Initial Steps to Consider Before Letting Out a Property
Becoming a landlord for the first time can be an exciting prospect, as well as serving as an additional source of income.
However whilst landlords should always take the time needed to familiarise themselves with their various duties (in particular those which apply before the tenancy even starts. It is equally important to double-check that the landlord can even let the property to the tenant in the first place.
Although the pre-letting duties placed on landlords can differ depending on the circumstances, a few points to consider are:
1) Right to Rent – in England, the ‘Right to Rent’ scheme imposes a duty on all landlords to check that the prospective tenant has the required legal status to reside in the UK. As such, a landlord (or a letting agent if one has been instructed on their behalf) must carry out the necessary passport and immigration checks before they consider whether to grant a tenancy. If the prospective tenant does have permission to reside in the UK, though is subject to certain conditions, subsequent checks must also be carried out.
If a landlord fails to carry out the require checks or rents to someone who they had “reasonable cause to believe” did not have the right to live in the UK, then this could lead to a custodial sentence of up to 5 years, or the imposition of an unlimited fine.
2) Restrictions placed on the Landlord – it is important not to overlook any limitations which may be placed on Landlords themselves before a tenancy is granted. There may, for instance, be certain restrictions imposed on a Landlord (particularly if the Landlord’s own title is a Leasehold) which require that they obtain the consent of a third party before a tenancy can be granted (such as that of the Freeholder). In addition, there may also be certain covenants/restrictions placed on a Landlord, which the Landlord must ensure the tenant complies with.
3) Mortgage/Lender considerations – if the property has been purchased with the assistance of a mortgage, it is important to consider the impact which this can have on the landlord’s ability to rent the property to a tenant. This is because a mortgage can impose limitations on what one party can and can’t do.
Most landlords obtain a ‘Buy-To-Let’ (“BTL”) mortgage when purchasing a property which they intend to rent. As is clear from the name, a BTL mortgage is granted on the assumption that it will not be the landlord who will be residing in the property. As such, this means BTL mortgages differ from standard mortgages in that they are typically assessed based on how much rent the property is likely to generate, as opposed to what the landlord’s personal income is.
It also goes without saying that almost every mortgage which is not a BTL mortgage will not permit the owner to rent the property out. It is therefore important for a landlord to carefully consider the mortgage position when purchasing the property which is to be rented out.
Landlords should therefore ensure they carry out these basic checks to determine whether they can even rent out the property in the first place, before even considering the additional duties which would follow insofar as gas certificates and other documents are concerned.