Company Letting Agreement and Assured Shorthold Tenancy Agreement

If you’re a little bit confused and would like to understand what Company Letting Agreement and Assured Shorthold Tenancy Agreement (AST) are, their differences and the regulation, then read on…

What are Assured Shorthold Tenancies:

ASTs are usually generally for six or 12 months. This would give the landlord the chance to review the tenancy and renew the agreement at the end of the period.

Landlords can evict a tenant after an initial fixed term of six months without a legal reason. If a landlord decides not to renew the tenancy, they need to issue a Section 21 Notice to as it operates under section 21 of the Housing Act 1988.

Section 21 Eviction Notice

Landlords can also terminate a tenancy before the fixed period elapses. The landlord must obtain an order for possession from a court. Before applying to the court for such an order, the landlord must issue the tenant with a Section 8 Notice to Quit, it operates under section 8 of the Housing Act, needs to state that the landlord intends to seek possession of the property and the grounds on which possession is sought.

A landlord must give the tenant just two weeks’ notice for most of the 17 grounds covered by section 8 of the Housing Act. These include rent arrears, antisocial behaviour and breaches of the terms of the agreement.

ASTs are not usually subject to rent controls, which gives landlords the right to increase the amount they charge tenants after they have signed the rental agreement.

Assured Shorthold Tenancies

What are company lets:

A company is in a sense a ‘person’.  It has a legal identity and it is capable of owning a business, hiring staff, and owning and renting property.

A company can rent a property can be rented as a ‘residential tenancy’.  However, it cannot live in the property itself, it lives in it through the directors and employees.

When a company rents residential accommodation for its own staff or directors this is known as a ‘company let’.  If a property is rented for the purpose of subletting to customers, this will be a commercial tenancy and not a residential one.

Considering residential tenancies, there are significant differences between lets to people and lets to companies.

How to be a landlord and manage my property?

The Housing Act 1988 Does Not Apply

S1 of the Housing Act 1988 specifically excludes company lets from the statutory code set up by that act.  Meaning

A property let to a company cannot be ‘an assured shorthold tenancy`.

The procedures set out in s13 for increasing rent by notice in periodic tenancies does not apply.

The eviction procedures set out in section 21 and in section 8, and the second schedule to the act, also do not apply.

The rules developed over the centuries under the ‘common law’ will apply instead.  Society is used to the Housing Act 1988 rules that the old common law rules are generally forgotten.

Property Inspection Checklist

Rent for company lets is unregulated.  Therefore, there is no way that a company can challenge a rent – once they have signed a tenancy agreement – and claim it is too high. Instead, this can sometimes be done under the statutory codes.

A rent will be as set out in the tenancy agreement.  If a landlord wants to increase this, it can be done via a rent review clause. Otherwise, there can be an agreement or the parties can sign a new tenancy agreement.

It’s very easy for a landlord to end a common-law tenancy after the end of the fixed term. They just serve an old style Notice. Then, if none gives up a vacant possession, they bring proceedings for possession.

How to keep your tenants longer?

If a landlord wants to end a tenancy during the fixed term, this can only be done if the tenant is in breach of the terms of the tenancy agreement, when the landlord can use the old ‘forfeiture’ procedure.

Living tenants are generally consumers.

A company being an artificial person for business purposes, cannot take advantage of the various consumer laws which exist to protect living tenants.

In particular, the unfair terms rules and the various other measures set out in the Consumer Rights Act 2015 will not apply.

Company lets can be very lucrative. For this reason, large, wealthy companies will often rent high-end properties at high rents for accommodation for their staff.

It is best to be cautious. A company can close down, it can become insolvent, in which case it may prove impossible to recover unpaid rent.  It would be best to take guarantees from the directors.

Also, sometimes someone will seek to rent accommodation through their company because they would not pass normal referencing. Therefore, it is important to find out who will be living at the property and, if possible, take references.

What is West London Property Networking

If you have any questions on Company Letting Agreement and Assured Shorthold Tenancy Agreement and on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

How to deal with damp and mould in rental property

In this article, you’ll find how to deal with damp and mould in rental property solutions as a landlord.

It is necessary to advise tenants of their responsibilities in terms of keeping the property in tip-top condition.

This will also allow you to finalize any costs that may arise at the end of tenancy with ease.

How to build a buy to let portfolio- mistakes to avoid as a landlord

Try suggesting them these 7 tips on how to deal with damp and mould in a rental property.

