Services
3. Ongoing Management, Maintenance and Inspections
4. Landlords Safety Obligations
8. Letting and Management Agreement
Thank you for your interest in our company. Devon Lettings have been helping landlords and tenants alike since 1995 by giving honest and experienced advice, an ethos that has seen the company grow to be one of the busiest independent letting agents in the county. Perfectly placed within easy reach of both coasts and national parks, the demand for quality rented accommodation in the Mid Devon area is very high.
The directors Graham J Carter MNAEA and John B Stoyle; and manager Rupert Geering MNAEA, have over 75 years combined experience in the residential property market, and particularly the legal aspects and day-to-day running of residential tenancies.
The company has been built up by reputation, with many landlords being former tenants who appreciate the honest, efficient and courteous approach adopted by all our local staff.
We offer a comprehensive range of services to deal with the running of rented properties, from in depth reference and financial checks to rent guarantee insurances, as well as providing extensive marketing avenues in the local press and on the internet.
As members of the National Association of Estate Agents and Ombudsman for Lettings we are a company you can trust. The aim of the company is to take the stress out of renting for both Landlord and Tenant and to offer the peace of mind that can only come from dealing with a well-established and reputable company.
In the current market there are a wide variety of reasons why people choose to let their property or purchase a property to let. Many people let purely as an investment, possibly to provide an income with the likelihood of realising some capital growth in the long term. Some may find, due to the need to move away, perhaps for employment reasons, that they can let their property to cover mortgages and other outgoings. Property management is no longer just for the rich and we deal with a diverse range of landlords from those with just one or two properties through to those with a portfolio of 15 – 20.
Whatever your reason, letting your property enables you to retain a foothold in the property market whilst retaining a satisfactory income.
There are many areas to consider before letting your property and although it can be a lucrative venture, there are also potential pitfalls you should be aware of. In the following pages we will outline the problems that can be encountered and detail how we can help.
We offer a free, no obligation valuation service and can offer specific advice relating to your property to make it easier to let. It is generally the case that the better the condition of a property, the easier it will be to let, and the higher the likelihood of the property being well looked after by tenants. However, to generate the best return on your investment you should not over capitalise.
When we receive your instructions to market the property we will prepare particulars with colour photographs, which will be circulated amongst our ever-growing database of applicants. We will also display details in our windows, advertise extensively through the local press and display details on both our website and several leading property portals. We would also strongly recommend that a ‘To Let’ board is erected at the property, these 24 hour marketing tools often attract people in the local community who may not be actively thinking of moving.
References
Once we have an interested applicant we will discuss their circumstances with you before taking up detailed references. These include past and present landlords and employers, accountants where applicable, personal references, proof of residency and identification, as well as a credit check. Once we have obtained all of this information we will forward copies to you. Although these references are taken in good faith they cannot be fool proof and it is the landlord’s sole decision as to whether to proceed with the tenancy.
Tenancy Agreements
We will be responsible for preparing the legal agreement and any relevant notices required.
All new tenancies are now assumed to be Assured Shorthold Tenancies (AST’s), unless stated otherwise, giving landlords a great deal of security. The minimum term for an AST is six months, although shorter lets can be agreed from the outset if acceptable to both parties. However, a landlord cannot evict a tenant within the first six months, even if a shorter term has been agreed, unless the tenant is in breach of the tenancy. After the initial term of six months, the tenancy, if continued, will become a periodic tenancy and continue on a month by month basis. This does not affect either party’s rights or obligations and can be ended by the serving of the appropriate notice.
If the tenant wishes to end the agreement either at the end of the initial term, or during a periodic tenancy they must give the landlord or their agent one month’s written notice to that effect. Should the landlord wish to terminate the tenancy, they must give two months notice. If we are managing the property on your behalf we will advise on the options available to you and serve notice on your behalf.
The tenants are of course subject to numerous requirements most of which are common sense and all are included in the tenancy agreement. The main requirements are of course to pay rent on time, to keep the property, including gardens in a clean and tidy order, not to disturb neighbours or become a nuisance to people outside of the property etc.
