Landlords from the UK who choose to live abroad can enjoy living their dream lives in another country while enjoying a steady income flow from their rental property. However, there exist some challenges you’ll face acting as a long-distance landlord. Difficulty communicating and the inability to meet tenants in person are just some of the challenges you may face. Also, if a tenancy ends while still abroad, landlords are left with the singular choice of asking someone else to carry out viewings for them.

For these reasons, landlords who live abroad prefer using a letting agency to manage their property while they live their lives undisturbed abroad. Are you an international landlord? Are you planning to become one soon?

This write-up will discuss some 4 tips to help make the letting process the easiest for you. Sit back, relax, and read on!

Get to Know Your Legal Responsibilities

All rental property owners in the UK are required to pay tax on the rental income. As an international landlord, you are no exception. The HM Revenue and Customs (HMRC) consider you a ‘non-resident landlord’ if you live out of the UK for 6 months or more in a year. However, this won’t be your case if you live outside the UK only temporarily, i.e. less than 6 months in a year.

You can pay your tax by taking out an essential tax rate from the rents or better still by using a Self-Assessment form for tax return. Payment can be done by a tenant or a letting agent. At the end of each year, the agent will provide you with a certificate. If you do not wish to do this, you will need to join the “Non-resident landlord (NRL) scheme. More information is available by clicking here.

Carry Out Screening through Skype

Meeting tenants one on one before accepting their rental application has proven to be one of the greatest challenges faced by landlords who live abroad. This of course won’t be a problem if you choose to use a letting agent. However, determining whether or not a tenant is the right person for your property without seeing them can be difficult. To help solve this problem, consider using Skype, Zoom, or any other video conferencing platform to discuss with tenants before deciding to accept or decline their rental application.

Give Priority to Long-Term Tenants

Administrative demands are higher for shorter tenancies than longer ones. Also, landlords are more likely to develop stronger bonds with long-term tenants. This helps take away much anxiety concerning how your property is being treated.  

Consider Using a Property Management Agency

The best and simplest way to avoid any headaches with regards to managing your property from abroad is to have someone else do it for you. Most landlords have found this to be the best way to live a stress-free life abroad.

A trustworthy and reputable property management agency like us (SWR) can bear the burden for you. We take care of everything from collecting rent from tenants to ensuring that you pay just the right amount of rental tax as you should normally pay.

Owning an apartment block or a flat on a lease comes with many challenging responsibilities. However, a block management company can help you carefully oversee the welfare of your building and cover all legal responsibilities on your behalf.

The block management company is responsible for the overall maintenance of residential blocks, providing proper assistance for the client (property owner) all the time. Some of the responsibilities of a block management company include:

Routine Inspection

The block management company is wholly responsible for appointing professionals to visit and inspect blocks on their portfolio, noticing and diagnosing legal risks or potential problems on the block. When you own an apartment block, there is a need for these routine inspections. Block management companies take up this challenging task as part of their many responsibilities. The inspection covers all areas, from accounts to records to maintenance. The company makes sure all legal domains and functions are correctly taken care of.

Safety Regulations

The continuous stability of a site is dependent on specific health and safety precautions. The block management company is responsible for making sure that health and safety laws are regulations are strictly followed. The company helps to implement and manage these safety laws consistently. Block management companies take health and safety precautions seriously and handle them professionally for the smooth sailing of property operations.

Insurance

An insured property gets covering against several unexpected risks that may arise at any time – risks from fire hazard, natural damages like hail or storms. A block management company helps you to identify the right cover or insurance policy for the block. It is among the duties of the company to assess the number of occupied or rented apartments and the types of occupants, and then find a suitable insurance policy for the block.

Keeping Records

Legal records, files, and statements can often become cumbersome to keep track of. A block management company is responsible for keeping detailed records of all transactions, work, and inspections. These records are especially vital at certain times. Making use of a block management company saves you from worrying about paperwork and documents. The company carefully holds all necessary records for safekeeping.

Keeping Accounts

Accounting for a block property involves many responsibilities, including rounding up rents and services charges, correctly allocating resources, creating a budget to make sure money is readily available. And overseeing account creation for shareholders of the block. All these accounting processes are vital and delicate and require the professional attention of a reliable block management company. The company appoints a professional accountant to make sure all accounting processes are on track.