Open all windows and curtains as often as possible to ventilate the house, especially if it’s double glazed.

Improved insulation and double-glazing mean homes are now exceptionally well-protected from external elements that during colder months there will barely any fresh air circulating unless tenants open windows to air the property specifically.

Landlord and tenant tips on managing relationships

When showering, switch on the bathroom extractor fan.

Open a window after showering to release the hot air and leave the bathroom door open. If hot, damp air is left to dry out on bathroom walls it quickly turns to mould in these conditions. Apart from looking and smelling awful, if mould is left for a long time it also becomes a health risk.

Ensure to heat the property evenly.

During winter, make sure the property is heated evenly. Do not only heat the lounge and bedrooms but not the bathroom and kitchen, for example. This will highly likely still lead to condensation.

Accidental Landlord Tips

Keep the heating on low even when not at home.

During the very cold months, it’s more cost-effective and energy-efficient to heat a house through the day on a low temperature rather than blasting the heating for a few hours in the evenings.

How to be a landlord and successfully manage my property?

Keep the heating on low when the property is vacant.

During very cold periods it’s advisable to heat the building on a very low setting, so pipes don’t freeze and consequently burst.

Property Inspection Checklist

When cooking, use saucepan lids as well as the kitchen extractor fan to disperse cooking vapours efficiently.

If there’s no extractor fan, open a window while cooking.

How to find the right tenant

Don’t dry clothes in rooms or on radiators.

If you do dry clothes at home, open a window, otherwise the damp air will stick to the walls and cause mould to appear. What are the common landlord pitfalls?

Don’t overfill the house with furniture.

Air needs to circulate around sofas and cupboards too. It’s also advisable to avoid positioning wardrobes against external walls; put them against internal walls where possible.

The importance of tenancy inventory check-in for your rental property

How to remove mould:

  • Be proactive and tackle mould at the first signs. If you leave it to spread, it will be much harder to remove.
  • Mould is easy to remove if caught early. Mix bleach and hot water in a 1:4 ratio (one part bleach, four parts water). Using a hard brush, scrub away until it completely disappears. To finish, wash with water and dry.
  • Remember to clean all mould off completely. If you leave any it’ll grow back again.
  • Dry-clean any clothes, toys and soft furnishings that have grown mould.
  • If mould has grown into carpets and sofas, use a reputable carpet and upholstery cleaning service.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

HMO licence changes 2018

Here are all the HMO licence changes 2018 that the government is introducing in England from this October.

In 2006, the HMO (Houses in Multiple Occupation) only applied to properties of at least three storeys housing at least five people from two or more households. However, from October the government has removed the ‘over three-storeys’ part of the regulation will be removed so that it covers all properties that house 5+ people from 2+ households, whatever the building size.

This will level a playing field between landlords, so the rogue landlords will be ceased to operate substandard accommodation.

How to build a buy to let portfolio

How does it work

There has never been a full review of the existing HMO licensing system, so it is difficult to assess whether it has achieved its original goal. On top of this, local authorities are already able to bring in additional licensing in areas where they deem it necessary. There are already measures to address inadequate housing and rogue landlords in a far more targeted manner without the government’s input.

Tips on managing landlord-tenant relationships

In Hammersmith and Fulham, for example, where there are many HMOs, landlords who let properties to just three or more people from separate households already need a licence.

And on certain streets in the London borough where antisocial behaviour has been deemed a problem, all landlords need a licence. Hammersmith & Fulham Council is already acting to protect renters and make sure landlords have a level playing field.

Renting to students- Rules and Tips

The new rules will bring around 177,000 new properties into mandatory licensing, affecting thousands of landlords. It’s difficult to estimate the extra cost to landlords. In fact, licence fees are fixed by local authorities and can vary significantly across the UK from £300 in Suffolk to £1,100 in Ealing.

With at least five people per property, the HMO licence changes 2018 will improve renting for almost a million people. They will now receive the extra protection of living in a licensed property.

Introduction of the minimum room size for HMO properties addresses the overcrowding issue.

This is a serious problem and increases fire risk. However, it is concerning that specifying room size might have unforeseen consequences for landlords and tenants.

Landlords often offer these smaller rooms at a discounted rate for tenants. If these rooms become out of use, that room becomes vacant. Additionally, chances are it will force rents up in the other rooms in the house to cover the lost rent.