Most requirements are already listed in our tenancy agreement as standard terms but if there are any specific terms or conditions let us know, and subject to them being within the laws relating to contract terms we can include these for you.
3. Ongoing Management, Maintenance and Inspections
Where we are managing the property we will be responsible for the day-to-day running of the property, and you can have, within reason, as much or as little to do with the property as you like. We obviously collect the rent and can arrange to pay this directly into your bank account and send you a monthly statement. At the end of the financial year we can also forward you a breakdown of all rents and expenditure to both you and your accountant.
During the tenancy our inspections and inventory clerk will carry out regular inspections of the property and report back to you with their findings. We will also carry out a final inspection and arrange for return of the deposit to the tenant, less any deductions.
One of the main disagreements between Landlords and Tenants is often the cleanliness of the property at the end of the tenancy. Although the deposit often covers the cost of any necessary cleaning etc, we will also arrange digital photographic inventories, complying to the strict standards of the Tenancy Deposit Service in order to keep disputes to a minimum. Although the majority of tenancies run smoothly, landlords must appreciate that tenanted properties do, as a whole, suffer greater wear and tear than if it was their own home.
We have plumbers, electricians, painters/decorators, builders and cleaners who work for us on a regular basis or if you prefer you can use workmen of your own choice. Quotes, where required, will be provided before any work is authorised, except in the case of emergencies.
In the unlikely event of serious problems, such as rent arrears or damage to the property, we will initially try to resolve the problems and in the event of missed rent payments try to establish if there are genuine reasons for the arrears. If the problems cannot be resolved, we will issue notices to leave and liaise with solicitors in bringing court proceedings, if the tenants remain at the property.
Details of rent guarantee and legal expense insurance are outlined later in this brochure.
4. Landlords Safety Obligations
Gas Safety (Installation and Use) 1998
As most Landlords are now aware, all gas appliances at a rented property, including portable appliances such as LPG heaters, must be tested prior to the start of any tenancy and annually there after by a Gas Safe registered plumber who will provide you with a certificate. We will need to have a copy given to us and to the tenant before we can start any tenancy.
The Electrical Equipment (Safety) Regulations 1994 and The Plugs and Sockets etc (Safety) Regulations 1994
It is a legal requirement that the mains wiring and any portable electrical appliances left in a rented property must be safe for the tenants use. These should be tested by a suitably qualified electrician. We insist that the mains electric wiring is tested every five years, and any portable appliances tested annually.
The Furniture and Furnishings (Fire) (Safety) Regulations 1988
Upholstered furniture left in a letting property must comply to these regulations and apply to all upholstered furniture. The safety provisions require that any upholstered or soft furnishings have a suitable, permanent safety label attached. As these could be removed by a tenant it is also wise to keep a copy of the purchase receipt. Bedding, Carpets, Curtains and Furniture made before 1st January 1950 that are not foam filled (for example horse hair) are also excluded from the regulations.
Oil & Solid Fuel Appliances
Again any oil or solid fuel appliances must be safe for the tenants use and therefore they need to be checked on annual basis by a suitably qualified or experienced engineer, with an appropriate certificate or service record issued.
Smoke Detectors
It is not yet a legal requirement to have smoke detectors fitted in a rented property, although this requirement is almost certain to come into force in the future and therefore we would strongly recommend that mains wired smoke detectors are fitted on each floor of a rented property by a suitably qualified electrician. We do however insist that at least 1 battery operated smoke detector is fitted on each floor of a rented property. We will check the smoke detector at the start of each tenancy and we make it a condition of the tenancy that the tenant checks the smoke detectors on a regular basis, replace the batteries when necessary and inform us, if they go wrong.
Chimneys
We also strongly recommend that any chimneys are swept on an annual basis and this may also be a condition of your house insurance.