General Maintenance

The block management company ensures that maintenance contracts are in place and operational, ranging from general cleaning to gardening to cost-effective installation of necessary facilities.

At South West Relocation, we offer trusted and reliable letting and block management services to our clients. By partnering with us, you have the assurance that you will receive professional and up-to-date management services for your properties.

Legionnaires’ disease occurs when droplets of water contaminated with Legionella bacteria are inhaled. It is a potentially fatal form of pneumonia and the symptoms are similar to that of flu – high temperature/fever, cough, muscle pain, headache, diarrhoea, confusion. If you suspect Legionnaires’ disease, you must get help immediately. 

Why is this relevant to rental properties?

Man-made hot and cold water systems within most properties provide the ideal environment for Legionella bacteria to grow – suitable temperature, water droplets produced and dispersed (shower heads etc), water stored in tanks and/or recirculated, some “feed” for the organism such as rust/sludge/scale.

What do you need to do about it?

As a landlord you have a responsibility to manage the risk of Legionnaires disease within your property under the Health and Safety at Work Act 1974. As an agency we manage that risk on behalf of landlords in our managed properties.

We:

1) Recommend a third party risk assessment prior to commencement of letting

2) Carry out our Legionella protocols at check in such as running taps for 3 minutes to drain out stagnant water and checking shower heads for signs of dirt or limescale

3) Liaise with tenants to ensure that relevant precautions are taken if the property is going to be left empty for more than 2 weeks

4) Advise tenants of the relevant symptoms and how to reduce the risk

The advice given to tenants is as follows:

1) Make sure your boiler is set correctly. Hot water should be 50 degrees or more.

2) Cold water should be cold, not lukewarm. Please report it if this is not correct.

3) Regularly flush through any taps or showers not in regular use by running for 3 minutes

4) Disinfect and descale shower heads at least every 6 months

5) If you leave the property empty for longer than 2 weeks, please advise us of this, and on your return run all water outlets for 3 minutes.

As a landlord, you have several legal obligations under The Gas Safety (Installation and Use) Regulations 1998.These are:

1) Arrange an annual gas safety check to include all gas appliances and flues within the property.This must be carried out by a Gas Safe registered engineer.

2) Provide a copy of this report to your tenants within 28 days of the test, and to all new tenants moving into a property. Note: Under the Deregulation Act 2015 if this is not done you will not be able to serve an eviction notice to your tenants. See this post for more information.

3) Maintain all gas appliances, flues and pipework, to include an annual service.

You are also required under the Health And Safety at Work Act 1974 to ensure the property is safe.

What happens if you don’t comply?

Non-compliance is a criminal office and the standard penalty is a £6000 fine (per appliance) and/or 6 months imprisonment. However, if there were to be a fatal incident due to lack of gas safety compliance a criminal charge as serious as manslaughter could be levied against the landlord and/or agent. Any buildings or contents insurance could also be invalidated.

The current regulations state that a gas certificate must be carried out on annual basis, and must not be allowed to expire. This can cause an issue if there is no availability for appointments meaning you potentially have time left on a certificate “wasted”. The government has therefore implemented the Gas Safety (Installation and Use) (Amendment) Regulations 2018 on 6th April 2018 which introduce more flexibility to the timing of the gas certificate, by using an “mot style” system whereby the certificate can be carried out within 2 months of the due date, but retain that original date going forwards.

For more information and to check if your engineer is gas safe registered you can visit the Gas Safe Register.

Unlike the gas safety legislation, there is currently* (*see below) no legislation which states that a landlord has is a legal duty to arrange for an annual electrical test to be carried out.

However, under the Landlord and Tenant Act 1975, The Housing Act 2004 (in particular the HHSRS), Part P of the Building Regulations (England and Wales), The Electrical Equipment (Safety) Regulations 1994, the Health and Safety at Work Act 1978 and the Defective Premises Act 1972, a landlord is obligated to ensure that a rental property is safe, and will be liable legally if a tenant is injured or their personal belongings damaged due to a defect in the electrical systems or appliances within a property.