Secondarily, there’s the question of what happens to the room that does not fit the size. If the landlord leaves it vacant, there’s a high chance the tenants might sublet it. In this case, the landlord could struggle to find it out.

HMO Legislation Change

Minimum room sizes

The HMO licence changes 2018 is not putting off everyone, however. Where the minimum room size regulations are affecting, the landlord can convert these rooms into en-suite bathrooms for one of the bedrooms. It will mean less revenue, but rules are rules. At the moment, you may have a 20-bed property on two storeys that don’t need a licence. At the same time, a five-bed over three storeys could do.

The greatest impact of the new regulations will be for landlords who have bought their property on a buy-to-let mortgage and then rented it out as an HMO.

This will create further administrative complications for buy-to-let investors and local authorities, not to mention make accessing finance more challenging as a number of mainstream lenders are reluctant to lend against licensable properties.

Lenders who offer mortgages to HMOs that do not have a licence until the new rules apply can change their criteria to factor in these properties. Altogether, the upshot is that landlords need to be on top of their licences and their paperwork. Any landlord who needs a licence but hasn’t applied for one by 1 October could be liable to prosecution and hefty fines.

Local authorities will be responsible for overseeing the HMO licence changes 2018. So, it’s likely prosecutions and fines will again vary widely between councils.

Where to invest in property?

What the HMO licence changes 2018 will mean for landlords

  • If you let a property to 5+ tenants from 2+ households, you will need to apply to your local authority for an HMO licence, irrespective of building size.
  • All bedrooms in any such property will be subject to a minimum room size. For a single room, this is 6.51 square metres and for a double, 10.22 square metres. Landlords have up to 18 months to comply with this.
  • Landlords will have to provide suitable facilities for rubbish storage and disposal as stipulated by their local authority.
  • A licence is valid for five years and each HMO property requires a separate licence.
  • Any landlord who hasn’t applied for a new licence by 1 October 2018 will be in breach of the law.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

How to build a buy to let portfolio: 5 mistakes to avoid as a landlord

If you wonder how to build a buy to let portfolio, here are

5 mistakes you should learn how to avoid as a buy to let landlord.

Lengthy void periods

Your property is only making you money through rent if there are tenants living in it. Landlords still have to cover their mortgage regardless of whether they are getting any rental income. So, avoid a vacant property and be careful when you draw up a tenant agreement.

If you are allowing students to live there for just nine or 10 months, and not charging for a full year’s rent, consider renting it with Airbandb for the short period that the property is empty.

Remember happy tenants stay longer and will cost you less in terms of void periods and cleaning bills. So, make sure you maintain the property and communicate with your tenants regularly.

Tips on managing the tenant-landlord relationship

Being tax ignorant

As a landlord, you need to pay tax on the money you receive from tenants if your total income for the tax year is above the personal allowance threshold of £10,600.

Failure to do so is against the law, and it could result in fines or even a prison sentence.

Landlords also need to be aware landlord tax has recently changed

Section 24 Income tax changes

Since April 2017, this mortgage interest tax relief is being stepped down to a maximum of 20 per cent basic tax rate.

Mortgage interest repayments are likely to be one of the biggest costs incurred when buying to let. So, this change is significant and needs to be budgeted for.

Making life even harder for landlords, the ‘wear and tear’ allowance will be scrapped in the next few years. Currently, landlords can offset 10 per cent of their rental income against tax for maintenance, regardless of whether they had carried out any repairs or not. Since April 2016, landlords will only be able to claim for maintenance which can be proved to have taken place. That means that careful record keeping is essential.

Renting to students

Not accounting for hidden costs

Buying to let is an investment and initially, you will have to spend money to make money. While you know about mortgage repayments and letting agent fees, there could well be lots of extras you haven’t thought of.

You may need buildings insurance and potentially contents insurance and even landlord insurance to cover any rent arrears or damage to the property, although not all tenants will qualify for this. You will also need to provide a gas safety certificate and pay for annual checks.

In addition to these initial costs, you will be expected to maintain the property to a reasonable standard. For example, if the boiler or washing machine breaks, you will usually be responsible for fixing or replacing it, if it wasn’t the tenant’s fault.

It is possible to sign up to landlord specific plans that will cover repairs and maintenance.

These costs add up. You will also need a contingency fund in case of emergencies.

Accidental Landlord Tips

Choosing an unpopular location

Location, location, location; you need to select a location where void periods are low and there are high rental demands.