Carbon Monoxide Detectors
It is not a requirement to install either battery or mains wired carbon monoxide protectors but they do offer extra peace of mind for both the landlord and tenant and if installed should be situated close to any gas or oil appliances
General Product Safety Regulations 2005
Any items or equipment not already covered by specific regulations must be safe. This includes leaving any warning notices, instruction manuals and checking on a regular basis that the item is in safe working order. For example any garden machinery should be regularly serviced and any guards or personal protective equipment also supplied. Glass in furniture should be to British Standard etc.
Other Safety Requirements
As stated above the property has to be safe for the tenants occupation and although we will visit the property and try to identify any potential hazards, if the Landlord is aware of any other aspects that might be hazardous these need to be notified to the Tenants & Ourselves in writing, i.e. steep stairs, wells in the garden etc. Due to the potential hazards of some household or garden equipment/ appliances, e.g. lawnmowers/ garden strimmers etc we would strongly recommend that these are not left in a rented property.
5. Insurance
It is possible to take out an insurance policy to cover both loss of rent and legal expenses for evicting a defaulting tenant. Although this is not a common problem, and the referencing procedure eliminates most of the risks involved, it is not possible to be completely fool proof, and even tenants who are financially sound at the start of the tenancy can face redundancies, illness etc and fall into difficulties.
We use Rentshield Direct for this cover, and full details are available from our offices. The cover is until vacant possession is obtainedr, as well as legal fees for evicting the tenant. Contact Devon Lettings for a quote.
Rentshield are also able to provide cover for House and Contents Insurance and Malicious Damage at competitive prices. We are happy to provide further information and quotes upon request.
You must inform your buildings insurance provider if you decide to let the property. We insist that all tenants take out contents insurance to protect their belongings. Devon Lettings Limited are an appointed representative of Rentshield Direct, Rentshield House, Unit 9, Broadmeadow Trading Estate, Teignmouth, TQ14 9AE whom are authorised and regulated by the Financial Services Authority (Registration Number 5616550.) We act as approved representatives for Rentshield and all contracts will be with them. As such we hold no responsibility for the payment or otherwise of any claims. Clients should read all the literature and small print before committing to any of the Insurance Products.
Many changes have occurred in the residential lettings sector over the past few years and most have been well publicised in the national media. The main change in legislation has been with the holding of deposits, energy performance certificates, and houses in multiple occupation, often referred to as HMO’s.
Tenants Deposits and Inventories
Since April 2007 new legislation came into force regarding the holding of tenant’s deposits. Devon Lettings are registered with The Dispute Service and operate a fully compliant scheme. To meet the criteria of the scheme we are bound by the rules and regulations of not only the scheme, but also of the National Association of Estate Agents and hold both Professional Indemnity Insurance and Client Money Protection. This means if we go bankrupt or misuse client money the deposits will be covered and returned to the appropriate person. If we are managing the property on your behalf you will have free access to this scheme, but for unmanaged tenancies we charge an administrative fee of £50 per tenancy. No interest will be paid to the landlord or tenant on deposits.
The deposit belongs to the tenant and continues to do so until such time as a landlord becomes entitled to make reasonable deductions from it. If a tenant feels a landlord is unfairly making deductions then an independent case examiner will decide who should be awarded the amount, and what a fair amount would be. The case examiner, much like the courts, start with the assumption that the deposit belongs to the tenant, and it is down to the landlord to prove their entitlement to it. It is therefore absolutely vital that a thorough, and in depth inventory and schedule of conditions is prepared before the commencement of the tenancy. Without one the case examiner will return any disputed amount directly to the tenant. We have an inventory clerk who will carry out full digital inventories, and the cost of this is split equally between landlord and tenant and depends on the size of the property.
Where we are also managing the property, we will also complete a check out report and try to resolve any disputes that may arise in terms of damage or cleaning. If an agreement cannot be made we will make representation to the scheme on your behalf.
Energy Performance Certificates
Energy Performance Certificates are a graph showing the current rating and potential rating of the energy performance of a property. Your property is rated on a scale from A - G with A being the most efficient. Current estimated running costs are also shown on the certificate, together with recommended energy saving improvements.
