Legislation & Regulations
As a prospective tenant, it is customary to send the landlord a financial deposit as security against the shorthold tenancy agreement. Once the contract comes to an end and all financial obligations towards rent and utilities are complete, the landlord then returns the deposit if he or she is satisfied with the state of the property. Consequently, the tenant and landlord can go their separate ways without a fuss.
Regulation within the lettings industry has been something of a controversial subject in recent years. There is currently no compulsory regulation of the lettings market. Many agents choose to remain unregulated so they can behave how they like, regardless of business ethics or trading standards.
Buy-to-let properties provide an attractive, potentially lucrative way of boosting income for many would-be landlords up and down the country - if they do their research. The importance of being ready to own a buy-to-let property, and managing all the responsibilities that come with it, cannot be understated. For landlords with no awareness of the legalities surrounding buy-to-let, money could be lost rather than gained.
One of the most contentious areas of the letting industry surrounds the issue of deposits, most notably their fate once the tenancy draws to an end. The average deposit is now over £1,000 (mydeposits.co.uk), with London rates even reaching around 50 per cent more. This is a lot of money, especially for those tenants who have already paid out a great deal to secure their next home in fees, deposits and advance rent.
The reason many people become landlords is to find a safe and secure place for their investment. It can provide a business opportunity while also helping build a nest egg for the future, or for retirement. Rarely, however, landlords will go into the business because they already possess a wealth of knowledge about the law when it comes to properties.
This means that many landlords may need to brush up on their knowledge of regulatory systems in order to better guarantee they won't find themselves straying onto the wrong side of the law. For these reasons, we have compiled a directory of all the legal and regulatory issues facing landlords today in order to ensure best practise is adhered to throughout.
Landlord have certain legal obligations once they sign tenants up to live in a property they own. Whilst some rules can depend on what is written in the contract between both parties, others are enshrined laws - and must be respected throughout. For example, landlords have an obligation to make sure all the appliances within the home are gas safe. This cannot simply be given the once over, but must be checked and certified each year to guarantee the property poses no risk to the tenants who live there.
Likewise, similar rules are in place to govern fire safety - although with slight differences. Fire extinguishers, for example, do not need to need to be provided. In a move that surprises many, the same rules apply for smoke alarms, albeit in single-occupancy properties. Those living in multiple occupation - on the other hand - need to be given a working alarm.
Certain landlords prefer to offer their properties furnished - most notably for student lets. Similar legislation has been put in place here, although some appliances need to be resistant, whereas others do not (it is advised, of course, that more fire-resistant furniture is certainly better from a landlord's perspective in order to protect the property).
Letting agent regulation
In order to ensure the industry remains reputable in the long term, laws have long been in place to keep best practice standards upheld at all time. This is not the case with the lettings market, however, which - despite having the presence of numerous official regulatory bodies - has not been given such stringent laws to uphold.
This section will look at the difference this causes and also what letting agents are undertaking in order to self-regulate. It will consider the impact a less-heavily regulated industry has and what both physical and online letting agents are doing in order to make their business as honest as possible.
The letting agent regulation advice will also cover suggested best-practice methods and what these mean for potential landlords. Despite there being few laws governing their day-to-day running, there are a great many guidelines set out by official bodies which offer guidance and advice to letting agents.
In the absence of official laws, letting agents are also governed by their own, internally-set management standards. These will have been decided upon by the company; acting as their own promise to landlords and tenants alike.
Whilst the lettings market may not be so heavily-regulated as the sales sector, there are still many distinctions that can help the best in the business stand out against their peers. Likewise, landlords may have certain rules they need to stick to and others which aren't so rigid, but knowing the difference - then remembering this at all times - should make for a more successful, manageable and profitable investment.