With the demand for rental properties currently at record levels thanks to the unstoppable rise of property prices within the UK, only spurred by the pandemic as those that have seen it as essential to live close to the office in city centre locations flee to more remote areas. This has solidified the buy to let market meaning that although the topic of rent arrears is unavoidable in this financial climate, the call for more rental opportunities and in turn landlords has been heeded. But, those first steps into the industry can come with a landslide of issues if not taken with care.
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Whilst it should be noted that landlords are in no way legally required to take out any form of insurance when letting out a property, it could prove to be a costly mistake to say the least if a situation arises and they are left unprotected. A common mistake for newcomers to the rental landscape is to assume that a standard residential home insurance policy will extend is safeguarding measures to those that turn their hand to becoming a landlord, but similarly to residential mortgages, this is simply not the case. Whilst mentioning mortgages, it is often the cases that for a landlord to possess a valid buy to let mortgage when purchasing their rental property to take out ample landlord insurance, if they neglect to do so this could be considered a breach of the terms of their mortgage.
However, it is important not to view insurance as something that may be needed but rather a necessity that will protect a landlord against most of the stereotypical “nightmare” situations that could bring their rental income grinding to a halt. The most common forms of landlord insurance will offer financial protection to rental property owners in circumstance that concerns the structure of the building and its interior in the event of flooding, fires or other unforeseen accidents. An additional consideration for those that wish to let out their rental property in a furnished state would be contents insurance, whilst many landlords will depend on the amounts taken from the tenants for the tenancy deposit to cover any needed repair or replacement costs, due to the minimal amount that can be taken after the introduction of the Tenant Fees Act a far more reliable and practical solution to these exorbitant costs would be to seek contents insurance from your provider. However with this being said it is important to remind the occupants of the property that this policy will not safeguard any of the personal belongings they bring with them into the property.
Perhaps most vitally of all, providing the owner of the rental property has taken out an adequate insurance policy they will also be protected in the event that their residents fail to pay their rent on time. Whilst in the majority of cases this will only grant the landlord financial safety up to a specified value of rental payments, or for a set period of time, it will mean the will not be left completely financially exposed to buy to let mortgage interest repayments, the costs of maintaining the rental opportunity, marketing and the many other fees that come with running a renal portfolio.
Similarly to how a rental property owner would rightfully expect the occupants of the accommodation they offer to periodically pay their rent on time, the landlord must also adhere to the terms established in the tenancy agreement and fulfil their obligations as a landlord. Whilst there is occasionally some confusion surrounding the matter, the landlord must satisfy their duty to attend to the repair of the rental property when needed.
The landlord is responsible for all the more considerable aspects of repairing the property, comprising the structure and exterior features of the accommodation, sinks, toilets, water, gas and electrical utilities, alongside the appropriate wiring and pipework. Whilst t could be easy to view the tenancy as a job well done once the rental property is occupied and the tenants begin to pay their rent, it is essential that the landlord carries out regular inspections of the accommodation, ensuring that any issues that are found do not grow worse as they are left unattended over time, potentially endangering the residents.
Naturally when discussing the matter of maintaining the rental opportunity the responsibility of the residents cannot be ignored. When moving into a rental property and signing a tenancy agreement the tenants agree to return the rental accommodation to the landlord at the end of the fixed term in a similar condition to that at the start of the rental period. To this end the occupants will be expected to conduct themselves in a tenant like manner, seeing them attend to the smaller, but no less important aspects of upholding the property. Typically this will involve such things as replacing light bulbs, regularly ensuring that the fire and carbon monoxide alarms are in working order and generally cleaning the interior of the accommodation. Further to this the landlord cannot rightfully be expected to address any structural issues, damages or repairs that they have not been aware of and the responsibility to make this party aware of the necessary works lands firmly with the tenants. It is also essential to consider that a landlord, letting agent and their representatives must be able to access the property to carry out the appropriate works to ensure the safety of the tenants and the habitable condition of the rental property. Whilst a tenant’s right to quiet enjoyment of a property cannot be ignored by a landlord, for risk of incurring claims of harassment and violation of their resident’s rights; if the occupants of the accommodation continually prevent these parties from conducting the needed work and despite the landlord’s best efforts to find a mutually convenient time for the repairs to be conducted, the landlord cannot be held accountable for the deterioration of the rental, nor its upkeep.