Because prospective tenants will be able to see at a glance how energy efficient your property is it is recommended that you invest in some energy saving measures. In most cases this can be as straightforward as switching to energy saving lightbulbs, or fitting an insulating jacket to the hot water cylinder. Other more expensive measures include installing a new boiler – you’ll get a better rating if you have modern controls, or installing double glazing.
There are various grants available, including a Landlords Energy Saving Allowance, or grants if your tenants are on housing benefit. For more information contact the Energy Saving Trust on 0800 512 012.
Income from rented properties is of course subject to tax, isn’t everything? There are, however, certain exemptions and obviously some tax deductible expenditures that can be offset against the rental income. All profit you makle from letting should be added to your other taxable income for the year and you will have to pay tax at your highest marginal rate of tax if your total taxable income is higher than your tax allowances.
Only those expenses incurred wholly and exclusively for the purpose of the let can be offset against your letting income. Some examples are:
- Water Rates, if not paid by the tenant.
- Insurance. Buildings and Contents as well as insurances against loss of rent.
- All of our fees for the letting and management of the property.
- Mortgage Interest Payments; you may generally claim tax relief on interest payments relating to a loan used to purchase, repair or improve a property, where the interest id paid wholly and exclusively for the purpose of the letting activity.
Generally costs relating to repair rather than improvement can be offset against tax. On a repayment mortgage the capital repayment element of the loan cannot be offset against tax. If you have an endowment, or ISA mortgage, again, these cannot be offset against your letting income.
This is only a very brief summary of a complicated area and we would strongly recommend seeking further advice from an accountant in this respect.
Where a landlord is going to be non-resident to the UK, we are obliged by law to deduct tax at the basic rate, after expenditure incurred by us, and pay this to the Inland Revenue on a quarterly basis. You can apply to the Centre for Non-Resident Landlords for the rent to be paid to you gross without tax deducted and if you are going to be residing overseas please discuss this with us as we can offer further advice and assistance in this area.
8. Letting and Management Agreement
The terms of a legally binding agreement appear below. Please read them carefully and only sign when you have read and fully understood them, and wish to instruct us.
Landlord’s full name(s):
Landlord’s address:
Address of property:
Service Required: Full Management ï± Tenant Find Only ï±
Date:……………………………. Signed:…………………………………….
Terms and Conditions
1. In this Agreement "We" means Devon Lettings Limited, whose registered office is at 4 Market Street, Crediton, Devon, EX17 2AJ. "You" means the person(s) whose name(s) and address appear above. "The property" means the room, flat or house of which there is a brief description above. Clauses 10 to 19 apply only if we are to manage the property for you as well as arrange the initial letting.
Property Letting
2. We will visit the property with you for an initial inspection. We will agree the viewing arrangements with you and whether you wish to show prospective tenants over yourself. We will not normally accompany prospective tenants to unoccupied and unfurnished tenancies and if this is required we reserve the right to make an additional charge for this service.
3. We will advertise the property and circulate details of the property to all appropriate applicants on our register and erect a letting board.
4. We will, from amongst the applicants we have, select (where possible) a shortlist, which we will then discuss with you. When you have chosen the best applicant, we will take up references as far as we reasonably can. This will normally include employment references/ accountant’s references, personal references, landlord references (where applicable) and a credit check. If appropriate, we shall try to arrange a guarantor. Although we make these checks, they cannot be foolproof, and we shall not be liable to you in any way for any default of the tenant at any time.
5. We will, when a letting is arranged, prepare a tenancy agreement and forward a copy of this to you, so that you are aware of what your rights and liabilities are, and so that you can tell us if any special terms need to be added to suit you and your property. The agreement will provide for any notices needed under the Housing Acts to reflect what you tell us about your circumstances. The agreement will not under normal circumstances be sent for stamping and although it will still be legally binding on all parties, it may need to be stamped before it is admissible as evidence in court. In the event that you need to take the tenant to court under the terms of the contract, please contact us.
