Landlord FAQ's

We have a range of services to suit every Landlord ranging from Let Only/Tenant Find (we call this our ‘Basic’ service) to full Management (we call this our ‘Hands Off’ service).

Basic is designed for local Landlords who like to be very hands on, have plenty of time on their hands, and who are experienced and knowledgeable Landlords.

Hands Off is designed for those who have busy lives and who believe their time is better spent on their own career or simply having more time with their family. With this service, we do all of the work and keep you informed at every key stage in the process. We will still look to you to make important decisions such as choice of tenant, or approval for major works or maintenance items. We’ll take care of all the many details behind the scenes on your behalf.

The first step is a valuation. We call this a ‘Market Appraisal’ since there is more involved than simply confirming a rental valuation. We will also advise you on how to prepare the property for let, how to get the best results, how to market the property and to whom, safety checks, legal requirements, and answer any of your questions you may have. These may include tax, insurance, fees, service details and so on. If we haven’t met before, we prefer Market Appraisals to be done with you at the property. That said we can also visit the property without you where required and discuss the Market Appraisal with you after the appointment by video or phone call if you prefer.  

Market rents do change (usually upwards) over time and one of the benefits of having a managing agent is ongoing rental value advice. Where we manage the property we carry out routine rent reviews periodically to ensure that we are achieving market rent at all times.

Yes you absolutely can. If you have the time, knowledge, and inclination to take this on. Compliance is key and you should have a very clear understanding what your responsibilities are as a Landlord first. There are nearly 200 points of relevant legislation to be aware of as a Landlord, and this changes year by year. If you manage your own property you are responsible for your tenants health and safety and for keeping compliant. There are heavy fines and even custodial sentences for getting it wrong, so this should not be underestimated. We advise that you take some training and become a member with an industry body such as the NRLA before you embark on managing your own property. 

There are some basic checks that need doing before you can rent your property out. You will need a Landlords Gas Safety Certificate (annually) and an Electrical Installation Condition Report (EICR) (every 5 years). Smoke detectors are also required in the property and these must be tested the day a tenant moves in. A number of further requirements exist for HMO's. Here are some of the relevant legislation acts in this regard.

• Furniture and Furnishings (Fire)(Safety) Regulations 1988
• General Product Safety Regulations 1994
• Gas Safety (Installation and Use) Regulations 1998
• Electrical Equipment (Safety) Regulations 1994
• Plugs and Sockets (Safety) Regulations 1994
• Smoke & Co Alarm Regulations 2015
• Health & Safety At Work Act 1974
• Control Of Substances Hazardous To Health Regulations 2002
• Housing Health Safety Rating System (HHSRS)
• Landlord & Tenant Act 1954, 1985, 1987
• De-Regulation Act 2015
• Homes (Fitness for Human Habitation) Act 2018

Where we manage the property we have a strict arrears process we follow to ensure rents continue to be paid on time and tenants don’t fall behind with their rent. We engage with the tenants regularly and keep you informed of the issue and progress along the way until a resolution is reached. We will serve relevant legal documentation and notices as part of our management service.

If you are managing the property yourself it would fall to you to chase arrears and take appropriate action. 

You should make sure that you have made provisions in case the tenant cannot or does not pay the rent. At very least you should hold some savings to cover overheads such as mortgage repayments in case of non payment of rent. We strongly advise a Rent Protection insurance policy which covers non-payment of rent and legal costs in case of eviction. This is something we usually provide within our management services. 

Covid-19 has seen further protection been given towards tenants who cannot pay their rent. 6 months notice is currently required and the courts are prioritising only very serious cases for eviction. This has made Rent Protection even more important in the current climate. 

The correct tenancy agreement in residential lettings is an Assured Shorthold Tenancy (AST) agreement and this is used in almost all cases. The only exception to this is in the case of a Company Let, which are rare, but this would use a License Agreement instead. An AST falls under the Housing Act 2004 and the provisions including possession and deposit protection requirements within this act must be observed.

A deposit acts as security to the Landlord at the end of the tenancy which covers cleaning, damages, and possible rent arrears.

