORGI) and obtain a certificate, which should be given you your tenant. This needs to be done every year. You can locate relevant engineers via the Gas Safe Register web-site at www.gassaferegister.co.uk.

Electricals. You should also make sure that the electrics and electrical equipment are checked over, and ideally obtain a certificate. However a certificate is not strictly necessary unless your property is an HMO, although it is also required by some accreditation schemes.

Energy Performance Certificate (EPC). You will need to have an EPC and must provide a copy to your tenant at no charge. Generally this is done when the tenant is given the property particulars. The fine for non compliance is £200.

Tenant Application/Information Form. Most landlords and letting agents will require the tenant to complete a standard form giving their personal details. Most well drafted forms will also include a data protection notice and authority to use the information for referencing purposes. (Note that annual members of Landlord-Law will find a form here).

PAPERWORK WHEN SIGNING THE TENANT UP

This is the main time for getting the paperwork right. It is important to make sure that all the necessary forms have been signed before the tenant is given the keys to the property. If the forms are not signed now you may experience difficulty in getting them signed later.

Tenancy Agreement. You should never let the tenant in before a properly drafted tenancy agreement has been signed. Make sure it has all the clauses you need, and be careful when completing it to make sure that all spellings and other details are correct. Generally a plain English style agreement is best as it is easier for your tenants to understand. You need two copies of the agreement – one for the tenant/s to sign and one for the landlord to sign, although they can both sign both agreements as well. The main thing is that the tenant ends up with a copy of the agreement signed by the landlord and vice versa. ( Annual members of Landlord-Law can download our Plain English Style agreements from here).

Inventory/Statement Of Condition. This should be very detailed and should be checked over with the tenants during a meeting at the property. Both parties should then sign copies of the inventory to confirm that it is agreed and the tenants should be given a copy. Many landlords delegate this work to a specialist inventory company. (Note that annual members of Landlord-Law can download our inventory form here. There is a list of inventory companies web-sites here).

Gas Safety Certificate. This has been mentioned above but is important so is worth mentioning again. Now is the time to hand the certificate over to the tenant.

Standing Order Mandate. In most cases you will want the tenants to pay by standing order so it is a good idea to get them to sign the form before they go in. (Note that annual members of Landlord-Law can download our form here).

Housing Benefit Letter Of Authority. If your tenant is on housing benefit/Local Housing Allowance, note that the benefit office will refuse to speak to you about your tenant's claim citing the Data Protection Act, unless you have a written authority from the tenant authorising them to discuss things with you. (Note that annual members of Landlord-Law can download our standard letter here).

Tenancy Deposit Form. If your tenants have paid you a tenancy deposit then, provided the tenancy is an AST, it will need to be protected with one of the three government authorised tenancy deposit schemes. You will also need to serve a notice on the tenants giving prescribed information and have them counter sign your copy to prove receipt. (Note that annual members of Landlord-Law can download our form here).

Insurance Policy. If you are going to hold the tenants responsible for any action by them which may breach the terms of your insurance policy, you need to provide them with a copy of it, or at least an extract of the relevant parts, of these clauses in your tenancy agreement will be void.

Head Lease. If you are a tenant of the property under a long lease, you may want to give your tenants a copy of the head lease or the relevant parts to ensure that they are bound by its terms. However most matters in the head lease will already be covered in a well drafted tenancy agreement.

Guarantee. If you are not sure whether your tenant will be able to pay the rent, you can take a guarantee from a friend or relative. This can either be incorporated into the tenancy agreement or a separate deed can be used. (Note that annual members of Landlord-Law can download a form of guarantee here).

SHORTLY AFTER THE TENANT HAS GONE INTO THE PROPERTY

In some cases the following paperwork may be needed:

Tenancy Deposit Notice. If this was not dealt with at the time of signing the tenancy agreement, for example because the deposit had not been protected at that time, note that the notice must be served on the tenants within 14 days of the deposit being paid to you. (Note that annual members of Landlord-Law can download our form here).

Section 21 Notice. Some landlords like to serve a section 21 notice at an early stage, particularly if they know that they will want the property back at the end of the fixed term. Note that this should never be served on the tenant on or before the first day of the tenancy, as it is arguable that you cannot serve a valid notice to end a tenancy which not started yet. (Note that annual members of Landlord-Law can download our possession notices from here).

DURING THE TENANCY

Inspection Letters. Note that you will need to inform the tenant in writing if you wish to inspect the property (this is generally done quarterly), giving them not less than 24 hours notice.

Rent Arrears Letter And Notice. If the tenants fall into arrears of rent, you may want to send them a letter, and (if the arrears continue to increase) a section 8 notice. (Note that annual members of Landlord-Law can download forms, letters and checklists regarding action on rent arrears from our Rent Arrears Action Plan here).

Section 21 Notice. You may also want to serve this, if you decide that you do not want the tenant to stay on after the end of the fixed term. (Note that annual members of Landlord-Law can download our possession notices from here).

AT AND AFTER THE END OF THE FIXED TERM

Tenancy Renewals. If the tenant wants to stay, it is normal to give them a new fixed term. This is also a useful way to increase the rent. You can give them a complete new tenancy agreement, however often you can use a shorter renewal notice (Note that annual members of Landlord-Law can use our standard renewal forms from here.)

Notice Of Rent Increase. If you do not increase the rent by giving the tenant a new tenancy agreement or renewal, you can increase the rent (after the fixed term has ended) using the proper prescribed form. (Note that annual members of Landlord-Law can download our form here).

AFTER THE TENANT HAS VACATED

Letter Regarding Possessions Left Behind. If the tenant has left behind possessions which are not obvious rubbish, you need to be careful to follow the correct procedure, as laid down in the Torts (Interference with Goods) Act 1977, before disposing of them. (Note that Landlord-Law annual members will find a form of letter here.)

CONCLUSION

Hopefully this article has given you an idea of the sort of paperwork which is necessary when managing a residential property. Most of this paperwork needs to be carefully drafted and some is in a prescribed form (which means that it will be invalid if some of the prescribed wording is left out).

As mentioned above, much of it can be downloaded by annual members of Landlord-Law.

(Note – This article is written for landlords in England and Wales UK)

www.landlordlaw.co.uk

© Tessa Shepperson, April 2009

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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