6. We will also arrange for the preparation of an Inventory & Schedule of Conditions the cost of which will depend upon the size of the property and whether or not it is furnished. Under the new Tenancy Deposit Regulations it will be virtually impossible for a Landlord to withhold a tenants deposit without a detailed inventory. We will also wherever possible conduct a Check in Report with the tenants so that any discrepancies on the Inventory can be agreed at the outset and a Check Out Report (Where we are also managing the property) where any cleaning or damage to the property above fair wear and tear can be agreed at the end of the tenancy, hopefully therefore greatly reducing any disputes. The Landlord share of the costs of the Inventory, Schedule of Conditions and Check in & Check out Reports will be on a sliding scale depending upon the size of the property and whether it is furnished as follows: 1 Bed £20 + VAT, 2 Bed £35 + VAT, 3 Bed £50 + VAT, 4 Bed £65 + VAT, 5 Bed or more £80 + VAT. If the property is furnished it will be an additional cost of £25 + VAT in each scenario.
7. You will ensure that you have the right to let the property. We will not be liable for making sure that you have good title to the property, or that letting is not prohibited by your deeds. If you have a mortgage or legal charge over the property, or if your property is leasehold, it will be up to you to find out whether you need the lender's and/or landlord's consent to let the property, and to get any consents needed. You will also be liable for ensuring that your property and contents insurers are informed of the letting and for taking any steps they may require. You must ensure that the property and any items in it comply with all relevant regulations, e.g. as to the inspection and safety of gas or oil appliances, the fireproofing of furniture. You will be responsible for checking that the electrical wiring and all electrical appliances left at the property are safe and in good working order. Additionally, you are responsible for making sure that the property itself is safe and in a habitable condition and any unusual hazards (e.g.: wells) are notified to us, or the tenant in writing. You will indemnify us against any liability to any third party. We also require at least 1 battery or mains wired smoke detector to be fitted on each floor of the property.
8. We will collect from the tenant at the start of the tenancy the first rental payment and, after clearance, pay the balance due to your chosen account. We will also collect a fee from the tenant in respect of the costs of references, preparing the tenancy agreement and inventories etc. We will also collect a deposit, which is subject to the new Tenancy Deposit Regulations, and will need to be held by either you or us in line with the rules and regulations of one of the approved schemes as detailed in Section 22 at the end of this agreement. Where we are not managing a property nor holding the deposit on behalf of the landlord, the landlord agrees to hold the deposit within one of the approved schemes. Failure to hold the deposit in one of the approved schemes can result in court action being taken against you. More details of the various schemes can be found at www.communities.gov.uk If we are not managing the property but the landlord wishes us to hold the deposit we will do so on their behalf but we will charge an administration fee of £50 + VAT per deposit for this service, which will also include dealing with and disputes arising as detailed in Section 22 below.
9. You will pay us, in addition to the Inventory costs detailed above, in the event and at the time of completion of a tenancy, the sum equivalent to half of the first month’s rent + VAT, subject to a minimum fee of £400.00 + VAT (or £200 plus VAT if we are also to be managing the property after completion of the tenancy) plus any additional charges there may be, which if applicable will be agreed separately in writing with you. We may deduct those amounts from monies received by us from the tenant. Value Added Tax will be added to any sums payable under this agreement if we are obliged by law to charge it. If we are instructed by you to market the property either verbally or in writing but you subsequently find a tenant directly or via another agent or for whatever reason decide not to proceed with the letting of the property, we will charge a fee of £100 plus VAT, to cover our administration costs and advertising expenses.
10. If the Landlord’s place of residence is outside the United Kingdom, we are liable to deduct basic rate tax from the rent after expenses and forward this to the Inland Revenue. Landlords can apply to have the rent paid without the deduction of tax and we can offer advice and assistance in this matter if applicable. We may be required also from time to time to provide the Inland Revenue with details of all Landlords for whom we acted and gross rental income received.
Property Management
11. We will arrange for the rent to be paid by the tenant into our client account. We will maintain fully computerised records of all payments, and if any payments are late will use our best endeavours to get payment from the tenant. We shall account to you for any payments received (less any sums due from you to us or as set out below) as soon as reasonably practical after they have been cleared into our bank account.