In general terms, a landlord is required to ensure that all electrical installations and portable appliances (appliances with a plug) must be:

1) Safe

2) In good working order

3) In good repair

4) To current standards

Legislation Update 2018

Under the Housing and Planning Act 2016 measures are being introduced to make it a legal requirement for landlords to carry out:

1) A fixed wire test (also known as an Electrical Installation Condition Report) every 5 years

2) A visual condition report on an annual basis/every change of tenancy

3) An annual PAT test

As yet, there is no confirmed date for the implementation of these legal requirements. As an agency, SWR:

1) Arrange annual PAT testing on all managed properties

2) Carry out a basic visual inspection of electrical installations on check in of tenants

3) Are rolling out a fixed wire testing schedule across all managed properties in 2018 in readiness for the new legislation.

Under the Smoke and Carbon Monoxide Alarm (England) Regulations 2015, from 1st October 2015 landlords of rented property are required the make sure their property has:

1) At least one working and in date smoke alarm on each floor of the property

2) A working and in date CO alarm in any room with a solid fuel (wood, coal) burning appliance is installed

3) been checked at the start of tenancy to make sure all alarms are present, in date and in working order.

The law in England is inconsistent with the rest of the UK and only covers solid fuel burning appliances, Carbon Monoxide can also be emitted by gas burning appliances and therefore it is best practice to ensure there is an additional CO alarm in any room with a gas burning appliance (such as a gas cooker, fire or a boiler).

The Carbon Monoxide (Detection and Safety) Bill  2017 – 2019 is currently going through parliament to make this recommendation a law, which in our opinion is a fantastic idea. All our managed properties already comply with this recommendation.

Carbon Monoxide poisoning is known as the “silent killer” due to it being an odourless and colourless toxic gas. CO is produced when a fuel is not burnt properly, and can be produced from all gas, oil and solid fuel appliances, hence an annual service and annual safety test is very important to ensure appliances are operating correctly and safely.

Where should they be fitted?

A smoke alarm should be fitted according to manufacturers instructions but as a general guide:

1) On the ceiling, at least 30cm away from any wall or light fitting

2) Normally in a hallway where it can be heard throughout the house

A CO alarm should be fitted according to manufacturers instructions, but as a general guide:

1) At least 300mm from any wall (if ceiling mounted)

2) At least 150mm from any ceiling, door or window (if wall mounted

3) Between 1 and 3m from the potential source of CO (measured horizontally)

4) Not in an enclosed space (inside a cupboard for example)

5) Not where it could be obstructed

6) Not directly above a sink

7) Not near an extractor fan, air vent or similar opening

8) Not where the temperature could drop below -5 degrees or exceed 40 degrees.

Symptoms of CO Poisoning

Dull headache

Weakness

Dizziness

Nausea or vomiting

Shortness of breath

Confusion

Blurred vision

Loss of consciousness

IF YOU SUSPECT CO POISONING, LEAVE THE HOUSE IMMEDIATELY AND CALL 999.

When calculating the amount of tax payable, landlords normally offset their expenses against their gross rental income, leaving their taxable income or “profit”. The total profit combined with other income will allow them to be categorised into a tax band – Basic Rate (20%), Higher Rate (40%) or additional Rate (45%). Historically, mortgage interest could be included as an expense to reduce their taxable income, but this changed in April 2017, when a new system of tax relief began to be phased in.

The changes apply to all landlords who let residential property within the UK as an individual or a partnership. You will not be affected if you run your rental properties as a limited company so this could potentially be an option to explore although there may be implications with capital gains tax so we would recommend taking specialist tax advice.

From 6th April 2017, landlords are only able to offset 75% of their mortgage interest against their tax liability. This reduces to 50% from 6th April 2018, to 25% from 6th April 2019 and on 6th April 2020 you will no longer be able to offset any of their mortgage interest.

The old system of tax relief is being replaced by a new system of “tax credits”. A proportion of your mortgage interest will qualify for a 20% tax reduction:

From 6th April 2017 25% of your mortgage interest will qualify, from 6th April 2018 50% of your mortgage interest will qualify, from 6th April 2019 75% of your mortgage interest will qualify and from 6th April 2020 100% of your mortgage interest will qualify.