This security is important and we therefore advise Landlords that they do take a deposit before the tenancy commences. The Tenant Fees Act of 2019 dictates that deposit amounts must be capped at a maximum of 5 weeks rent in all cases and this is the amount that we take as standard.

We also offer a deposit replacement scheme in place of a traditional deposit. This is an insurance product whereby the tenant pays a fee for the product instead of paying a deposit. Dilapidations are then covered by the insurance provider. The advantage to Landlords is that this insurance usually provides more cover than a traditional deposit to the value of 6 weeks rent. Deposit claims are often settled faster using this product than if there was a dispute which had to be resolved by a deposit scheme. We cannot insist on a deposit replacement product over a traditional deposit, an option to take either is given to the tenant.  

Deposits must be registered with a deposit scheme within the prescribed timeframes and prescribed information must be provided to the tenant to show the details of this registration. 

An Inventory & Schedule Of Condition must be taken at the start of the tenancy to record the condition of the property at that time. This is because if there are any disputes at the end of the tenancy, it falls to the Landlord or managing Agent to evidence the condition of the property at the start of the tenancy. Without this document serving as evidence, the tenant will be awarded the full deposit return in the case of a dispute.

A Check Out appointment is carried out at the end of the tenancy (this is included within our management services) to examine the condition of the property at the end of the tenancy and to establish if any follow up works are required to restore the property to the equivalent condition at the beginning of the tenancy, allowing for fair wear and tear.  

The tenant is responsible for the garden however they are only required to keep the garden in the same condition it was when the tenancy begins. We advise Landlords to make sure the garden is left tidy at the beginning of the tenancy so we can expect the same when the tenancy ends. A record of its condition is recorded in the Inventory & Schedule Of Condition at the start of the tenancy. The condition of the garden is also monitored during routine inspections carried during the tenancy (this is covered within our management services, but should be done by self-managing landlords)

Yes. If you are currently living in the property, and you have a mortgage, this mortgage will reflect that you are an owner-occupier and if you rent your property out without checking with them, you are likely to be in breach of your existing mortgage conditions. In most cases the lenders won’t insist that you swich to a buy-to-product unless you wish to, but they will usually give you consent to let. It’s important you do this first as a first step just in case your mortgage lender won’t allow you to let.

If you currently live in the property and you are moving out to let the property, you will need to change your exiting property insurance to Landlords Buildings Insurance. You may also choose to add contents insurance and additional add-ons which have their own benefits if you wish, but as a minimum you must ensure the building as a Landlord.

Aside from the obvious risk mitigation, it is a condition of all mortgaged properties that they are ensured adequately so it is very important that you do not miss this step.  We work with specialist Landlord insurance providers so if you need a quote, please ask and we’ll arrange one for you.

You will need to keep records of your rental income and expenditure each year. You will pay tax on your rental profits although how this is calculated will depend on the ownership of the property. Traditionally property has been purchased in personal names, although in recent years there has been a switch to property investing within a Limited Company, which in many cases has become more tax efficient.  

 If your property is owned in your personal name then you will need to complete a Self Assessment Tax return prior to the 5th October each year. You will then pay tax on the profit you have made from your property at within your income tax band. You may offset maintenance costs, insurance costs, Agent fees, and so on. As of this year, for the first time you will not be able to deduct mortgage interest from your tax liability.

If the property is owned within a Limited Co then you will be pay Corporation Tax each year on profits made and a tax on the dividends you withdraw from company profits. In a Limited Company structure you may offset mortgage interest against Corporation Tax.  

Where we manage the property for you, we will send you a monthly rental statement which shows all income and expenditure within that month which you can use for your Self Assessment Tax return or for your company accounts. We also produce an annual income and expenditure report showing all of this annual information in one document.

Tax is a complex subject area and everyone's circumstances are different. We are not qualified to give tax advice therefore you should seek out a professional in this area before taking any major investment decisions. 

Here in Leeds we have a high concentration of HMO properties. Many people believe HMOs are the domain of students only. On the contrary, HMOs are becoming more and more popular with young working people due to the lower cost of accommodation, as well as having the appeal of a bills inclusive rent. They are also a fantastic way of meeting new people too. Being offered furnished and bills inclusive, HMOs make for hassle-free and mobile living for young tenants. We often find HMOs are a perfect choice for young people starting out in their career, especially if they are moving to Leeds and don’t already know many people in the area. Many of our tenants make good long-term friends in their shared homes.