If you choose an area with a bad reputation or is in the middle of nowhere, you will struggle to charge a decent rent and find good tenants, regardless of how appealing you have made the property.

It can be hard to predict which areas will appeal to tenants, but there are ways to protect yourself.

Visit the area in the day and also in the evening to see if it’s safe and a desirable place to live. It is also vital to check average rent in the area. That way, you can calculate your likely rental income versus the cost of the property.

There are a number of important questions you should be asking before you go ahead. Does the property have good transport links? The location will also determine what kind of tenants you attract, so consider; is it close to a university, so students will like it, or a local school, to appeal to families?

Finally, if you are a DIY landlord it is also worth considering a property that is relatively close to where you live. Where you can easily pop in if there are any problems.

Where to invest in property: the best commuter areas of London

Not vetting tenants thoroughly

Putting the time in to select good tenants is key to the success of your rental business. You must carry out your research early on, you could end up with tenants who damage your property or miss rental payments – leaving you seriously out-of-pocket.

As much as you might like to hope they will cherish your property, tenants do not always treat places as they would their own home. This means that wear and tear costs will be higher. However, there are some signs to watch out……

Ask for references – and check them thoroughly. Past behaviour is a good guide to how your tenants will act in the future so this should give you a clear indication of whether they pay the rent on time and how well they will look after your property.

Take time to sit down with prospective tenants and discuss why they are moving, as this will be an indication of how long they intend to stay in the property. Be clear about what you allow.

A signed rental agreement should back this up. However, it is important to have clear lines of communication so that both parties know what is acceptable. That way, they will be more likely to contact you if anything goes wrong, rather than letting things escalate.

Tenancy Deposit Dispute

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk

Section 21 eviction notice: how can you avoid an invalid one

The Deregulation Act 2015 set out some rules which require landlords in England to issue specific documents to tenants. From October 2018, they come into force for all assured shorthold tenancies (ASTs), regardless of when they began. If any landlord does not issue these, they won’t be able to serve a no-fault section 21 eviction notice should they need to.

The changes were introduced in the Deregulation Act 2015 and the Assured Shorthold Tenancy Notices and Prescribed Requirements (England) Regulations 2015 on 1 October 2015.

Tips on managing tenant relationships

A Section 21 eviction notice is now valid for six months only. It also includes protections against ‘retaliatory evictions’ where the local authority has issued an improvement or emergency remedial notice. In the latter case, the landlord cannot issue a valid Section 21 eviction notice for six months after receiving a notice.

Accidental Landlord Tips

It also protects tenants who have not received an adequate response to a written complaint and then referred this to the local authority. In fact, if they subsequently issue an improvement or emergency remedial notice, any Section 21 eviction notice after the tenant’s initial complaint becomes invalid.

Landlords must issue tenants with ‘prescribed information’ to be able to serve a Section 21 eviction notice.

How to serve section 21 notice

From 1 October 2015, the reforms only applied to tenancies in England granted on or after 1 October 2015 (including renewals). From 1 October 2018, the rules will apply to all ASTs in England.

Making sure your Section 21 eviction notice is valid

As part of the new rules, all landlords must use the ‘prescribed form’ – Form 6a – when serving a section 21 notice.

All landlords with ASTs in England also need to have issued tenants with an energy performance certificate (EPC) and gas safety certificate. Otherwise, they cannot issue a valid Section 21 eviction notice,

There remains some ambiguity about the inclusion of the How to Rent guide for pre-October 2015 tenancies. In fact, the guide was only produced for the first time in 2015. While the letter of the law does not require How to Rent for pre-October 2015 tenancies, you should issue the guide to all tenants to cover all bases.

Assured Shorthold Tenancies

Also, issue all tenants with the prescribed information around tenancy deposit protection and protect deposits, as per the previous regulations.

When issuing documents, ask tenants to sign to confirm receipt or to send an acknowledgement email if you email documents. This will help if they challenge an eviction and it goes to court.

You must issue the EPC, gas safety certificate and How to Rent to the tenant before the tenancy begins. If you realise that you haven’t issued these already, do so as soon as possible. You may wish to start a new AST with your tenant in order to regularise the situation.

What is West London Property Networking

If you have any questions on property management, please contact Pelin Martin to book a 30-minute free consultation on +0208 994 7327 – pm@bluecrystallondon.co.uk