In basic terms, most landlords will be seeing their tax bill increase. Higher rate and additional rate taxpayers will pay more as the tax credit only refunds at the basic 20% rate, and basic rate taxpayers may be pushed into the higher rate tax bracket as they will be unable to set mortgage interest against income as an expense.

Condensation and mould are a regular problem within residential property and are often mistaken for a “damp” problem. We receive a significant number of reports of mould between the months of October and March – many more than throughout the warmer months of the year and tenants are often unaware that their own actions have caused the problem.

Are you experiencing condensation and mould on windows, window recesses, walls or ceilings? Are the window recesses, bathroom ceiling or corners of your rooms going mouldy?

If you are experiencing any of these issues, it is almost certainly not a defect with the property, rather a result of the way the property is being used. You as the tenant need to take urgent action to prevent the problem from worsening.

What is condensation?

Have you ever noticed droplets of water forming on the inside of your windows? This liquid is called condensation, and is caused by the relationship between the temperature outside and inside the property, and the amount of moisture in the air inside the property. When warm moist air makes contact with a surface that is colder than itself, it releases its moisture content on to the surface causing the formation of condensation. This will lead to mould if not dealt with immediately. This process can occur on all surfaces within a property such as walls, ceilings and woodwork.

Signs of condensation include:

  • Wet windows and walls
  • Black spot mould
  • Wallpaper peeling
  • Musty smell

What is “Black Spot” Mould? (Aspergillus Niger)

Black spot mould is a direct result of a condensation problem within a property as is often confused with damp, which is a defect with the property and not a tenant responsibility. Black spot mould usually occurs in areas with poor ventilation or lack of air movement, like cupboards, corners of rooms or window recesses and is a direct result of a condensation problem. Black spot mould is dangerous because it can affect the health of those living in the property, in particular children and those with health conditions such as asthma, those who are immunocompromised or have other respiratory or pulmonary conditions. Mould spores are airborne and can quickly spread throughout the property.

How can you treat and manage condensation and black spot mould?

If you notice the signs of condensation in your property you can take various steps to reduce the problem.

  1. Ensure all extractor fans are working correctly
  2. Ensure the property is well ventilated by making use of window vents/opening windows
  3. Ensure tumble dryers are correctly vented if applicable
  4. Ensure the property is adequately heated
  5. Do not dry washing on radiators or airers around the property
  6. Wipe down any condensation when found
  7. Do not use calor gas heaters (or similar) within the property
  8. Spray any black spot mould with mould remover or mild bleach (using precautions as directed)

To Summarise:

Condensation and eventually black spot mould are caused by several factors:

  1. Too much moisture being produced within the property – incorrectly vented tumble driers, non-working extractor fans, drying of clothes on radiators and airers around the property
  2. Lack of ventilation in the property – not making use of window vents, not opening windows
  3. Inadequate heating in the property
  4. Lack of air circulation caused by accumulation of personal items within the property

If you are concerned that you have a problem developing within your property, please contact us as soon as possible and we can make a plan together to resolve your issue.

Images sourced from: 

https://www.envirovent.com/home-ventilation/stop-condensation-on-windows/

http://www.mtha.org.uk/for-tenants/damp-and-condensation/

https://www.envirovent.com/blog/keep-condensation-and-damp-out-this-winter/

https://www.timberwise.co.uk/2010/02/surveyors-fotofile-condensation-black-spot-mould/

http://www.completeremedialsolutions.co.uk/

The Homes (Fitness for Human Habitation) Bill has now made its journey through parliament and received Royal Assent, which means it is now a law. The bill makes it a requirement for a landlords to ensure that their property is “fit from human habitation” at the start of, and for the duration of the tenancy. This law will also apply to the communal areas within blocks of self contained units.

This new law amends the Landlord and Tenant Act 1984 and the Housing Act 2004 and gives the tenant stronger rights in terms of tackling a landlord who in unwilling to maintain or repair their property. It gives them a right to take their landlord to court t if the property does not comply with the Housing Health and Safety Rating System (HHSRS) and gives the court the facility to force the landlord to comply along with payment of damages to the tenant.