HMOs are attractive to investors too due to the fact they can offer much higher yields than single let properties. Rooms are often let to individuals rather than the whole property being let as one unit, in order to maximise yields.

That said, management is more intensive, running costs are higher, and there are many complex regulations that apply to HMOs that do not apply to single let properties. There is also a higher turnover of tenants, and there can be more wear and tear on the property. It is for these reasons that many Landlords, and indeed many Letting Agents, stay away from HMOs.

Investors who target HMOs generally don’t attempt to manage their own properties due to the time required and the complexity of the process. They realise their time is better spent on more important things and usually outsource management to an agent that has the systems, team, expertise and knowledge in this area.

Mortgage Lenders are often more cautious when it comes to offering finance for HMO mortgages. Landlords/Investors usually need experience of owning a HMO in order to pass the lender’s criteria, and rates are often higher than standard Buy To Let mortgages.

Landlords looking to buy or rent out their properties as HMOs need to be mindful of the Article 4 Direction in Leeds. Article 4 has been implemented here as it has in many other cities around the UK, in order to restrict the number of HMOs in certain areas. This is for many reasons including controlling the volume of occupants in an area, noise, parking, refuse, potential of anti-social behaviour, and so on. Most of inner Leeds falls within the Article 4 area, the map of which is available on Leeds City Council’s website.

Landlords looking to let their properties as a HMO will need to apply for change of use, unless there is already constant historic evidence that the property has been let as an HMO since the restrictions were brought in. The usual planning class for residential homes is a ‘dwelling house’ C3, whereas HMO falls under the C4 category.

Some HMOs also require a licence. The circumstances of which properties will require a licence are complex, however as a general rule if the property is to be let to 5 unrelated sharers or more, then it would need an HMO licence.

In order to obtain a licence, the property would need to ensure it has the correct features which often include a hard-wired fire detection system, fire doors, and interlinked smoke detectors with battery back-ups. Minimum rooms sizes may also apply, as do the amount of storage, cooking, and washing facilities that must be made available. HMO licences also fall into different categories. In general terms, the larger the property, the more restrictive the terms of the licence will be. HMOs must have Electrical Periodic tests carried out routinely as well as routine testing of fire safety equipment.

Every property is different, therefore to establish exactly what upgrades you would need to comply with licensing, you would need to take advice from the HMO team at Leeds City Council.

Smaller HMOs usually do not need a licence, but are still subject to planning approval for change of use to C4. A property is classed as an HMO in planning terms if it is let to 3 or more unrelated sharers. This would be defined as an HMO in the council’s eyes for planning, whether the 3 or more unrelated tenants were on one tenancy agreement (with joint and several liability) or if they are renting a room each on individual tenancy agreements.

Clearly this is a more technical area than buy-to-let, however understanding it can be lucrative for investors. A word of caution however – the HMO market has become extremely competitive in Leeds in recent years. Location, the quality of refurb/finish, the addition of en suite bathrooms, and room sizes have become increasingly important as a result. Voids are becoming increasingly problematic for some Landlords whose properties aren’t competing in these areas.
We don’t advise investors to go straight into HMO investment without prior experience as a Landlord.

Do you want to know more? We have written a number of helpful articles, which are published on our website, which cover some of the common questions we receive from investors.
We have a number of years experience managing HMOs and we are placed perfectly to guide you further.

Do you want to know more? We have written a number of articles, which are published on our blog page, which cover some of the common questions we receive from investors. You can read them by following these links:
 

• 'Understanding How To Invest In HMO's'
• 'How To Get Planning Permission (in an Article 4 area)'
• 'Overcoming challenges to HMO investing - Regulation'
• 'How To Get A HMO License in Leeds'
• 'Government Extends Mandatory Licensing Of HMO's' (December 2016)

We have a number of years experience managing HMO’s and we are placed perfectly to guide you further.

For more information on this complex area, or if you are considering buying or letting a HMO, give us a call today so we can show you we can help you to get a fantastic return from your HMO