Landlords Guide

So you want to let a property: Why do people rent?

Records show that at the turn of the century around 90% of properties were rented. After many years at war, Britain had a huge shortage of council properties. The country started to rebuild itself and began to propser again after the darker time of the War. With industry and trade growing, the personal wealth of individuals began to improve, people had more money and ambition and they wanted to buy their own properties – this offered them security, assets and status, while at the same time jobs still offered the long term security.

This trend continued and peaked in the 1980’s. As property prices were on the increase, buying a property was within reach of most people and there was social pressure to get your foot on the ladder as early as possible so as not to lose out on capital growth. During this period the private rented sector dropped to only 7%. Subsequently mortgage rates soared, so did the property prices which shortly afterwards fell dramatically. For many, this was disastrous, hitting many with negative equity, the inability to sell, and for some – re-possession. With the changes included in the 1988 Housing Act the rented sector received a boost, it was now much easier to create practical and enforceable tenancies.

The growth has continued and is continuing to grow. Since the all time low in 1987 of 7% it has now grown to over 13% and is rising for the first time in over a century. As buying property was now attainable by most, it was no longer a status issue. Because of economic recession and uncertainty in world markets, many companies no longer offer jobs for life, but rely on short-term contracts instead – they also expect greater flexibility and mobility from their employees. This has contributed to changes in the labour market. If an employee sought promotion they would quite often have to be willing to move at short notice to a new area to fill a post with only a short term contract in hand. In this situation a person is very unlikely to wish to buy a property but would be looking to rent one instead.

This sector of tenants demand ever-increasing standards, which has been reflected in the recent regulatory changes. We have seen a dramatic rise in the presentation and quality of rented accommodation through the industry. 80% of the market is people moving into the area for work – generally of the 25 to 40 age bracket. These people are looking for the type of accommodation that they would purchase themselves if they were to buy, and are willing to pay extra for the better quality of rented accommodation they demand.

Who needs to know?

If your property is subject to a mortgage, then your mortgage lender must be informed in order to gain their consent. This is not usually a problem when the property is being let and managed by an ARLA agent. If the property is Leasehold then the Leaseholders consent must be gained.

Insurers

Your buildings and contents insurers must also be advised as some policies do not cover the property if it is tenanted and very rarely will they cover for accidental or malicious damage by the tenant. You must also ensure your insurers cover you for landlords liability.

Mortgage Lenders

If your property is subject to a mortgage, then your mortgage lender must be informed in order to gain their consent. This is not usually a problem when the property is being let and managed by an ARLA agent. If the property is Leasehold then the Leaseholders consent must be gained.

Legal Requirements, and how they affect you

The Housing Act 1988 (as Amended 1996)

Among many changes was the creation of the Assured Short hold Tenancy agreement. This act ensures the Landlord possession under certain qualifying grounds, or the serving of appropriate notices. The Landlord always has to give the tenant 2 months notice for possession and cannot break the term of the tenancy except with a qualifying ground seeking possession.

The Fire & Furnishings (Fire & Safety) Regulations 1988 (Amended 1989 & 1993)

This states that all soft furnishings in a residentially let property have to comply with the fire resistance levels specific by the regulations. If they do not comply, they must be removed. Safety labels must be present on all items of furniture or a receipt to verify purchase after 1st March 1990. Furniture pre-January 1950 is not affected. Penalties for non-compliance can be heavy fines and / or imprisonment.

Apartment
£ 100,000
1000 sqft 3 2

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