For those not aware of it, the HHSRS is a system used by local councils to identify risks within a property, a rate them in order of severity. Different risks are allocated a set number of points, and the final number of points dictates the “category” of hazard present – and the resulting action that must be taken.

The law is scheduled to come into force on the 20th March 2019 and will apply to all new tenancies created on or after this date. It will be rolled out to all tenancies on the 20th March 2020. It states that a property will be unfit for human habitation if there is a serious defect (Category 1 hazard) in any of the areas below. The Act states that “the house shall be regarded as unfit for human habitation if, and only if, it is so far defective in one or more of those matters that it is not reasonably suitable in that condition”

  • Repair
  • Stability
  • Freedom from damp
  • Internal arrangement
  • Natural lighting
  • Ventilation
  • Water supply
  • Drainage and sanitary conveniences; and
  • Facilities for preparation and cooking of food and for the disposal of waste water.

The landlord however, will not be responsible if the damage or issue has been caused by the tenant or an action of the tenant. There will also be some exemptions, for example:

  • Rebuild or reinstate a destroyed building
  • Put right unfitness the tenant is responsible for causing
  • Carry out works which are the responsibility of a superior landlord (freeholder), or for which they cannot obtain third-party consent

All of our managed properties are, and will always be maintained to a high standard so you can rest assured that as a client of SWR the implementation of this law will not affect you. The law should hopefully target those landlords who choose to ignore their obligations and exploit their tenants, however until we have case law to analyse, we cannot be sure of any unintended consequences for our own landlords who are always conscientious and take care of their properties and tenants.

Download more information on the HHSRS here.

Read the full bill here.

Unless you have been living without a TV, phone or radio, I expect you have now heard about the Tenant Fees Act 2019, aka the “Tenant Fee Ban” (TFB).

So, what is it?

In short terms, the TFB is a piece of legislation introduced by the government which came into force on 1st June 2019. It specifically prohibits landlords and agents taking any form of payment (or forcing tenants to contract with a third party) in order to obtain or continue an Assured Shorthold Tenancy Agreement, unless that payment is specifically permitted by the ban (a “permitted payment“). All other payments are known as “prohibited payments” and carry heavy penalties, as I will discuss later in this article.

The TFB applies to all AST’s and licences (not common law, company or high rent tenancies) granted on or after 1st June 2019 and all AST’s and licences from 1st June 2020.

What payments are permitted?

There are several, including:

Rent (but this must be kept at the same level, or higher, throughout the duration of the fixed term. If it is decreased, the additional amount during the months prior to the increase will be seen as a prohibited payment.

Security Deposit (This is now capped at 5 weeks rent, and not a penny over, regardless of circumstances i.e. pets. Deposit calculators are widely available online, and the the following calculation must be used: (Monthly rent x 12/52 x 5). This cap is increased to six weeks rent for properties with an annual rent of over £50,000.

Holding Deposit (there are many regulations around the acceptance of a holding deposit, which I may need to go into further detail on a separate post. However the main points are that it is capped at 1 weeks rent, and it must be returned to the tenant save for four explicitly stated sets of circumstances .)

Change of tenancy Charge (a charge can be made when the tenant requests a change to the tenancy, such as the addition of a permitted occupier, or the change of a rent date. This charge is capped at £50 including VAT).

Late Rent Charge (this is one is pretty laughable and likely not worth even thinking about. You cannot charge for late rents, chasing letters, visits. The only charge you can make is an interest charge of 3% over the BOE base rate, after the rent is more than 14 days late).

Replacement keys/security device (Self explanatory, but you can only charge the cost of the replacement key or device, not for your time.)

Early Termination (If the tenant would like to leave a contract early, you can charge to cover your costs. However, if you are not using an agent, you are not permitted to charge them for re-referencing the new replacement tenants. They are also expected to pay rent and utilities up until the day before a replacement tenant moves in).

Breach of tenancy (If the tenant breaches any part of the agreement, you can seek to recover your costs from them, either directly or through the security deposit).

What payments are prohibited?

Anything not listed above is prohibited.

What are the penalties for breaching the ban?

