NAEA & ARLA »
Marketing Lettings »
Overseas Landlords Guide »
Type of Agreements »
Option to Renew/Break/Purchase »
Rent Payments »
Tax on Rental Income »
Deposit »
The Inventory and Check-In / Check-Out »
Initial Payments »
Utilities »
Council Tax »
Insurance »
During the Tenancy »
Moving Out »
Furniture and Furnishings »
The Gas Safety Regulations »
Stamp Duty Land Tax »
Other Legal Regulations »
Electrical Regulations »
NAEA & ARLA
For further information on NAEA and ARLA, please take a look at our accreditations page.
Marketing Lettings
Godfrey & Barr have an established rental and management division. We have been handling residential lettings in Hampstead Garden Suburb for about 16 years and have built up a large portfolio of clients including many large organisations, who are often seeking properties to rent for executives in the London area.
We have rented properties ranging from small flats and cottages in Hampstead Garden Suburb and the peripheries, through to Ambassadorial style houses in locations such as Winnington Road. As members of ARLA, we deal with all aspects of residential lettings which would include extensive marketing, evaluating suitable tenants, taking up rental and management references, processing paperwork, including the preparation of a tenancy agreement and statutory notices, with the intention of ensuring that any transaction proceeds smoothly and quickly.
If you wish to rent a property, we would be glad to value it and advise you of our proposed marketing strategy. We will confirm our Terms and Conditions of Business and begin to market the property when you are ready. Our property management service is principally designed for Landlords who live overseas and who are not able to effectively handle the management themselves. This is optional and is offered in addition to our standard lettings service. It is not available unless we are the letting agent.
If you are a Landlord, we can provide you with details of current legislation governing the rental of property in the UK. You should also be made aware of the implications of an Assured Shorthold Tenancy Agreement and the differences between these and Contractual Tenancies or Company Lets, the required Statutory Notices, the Fire and Furnishing Safety Regulations Act 1998 and the Gas Safety Regulations 1994, The (Part P) Electrical Regulations 2005 and the Money Laundering Regulations 2003. As members of ARLA and the National Association of Estate Agents, Godfrey & Barr are well versed in all aspects of residential lettings and are happy to provide you with any further information that you may require.
Overseas Landlords Guide
For a guide to the Non-Resident Landlord Scheme as produced by the Inland Revenue, centre for Non- Residents. Legislation does change over time and we would strongly recommend that you confirm via your legal advisors and accountants the up to date tax and legal position, before committing to a rental.
Type of Agreements
If the Tenancy agreement is to be in your name and the rent is less than £25k per annum, you and the Tenants are most likely to enter into an Assured Shorthold Agreement. This form of agreement came into effect in 1989, under the Housing Act of 1988. This is a fixed term agreement that runs for a minimum period of six months.
Our own comprehensive Tenancy Agreements and Assured Shorthold Agreements have been prepared by us and are designed to be both fair to the Landlord and the Tenant. Both parties will be bound by the terms of the agreement. You should read your Agreement carefully and make sure you understand all the clauses. You should always endeavour to seek independent legal advice from your Solicitor prior to you signing it. The cost of preparing our Agreements is currently £200 plus VAT at the prevailing rate, normally divided equally between Landlord and Tenant.
Option to Renew/Break/Purchase
Depending on the type and terms of your agreement, your Tenant may have an option to renew for a further period of time. If this is the case, they must notify us in writing within the time period specified in your Agreement. If there is no option to renew, but both you and the Tenant wish to extend or renew your Agreement, this can be organised. In both cases, once terms are agreed we will prepare the necessary documentation. In addition, the Tenant may want an option to break (cut short) the Agreement. This must be agreed with the Landlord at the outset. They may be responsible for the proportionate part of the agents commission and Landlord's costs paid in advance by the Landlord, if they determine the tenancy early. Notice to terminate must be adhered to, as specified in your Agreement. The Landlord can also request an option to break, but in the case of an Assured Shorthold, not before six months. They can also request, in certain cases, an option to purchase the property but this must be agreed at the outset. In that case a separate commission for the purchase will apply and terms needs to be agrees with Godfrey & Barr.
Rent Payments
Rental payments are payable monthly, quarterly, half yearly or annually in advance, depending on the terms of your agreement, whether legally demanded or not. The Tenant can pay by cheque, in cash or through their bank by standing order or direct debit. The first payment would normally be made payable to Godfrey & Barr and will be paid at the time that they sign the agreement along with the agreed deposit and other charges. If they wish to move in immediately upon signature, then we will need cleared funds by way of either cash or a Bankers Draft. Further payments will normally be paid directly to the Landlords account as detailed above. Godfrey and Barr will sometimes collect the rent if a Management service is being provided.
Tax on Rental Income
From the 6th April 1996 the way in which non-resident Landlords are taxed on rental income changed. These changes present the agent or the Tenant with two alternatives. They can either pay the Inland Revenue 25% of the rent, net of expenses. There is no negotiation on the flat rate 25% and payments must be made quarterly. If at the end of the tax year there has been excess payments, the Landlord can, on submission of detail paperwork, apply to the Inland Revenue for a rebate or, the agent or the Tenant can pay to the Landlord rental income without deduction of tax. The latter should only be done if the Landlord (or his agent) apply for and are granted permission by the Revenue to avoid deductions.
