When you rent your home out, it is vital that you are aware of your legal rights and obligations.
You’ll need to register as a landlord. The maximum penalty for letting out a property when not a registered landlord is £50,000. A ban can also be imposed on being registered as a landlord in any council area for a period of up to five years.
Inform your mortgage lender you want to rent your property out. Some lenders have restrictions on who you can rent a property to. Renting your property out can also affect your insurance. You need to make certain your insurers understand you’ll be renting your out your property and provide adequate coverage.
If your property is going to be let to three or more unrelated tenants, then you’ll need to apply for an HMO (house in multiple occupancy) license. There are extra criteria you’ll need to meet if your property will be used in this way.
The private residential tenancy
Any tenancy that started on or after 1 December 2017 will be a private residential tenancy. This new tenancy replaced the assured and short assured tenancy and brought in changes and improvements to the private rented sector, including:
- No more fixed terms – private residential tenancies are open ended, meaning you can’t ask the tenant to leave just because they have been in the property for 6 months as you can with a short assured tenancy.
- Rent increases – the rent can only be increased once every 12 months and if the tenant thinks the proposed increase is unfair they can refer it to a rent officer.
- Longer notice period – if the tenant has lived in a property for longer than 6 months you will have to give at least 84 days notice to leave (unless the tenant has broken a term in the tenancy).
- Simpler notices – the notice to quit process will be scrapped and replaced by a simpler notice to leave process.
- Model tenancy agreement – the Scottish Government have published a model private residential tenancy that can be used by landlords to set up a tenancy.
If your tenants moved in before 1 December 2017 then they will still have an assured tenancy or a short assured tenancy.
Getting the property ready
Your property must meet the repairing standard, which means it must meet a specific set of conditions, including:
- the property is wind and watertight
- the structure and exterior are in a reasonable condition
- the installations for water, gas, electricity, sanitation and heating are in a reasonable state of repair and working order
- any fixtures, fittings or appliances provided by the landlord (like carpets, light fittings and household equipment) are in a reasonable state of repair and proper working order
- any furnishings provided by the landlord can be used safely for the purpose they were designed
- it’s fitted with suitable fire detection devices – at least one smoke alarm in the living room, one in every hall or landing and a heat alarm in every kitchen
- it’s fitted with a carbon monoxide detector in any room with a carbon fuelled appliance (such as a heater or boiler, but not a cooker) or there is a flue from such an appliance
Electrical safety inspections have to carried out by a qualified electrician at least once every five years. Also, If you have any gas appliances, arrange for a safety check every 12 months, called an Annual Landlord Gas Safety Record. This should be done by a Gas Safe engineer.
You will have to get an Energy Performance Certificate (EPC) for your property and must include the rating in any advertising.
Landlords also have to carry out a Legionella risk assessment of the property.
Advertising the property and references
You need to give the Energy Performance Certificate (EPC) rating and include their registration number in all adverts.
Arrange viewings. If you are currently renting the property out, you have a responsibility to give your tenants at least 24 hours written notice of any visit to the property. Try to have viewings, where it’s possible, at a convenient time for your existing tenants.
Ask for references from a previous landlord, employer or friend. If these are satisfactory, arrange a moving in date with the tenant.
Dealing with tenancy paperwork and deposits
Give the tenants a copy of the tenancy agreement to read through, remember after 1 December 2017 all tenancies will be the new private residential tenancy, you can create a tenancy agreement by using the model tenancy agreement from the Scottish Government.
You also need to give your tenants the Annual Landlord Gas Safety Record certificate, Energy Performance Certificate (EPC) and electrical safety certificates. Tell them how to report repairs and emergencies.
Arrange payment of rent and deposit. Ask them to put the property address as the ‘reference’ if they pay by bank transfer so it’s easy to keep track.
Put the deposit straight into one of the approved Tenancy Deposit Schemes. You have to give it to the scheme within 30 days of the tenancy starting. Tell the tenant which Tenancy Deposit Scheme their deposit is in.
Inform your council of your tenant’s details and moving in date. Let your tenant know the council have their details for council tax purposes. Let the tenants know what council tax band the property is so they can work out how much their bills will be.
At Independent Estates we can help you every step of the way.