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The Lettings Process

Once the property is marketed and a potential tenant has been found, the next step is to identify their ability to pay the rent. At Whites we use a credit referencing company FCC Paragon. They check the identity of the potential Tenant through the electoral roll, employment record, public information including CCJ’s and previous Landlords reference. The ratio between their income and the rent is analysed to see if they are suitable. If the above is in order, we then move to the next step. Whites nor their referencing company cannot be held liable where even though references have been taken tenants either do not pay their rent or cause damage to a property or fail to vacate.

Most Tenancy agreements are Assured Shorthold Agreements and Company Lets. The Assured Shorthold Tenancy Agreement first started being used in 1989 as a result of years of frustration from Landlords where they could not evict a protected Tenant. These agreements are used for furnished and unfurnished lettings.

The Assured Shorthold Tenancy Agreement allows for possession of the property through the courts, provided certain criteria are met. There are insurance policies available which will cover you not only if you have to take a Tenant to court, but also for non payment of rent. Whites can guide you to an appropriate company.

Ultimately you have the choice to use any insurance company whether recommended or not. You choose, not us.

Once satisfied that references are appropriate, then the Tenancy Agreement is signed by both parties, with a date set for the start of the Tenancy. There are two identical Agreements, one which the landlord retains, and the other for the Tenant. These can be customised. Prior to the start of the Tenancy, various tasks should be carried out whether by Whites or the Landlord.

Inventory

An Inventory of all items in the property should be made, as the Tenants deposit is held against wear and tear. This should include condition of decoration, carpets and furnishings. A photographic record is a useful accompaniment. This Inventory should be given to the Tenant at the beginning of the Agreement. If they disagree with any comments made, the inventory can be altered by mutual consent. At the end of the Tenancy, allowing for fair wear and tear, if all is in order then the deposit should be returned within a reasonable time. See separate heading ‘Tenancy deposits’. Please be advised, as from 6th April 2007, if you are managing a property yourself then it is necessary for you to protect a Tenants deposit by belonging to a Tenancy Dispute Scheme, and the inventory could play a vital part of any future dispute.

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Services

All services provided should be in the Tenants name. It is worth checking with the relevant bodies that they have done this. Meter readings should be taken and recorded on the Inventory at the outset of the Tenancy to avoid any confusion. At the end of the Tenancy, these services need to be returned either to the Landlords name or the new Tenant. To avoid any unnecessary reconnection charges the existing Tenants should be given the new name for the services well in advance of the end of the Agreement.
If the property becomes vacant at the end of a Tenancy, the Landlord is responsible for payment. This includes gas, electric, telephone, water and council tax.

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Standing order

It is advisable to have the Tenants pay from just one bank account. This should be done at the outset of the Tenancy.

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Buildings & Contents Insurance/Mortgage Company/Permissions

Prior to letting, you need to advise your existing buildings insurer of your intention to let. They may wish to increase your premium or may decline to insure you.

Contents need to be insured if left in the property. The Tenants are responsible for their own insurance.

It is important you inform your Building Society or Bank that you are intending to rent out your property. Many lenders have separate products specifically designed for rental properties. These are often charged at a slightly higher interest rate, and have different criteria from a normal home loan.

If you have a flat, please check the lease. Many leases require permission to be sought from the freeholder prior to renting.

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Keys/Manuals

One set of keys for each Tenant is required. Spare keys for back doors and window locks should also be kept.

Copies of manuals should be supplied for all electrical and heating items.

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Rent Protection & Legal Warranty

We are able to offer through FCC Paragon further peace of mind in the event of your tenant failing to pay their rent This warranty will pay a maximum of five months rent arrears but not the first months unpaid rent. It will pay for the legal costs of eviction. It will pay the rent until this point or to the end of the tenancy period whichever comes first. The maximum amount of cover is up to £15,000 per contract.

Section 21 Legal Expenses warranty.

Paragon will cover legal expenses for eviction if a tenant fails to leave at the end of their tenancy.

These warranties needs to be applied for once tenants have been found. If the tenants pass normal referencing then there should be no reason why they may be refused. Whites cannot be held responsible if Paragon declines to pay.

For further details please look on http://www.paragonadvance.com/

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Tax

Rent from letting your property is viewed by the Inland Revenue as income, and is therefore subject to tax. You are able to offset costs against this. Only those expenses incurred ‘wholly and exclusively’ for the purpose of the letting can be offset against your letting income. This might include mortgage interest, general repairs and maintenance, insurance and of course your agents fees.  If the property is let furnished you may claim 10% of the rental income for the year, less water rates and council tax (if paid by the tax payer) for wear and tear.

When you come to sell the property it may be subject to capital gains tax. Please seek independent advice from your tax advisor. Non-resident Landlords will be liable for tax; this will either be deducted by the agents, or an exemption certificate sought from the Inland Revenue prior to the let. For more information contact http://www.inlandrevenue.gov.uk/

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The End of the Tenancy

To comply with the Terms of the Assured Shorthold Tenancy Agreement it is necessary to serve a notice on the Tenant to quit. Where the rent is collected monthly, a Section 21 Notice needs to be served at least two months prior to the end of the agreement. In the event of the Tenant not leaving, if the appropriate notice has not been served and the relevant “How to Rent”, Gas Certificate and EPC  then court action would not be possible. If the rent is collected at longer periods, different criteria may be applied to the notice period.

You may decide to keep on renting the property to the same Tenants, in which case a new agreement can start from the expiry date of the old one, or the Tenancy can be allowed to run on; this is known as a Periodic Tenancy, and the same period for the notice to quit applies.

Once the property is empty, the Landlord is then responsible for all bills and security until a new Tenancy is started.

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