The above is only applicable to Landlords who are non-resident (normally someone who resides out of the UK for a period in excess of 6 months). If you are paying rent to a managing agent, then it is the managing agents responsibility to withhold tax as above or to receive an exemption certificate. If however you are paying rent directly to an overseas Landlord and the Landlord cannot provide you with an exemption certificate then you are strongly advised to withhold 25% of the rent and make a return to the Inland Revenue quarterly for this amount. If you do not, you may well be assessed by the Revenue for payment of the same.
Further details of this Scheme are available from The Centre for non-resident, Inland Revenue, St John's House, Merton Road, Bootle, Merseyside, L69 9BB. Telephone 0151 472 6208 / 6209.
Deposit
A deposit is generally equivalent to six weeks rent and is normally held by Godfrey & Barr as Stakeholders between the parties in accordance with the ARLA scheme called the TDSRA (Tenants Deposit Scheme for Regulated Agencies). Godfrey & Barr will be entitled to interest on this money unless otherwise agreed. In certain circumstances and where the rental falls outside the Housing Act 1988 and provided you are in agreement and current legislation permits, the Landlord can hold the deposit but this should be placed in a separate interest bearing account. It could be used to offset any costs such as cleaning, gardening, damage or dilapidation's at the end or during the Tenancy, but should not be converted into rental payments. The deposit should be refunded in full by either the Agent or the Landlord at the end of the Tenancy provided that there are no dilapidation's or breaches of the agreement. Any disputes will be arbitrated under the TDSRA, providing the Agent is holding the deposit.
The Inventory and Check-In / Check-Out
Before the Tenants move in, the Landlord or an inventory service
prepares an inventory, listing comprehensive details of the contents
and conditions of the property. On the day the Tenants move in or at some other agreed time, they may be met on the premises to check through the inventory. They will then be asked to sign a declaration confirming the details of contents and condition are correct. The cost of preparation of the inventory is normally paid by the Landlord and the check-in and checkout costs by the Tenant. If they do not sign (amend if required) and return the inventory to the agent within seven days, it will be deemed that they have accepted it as written.
Initial Payments
As stated above, once the Tenants have chosen a property and the terms of the Tenancy have been agreed, Godfrey & Barr draw up the relevant documents for signature. At this time Godfrey & Barr ask them to pay the first rental payment, half the cost of drawing up the Tenancy agreement of £100 plus VAT, the deposit, the reference charge approx. £18.50 plus VAT for each individual and £25 plus VAT for a company, plus any inventory costs. Some of their deposit may be non-refundable if they withdraw from the letting.
Utilities
Most Agreements require the Tenant to be responsible for gas, electricity, telephone, water rates and T.V.licence. Gas, electricity and telephone companies will carry out a credit check on you. If they have not been a customer before, they may ask for a deposit against the first years bill. You must inform all the relevant services of your start date as must the Tenants. It is your responsibility to notify the relevant utilities of your impending termination date, at the termination of the Tenancy. The deposit will not be refunded until proof can be provided to us or the Landlord that all utility accounts have been settled.
Council Tax
You must inform the local authority of the start date. The council will then send them a registration form. It is a criminal offence not to pay Council Tax.
Insurance
Under our normal agreement, the Landlord takes out insurance for the building and the contents provided. This does not usually cover the possessions of the Tenants. For their own possessions they should take out an "all risks" insurance policy.
During the Tenancy
If the property is being managed by Godfrey & Barr, we will make sure everything goes smoothly for the Tenants. Godfrey & Barr will deal with any problems, like electrical appliance repairs or other minor problems. If the property is not being managed, all matters concerning the property are between the Tenant and the Landlord and should be dealt with directly.
Moving Out
Either Godfrey & Barr or the Landlord should arrange for an inventory checkout on the day the Tenants are due to leave. At the checkout time, the property should be clean and tidy, as they found it and ready for hand over. After handing over the keys, a report is prepared as to the condition of the property and any defects or damage are listed. They should already have contacted the utility companies for termination accounts. Once these are paid, they should be submitted to either Godfrey & Barr or the Landlord as evidence of payment. This is important. If for any reason a supply is disconnected, the Tenants could be charged a reconnection fee. Their termination receipts are also needed so that either the Landlord or Godfrey & Barr can release the original deposit, less any appropriate charges, (which may include half the cost of the check-out), and return the balance to them.
