London’s rental market is in a boom powered by the buy-to-let (BTL) residential housing sector. As the UK’s hottest lettings market London commands more than 45 per cent of all households renting. As a result a typical Landlord in London receives 7 percent rental yield every year which is higher than any other tools.
Some tips can be useful for landlords even if they are not first timers as that will help in following best practices for renting of residential properties.
Tenant Screening
For an effective selection of tenants hiring a credit search agency to screen the tenants will be ideal. Its cost must be borne by the tenant along side mandatory Tenancy Agreements before a tenant steps in for occupation. Making such an agreement a standard contract with clauses on special requirements will make it work better.
Lettings agents
Hiring a letting agent had benefit as well pitfalls. These agents will take 11 to 17 per cent of the rental income as fees as well as one-off charges in terms of the levy for scouting the tenants. They are helpful in the matter of checking references and handling the maintenance, safety and gas inspections, fire precautions part of the landlord’s responsibility. This is good for those who are pressed for time or lacking in experience.
Nature of Tenancy
Most tenancies come under Assured Short-hold Tenancy in accordance with the Housing Act 1988 with the rent below £25,000 per annum. Here the individual or individuals who own the property will not enjoy resident Landlord status.
Under the provisions of this Act possession cannot be granted by the courts from a tenant who is unwilling to vacate a property in the first six months of a tenancy. So a release clause to end the tenancy before the expiry of the agreed fixed term, or renewing it for another term can be inserted into the contract prior to the negotiation.
Security of Tenure
For properties to rent in London, the security of tenancy comes with a fixed period if the terms of the Tenancy Agreement are not breached. At the expiry of a fixed term tenancy a tenant can take possession of the property. During Assured Shorthold Tenancy the Landlord has to serve notice of two months with this intention.
Stamp Duty
The Finance Act 2003 has stripped the Landlord of the liability for Stamp Duty on a lease for residential letting. In all such cases the payment of the Stamp Duty Land Tax is the responsibility of the Tenant.
Rent Increases
Rent is calculated without including the expenses on telephone and utilities such as gas, electricity and water. Rents can be hiked every 12 months in tune with the current inflation. But in the first six months of an Assured Shorthold Tenancy, a Tenant is at liberty to demand a review by the Rent Assessment Committee and fix a different rent if the rent does not seem on par with the prevailing market rents of that area.
Security Deposit
At the commencement of the Tenancy, a tenant must be asked to deposit an amount equivalent to six weeks as security against any damage or loss of the property not happening due to wear and tear.
Inventory
Prior to taking possession of the property an inventory of the property must be prepared with contents and condition accounted by an independent inventory clerk. The property must be cleaned prior to a new tenancy.
Insurance
Insurance is essential because in many cases the full replacement cost of the articles found defective cannot be thrust upon the tenant. That is why it is strongly recommended that service and maintenance agreements must be taken only after a content insurance.