Luckily for us Bristol folk, the government helpfully decided to place the central UK enforcement authority for the Tenant Fees Act within Bristol city council. They are a team who will be able to enforce the ban through penalties, and make no mistake, after reading the government guidance written for enforcement authorities it is very clear that they are being pushed to enforce this legislation to the letter. The reasons for this may become clearer to you if you allow me explain a little further about the penalties for breaching the ban.

If you purposefully or accidentally take a prohibited payment and do not return it to the tenant within 28 days, if reported it is likely you will be given a penalty charge. Ignorance is sadly no excuse so it is important you are aware of your obligations.

Any breach would render a Section 21 eviction notice invalid, so you would not be able to regain possession of your property until the prohibited payment was returned.

First breach: Up to £5000 penalty charge per breach (note: if you charge one fee that includes several items i.e. referencing, check in, tenancy fee: this could easily be seen as multiple breaches which would each attract a penalty charge in its own right).

Second or subsequent breach within 5 years: Criminal offence, or a penalty charge of up to £30,000 as an alternative to prosecution, per breach.

Common Errors

There are many people that believe the TFB only applies to letting agents, however this could not be further from the truth. As a self-managing landlord, here are a couple of scenarios which could easily catch you out if you are not making sure you are fully up to date with your obligations.

  • Your tenant is on a six month AST which renews on the 1st August 2019. You currently hold six weeks deposit. At their request, you supply another six month agreement as you normally do, and as the deposit is held in a custodial scheme, no action is needed.

WRONG. Prior to signing the new fixed term agreement (and effectively creating a new tenancy, you MUST return the portion of the deposit that is over the five week deposit cap. If you do not do this, that money will become a prohibited payment and you will be in breach.

  • You are advertising your property to rent as no pets, but someone phones and offers to pay a separate payment as protection against pet damage. This is fine, because it technically isn’t part of the security deposit.

WRONG. You must not take any money over the five weeks rent as a security deposit. In this scenario, not only would you be in breach of the TFB, but you would also be in breach of the Tenancy Deposit Protection Legislation.

  • You are advertising your property to rent as no pets, but someone phones and offers to sign a contract that states they will have the property and carpets professionally cleaned and flea treated at the end of the tenancy. You agree to the tenancy on those terms.

WRONG. You must not make or allow the tenant to contract with a third party (that costs them money) as a condition of granting a tenancy. In this instance, the fact that they must pay for cleaning and flea treatment in order to have the tenancy would be a breach.

  • Your tenant calls you at 10pm to say they have locked themselves out as they have lost their keys. You visit the property to let them in and provide them with a spare, and they give you £20 for your trouble.

WRONG. You are not able to charge for your time when resolving issues like this. You are only able to charge them the cost of the key. Our advice in this situation would be to either ask them to come to you to collect the key, or for them to call a locksmith who they would need to pay directly.

As you can see, the TFB was created as a piece of legislation to protect tenants from unscrupulous landlords and letting agents. I am the first to acknowledge that historically there has been a huge amount of unfair treatment of tenants, particularly from city centre Letting Agents across the country. However, the way this legislation has been written goes above and beyond the job it was meant to do.

It is so convoluted and technical that it makes it difficult for the non-professional landlord to stay compliant without expert support. It is full of opportunities for mistakes, and this coupled with widespread ignorance around the true implications and requirements of the Act means I am expecting to see a large amount of prosecutions over the next few years.

That said, any piece of legislation is subject to interpretation and until we have case law coming through giving us better more conclusive guidance on how to interpret the Act, we all just need to keep our fingers crossed that doing our due diligence is enough to comply and ensure that we aren’t one of the unfortunate few who are involved in creating that case law that everyone else is awaiting to enable them to learn from.

As always, I hope this information was useful, and if you have any questions feel free to post them below. Please make a point of reading our disclaimer located on the privacy page of this website.

South West Relo - your local family agent

Family run, our tenants and landlords love the fact we take personal care in what we do to help customers.

Here at SWR, our business model is not to undercut or price match other agents. We offer you the most comprehensive and personalised service to protect your valuable and important investments whilst making the journey of being a landlord as “stress free” as possible.

Come and visit us at The Stables and let’s discuss how we can help you with your property management needs.