Furniture and Furnishings
a) March 1st 1993 saw the application of the above Regulations to furnished lettings they require that upholstered furniture supplied in a furnished let must meet all the resistance requirements of the Regulations. The supply of furnishings " in the course of business" which do not meet the Regulation constitutes an offence under the Consumer Protection Act 1987. Conviction for an offence under the Regulations carries a maximum penalty of a fine of £5,000 or six months imprisonment, or both.
b) The phrase "in the course of business" includes the business of letting furnished accommodation by Landlords and can also include the business of a Letting Agent. However Landlords who privately let their principal residence are not caught by this definition, unless the let is long term or they carry on persistent letting.
c) In brief, the Regulations require that the upholstered furniture, mattresses, pillows and cushions, and head boards and head bases which are upholstered, included in a furnished letting must have a fire resistant filling material, the covering fabric must have passed a match resistance test and the combination of cover fabric and filling must have a passed cigarette resistance test. The Regulations do not apply to soft furnishings such as curtains, carpets, etc.
d) Furniture, manufactured before January 1st 1950 have been deemed not to be made with especially hazardous materials and is exempt.
e) There is also some leeway for properties which have been subject to a continuous let since before 1st March 1993. In this case the Regulations need not be complied with up to 31st December 1996. However, any replacement furniture supplied during this transitional period must comply.
f) Since March 1st 1990 all new upholstered furniture sold in retail outlets has had to comply with the Regulations. In order to show compliance such furniture carries a permanent label stating the tests to which the materials have been subjected. This label is of great assistance to a Letting Agent or Landlord in determining what furniture is acceptable in order not to commit an offence.
g) Further guidance and a free booklet produced by the Department for Trade and Industry is available from your local Council Trading Standards Department, or from this office
h) Please ensure that the furniture and furnishings of your property conform to the regulations of the above act. Godfrey and Barr cannot be held responsible if your furnishings and furniture does not comply with current regulations.
The Gas Safety Regulations
a) The Gas Safety (Installation and Use) Regulations 1994 are made under the Health and Safety at Work act 1974, which is the principal, legislation relating to the same. The principal obligations of the Landlord are to be found in Regulations 34, 35 and 36 and the offences in Section 33 and 36 (1) Health and Safety at Work Act 1974.
b) Details of which are available from this office and the Health and Safety executive. The act governs the Landlords obligations, unsafe appliances, and maintenance of appliances, escape of gas and criminal liability.
Stamp Duty Land Tax
From the first of December 2003, this tax is solely the responsibility of the Tenant to pay. It is payable to the Inland Revenue for any short-term residential tenancies of up to seven years. The core change is the threshold over which the SDLT becomes due and the method of calculating that threshold is based on a computation known as Net Present Value (NPV). If the NPV amount is less than £60,000 then not LDLT is due. If the figure is more than £60,000 then tax is payable by the tenant(s) based upon 1% of the NPV. The sole responsibility for the calculation and submission of the relevant forms (SDLT1 and SDLT4) to the Revenue is the tenant(s). If makes no difference if the tenant is a person(s), Company, Trust or Partnership. All are liable to pay SDLT. The Tenant has 30 from the 'effective date' in which to submit the forms. There are fines and possible penalties if the forms are submitted later than three months. If does not matter whether the tenancy is assured, shorthold, non-housing act or company let, they are all included. The calculation is on the rent due under each year (or part year) of the initial fixed term - irrespective of any notice period requirements. It is irrelevant if there is a break clause in the tenancy, as the calculation of the NPV is based upon the rent due each year (or part thereof) of the initial fixed term. There is no entitlement to a rebate in the event that a break clause is exercised, or a tenancy terminating early for any reason. Further details are available from the Inland Revenue's Web site or from ARLA.
Other Legal Regulations
Money Laundering Regulations 2003 (MLR 2003); the Proceeds of Crime Act (PoCA 2002) and the Terrorism Act 2000 (TA 2000).
Finally, in accordance with current legislation, specifically the Money Laundering Regulations 2003 (MLR 2003); the Proceeds of Crime Act (PoCA 2002); the Terrorism Act 2000 (TA 2000) amongst other requirements, we are obliged by law to properly identify clients' of this firm. However in the interests of safe practice, we also require proper identification on those parties who rent a property through us. In this regard, we require you to provide us with formal identification. This can in the following form. A valid passport, or a valid EU/UK photo driving license. We also however require proof of address. This could also be a utility bill, or a mortgage statement, or an Inland Revenue tax notification. The above should be brought to our office in person, where a copy will be made and retained in our records. In the event that you are unable to visit us personally, we would accept copies, but in the case of the passport or driving license, these must be certified by an professional person, i.e.: a solicitor, a GP or a JP. In the case of joint owners, buyers or tenants, both must comply with the above legislation.
Electrical Regulations
As of January 2005, there was new legislation introduced to cover electrical installations called the Part P Electrical Regulations Act 2005. Any installation or repair, excluding minor repairs, such as replacement of switches and sockets, now needs to be completed and self-certified by a qualified Electrician, who is a member of either ELECSA, BSI, ECA/BRE, NAPIT or NICEIC. Otherwise Building Control at your Local Authority has to oversea the installation or repair. Even minor repairs must come with a 'Minor Works Certificate' on completion of the job. Repairs that fall within the Act should be certified in accordance with BS7671. Your Landlord should ensure that all works in the property, whether completed, underway or scheduled are carried out in accordance with the regulations and legislation.
The above information is correct as at November 2006, but due to the continuous changes in legislation in relation to residential lettings and estate agency in general, tenants are recommended to seek professional advise from either their accountant or their solicitor to clarify the up to date tax and legal position, before committing to any rental.