It is somewhat expected that over the course of several tenancies the rental property and its contents will begin to show signs of wear. To some extent the owner of the rental property could even perhaps tolerate a small amount of accidental damage, assuming that they have a good relationship with the occupants and have never experienced any trouble because of their occupancy.
However, regardless of the property owner outlook on such matters it is essential that, for clarity if nothing else, a thorough property inventory is curated. The property inventory is a document that comprehensively details not only the condition of the appliances, furnishings and other aspects of the rental property, but also clearly shows the change in the condition of the rental over the course of the tenancy period. This is essential as if the landlord wished to make any deductions from the amount of the tenancy deposit that would be returned to the occupants they will need to show that the damage or deterioration being questioned and challenged by the residents occurred during their fixed period, making them responsible.
With this in mind it is in the best interests of both the tenant and the landlord to ensure that each room, appliance and furnishing is documented with a description of its condition alongside photographs that support these claims. This allows for a clear and undeniable comparison during the final inspection of the tenancy, giving the landlord critical evidence of a property’s deterioration, or on the other hand, a tenant irrefutable proof that the damage occurred before they moved into the rental.
However, as mentioned over the course of numerous tenancies and multiple occupants residing within the rental premises, certain areas within the rental property and its furnishings will begin to show signs of use. This is what is commonly referred to as “fair wear and tear” and regardless of what information comprises the property inventory the landlord is not able to pass o the associated repair costs to the tenants through a deduction on the tenancy deposit. As can be expected if such a deduction is made from the amount that the tenant is expecting to receive from their tenancy deposit then they are able to make an appeal. When appealing a deduction relating to fair wear and tear, the specific item that is showing such signs of use, its expected lifetime and the condition I was in at the start of the fixed term will all be considered before a judgement is made.
Whilst it is somewhat understandable how a tenant taking their first steps into the world of renting or a new or accidental landlord could experience some confusion surround the many payments that could be taken prior to the all-important move in day, these errors could be a critical mistake. Naturally with a holding deposit, tenancy deposit and perhaps even rent ion advance all being handed over to the owner of the rental property, these fees can not only add up quickly, but all demand an individual handling process to ensure the landlord is compliant with what is deemed to be proper conduct during the period of a tenancy being established.
It is important to note that whilst a landlord is not in any way legally compelled to take a tenancy deposit from the aspiring occupants of their rental property, if they do decide to take such amounts from their future tenants these must be entered into a government approved deposit protection scheme. Regardless of the amount taken for the tenancy deposit, sometimes referred to as a security deposit, it must be entered into either a custodial type protection scheme, or alternatively an insurance based protection scheme. Whilst the most significant difference between the two types of scheme is largely the party that maintains possession of the amounts taken from the tenants over the duration of the tenancy, if any deductions are made from the sums being returned at the close of the fixed period, the scheme will oversee this process. Once the owner of the rental property has received the appropriate amounts from the residents of the rental property they will have 30 days in which to enter these deposits into a government backed protection scheme. If the landlord neglects to protect the tenant’s tenancy deposit not only could they face severe legal action, but could be legally compelled to pay back the effected tenants as much as three times the taken amount.
Further to this the amount a landlord is able to request from their tenants to serve as this security deposit is also capped. After the introduction of the tenant fees act in 2019, rental property owners had a limit placed on the amounts they could request from their tenants for both the holding and tenancy deposits. Simply put if the annual rental charge for the property is below £50,000 a maximum of five weeks rent can be taken for the tenancy deposit; however if the amount the tenant pays each year for the property is over this amount they can be made to pay a maximum of six weeks rent for the security deposit.
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