12. We will visit the property at the start and end of the tenancy, as well as regularly whilst it continues, and if there is any emergency. We will report any problems to you, and agree with you whether any works need to be done to the property. If we find any default on the tenant's behalf we will write to the tenant to advise of that and to require remedial action. No extra charge is made for these visits.
13. We will act as your agents in arranging any works to the property, which may be agreed as necessary. Further, you hereby authorise us, in the case of emergency or in circumstances where you cannot be contacted, to arrange for works to the property up to a maximum overall cost (plus VAT) of two hundred pounds (£200) at our sole and absolute discretion. We will arrange contractors if required, or will instruct contractors of your choice. The charges of any such contractors will be payable by you (whether arranged through us or not) and we shall have no contractual obligation to them, but we shall be entitled to deduct any amounts properly due to them from any monies held by us on your behalf. If we are instructed by you to organise major repairs or improvements to a property, the total cost of which exceeds £750, we will charge an additional 10% + VAT on the overall cost of this work. This charge is to cover our administration costs for obtaining quotations, organising and overseeing works, checking that works have been completed, payment of workmen and preparing statements of costs. Although these works may be organised by us we will be acting upon your instructions and the liabilities for the payments of such works remains with the Landlord.
14. We will deal with any routine queries regarding the property or the tenancy, and will liase as necessary with the local authority (including the Housing Benefit department) and the various utility companies. We will promptly advise you of any matters thus arising, which need to be brought to your attention.
15. We will prepare and serve any notices, which may be necessary during the tenancy, including any notices that you require to recover possession, and any notices to quit.
16. Where the rent is being paid direct to us from local authorities, you authorise us to collect this on your behalf. If a tenant makes a false claim for housing benefit and the rent is being paid direct to ourselves, this money may be reclaimed by the local authority involved. If such an event arises, you will refund to us any money that has been paid to you in rent upon request from ourselves, in respect of false claims from the tenant.
17. We can arrange, on your behalf, insurance against both loss of rent and legal fees for evicting a tenant, if they default on the rent. The cost for a 6 month policy is £90 with no excess. The above costs are of course subject to Insurance Premium Tax, currently 5% of the premium. The policy which will be arranged via Rentshield Direct, and covers until vacant possession is obtained, as well as the legal fees for evicting the tenant. Customers should obtain, read and fully understand the policy wording before proceeding with an insurance product.
18. You will pay us 12% of the rent due per property and recoverable during the tenancy, plus any Value Added Tax we may be obliged by law to charge thereon. We can deduct any such sums from any rents or other monies received.
19. Either you or we can end this agreement by not less than three months' written notice.
20. We will not be obliged to issue court proceedings or other forms of enforcement against any tenant, and will not be liable for any failure of the tenant to make any payment due or perform any term of the tenancy agreement. In the event that legal proceedings are necessary we will if requested liase with the relevant solicitors. We can arrange legal representation if needed, or you are free to instruct solicitors of your choice.
21. We may receive commission / remuneration on the sale of Insurance or related products arranged in conjunction with the property or the tenancy as well as for arranging repairs and maintenance on the property and will disclose to you any such amounts upon written request.
22. Under the Tenancy Deposit Regulations there are strict rules and regulations as to how tenants deposits are taken and held and how they can be distributed at the end of the tenancy. For properties under management we will hold the deposits within the rules and regulations of the Tenancy Deposit Service and to comply with these regulations we hold Professional Indemnity Insurance, a ring fenced Client Account and Client Money Protection Insurance. We will abide by the rules of the scheme and deal with administration involved in any disputes that may arise with regard to the returning of the deposit monies at the end of the tenancy. This will include submitting paperwork and evidence to the Independent Case Examiner of the TDS in the event of a dispute. The Deposits will be held as Stakeholder for the Landlord and Tenant, which means deposits, can only be returned or distributed with the agreement of both the landlord and Tenant. Interest on deposit will be kept by Devon Lettings to help towards the costs of the administration of the scheme.
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