By Admin Insurance 0 Comments

The Importance of Building Insurance for Landlords

As a landlord, you may not already have building insurance. You might have also heard that it’s important to have, and it is. But you might not be sure if it’s for you, or how you go about obtaining building insurance. This article will help to explain what building insurance is, why you as a landlord need to invest in it for all of your buy to let properties and how to do so. This will make you and your tenants more secure, as well as increasing the confidence of buyers in your properties.

What is building insurance?

Building insurance is a specific type of home insurance, the other type being contents insurance. Whereas contents insurance is insurance for the things that you keep in your home such as the furniture, the television, your possessions, carpets and curtains, building insurance covers the permanent fixtures and fittings in the home such as the kitchens and bathrooms. The definition of what is a permanent fixture can sometimes be ambiguous. For example, in Germany when people move house they often take their ovens with them, rather than leaving them in the house as do most people in the UK. But in general, fixtures and fittings are those things that you would leave behind if you were moving house. There is no law which specifies what constitutes permanent fixture, so when getting building insurance you need to specify what you take the fixtures and fittings of your property to be.Building Insurance for Landlords

Building insurance is a policy covering damage to the structure, the fixtures and the fittings of the property. If the building so defined is damaged, the insurance policy will cover the cost of repair depending on the nature of the damage. Commonly policies cover for damage by natural events such as floods or hurricanes, fire or smoke, vandalism or leaking pipes among other things. The policy will also exclude certain kinds of damage, such as damage by insects, birds or pests. Also, you normally can’t claim for damage that happened while the property was uninhabited for 30 days.

Why is building insurance important?

For rented properties, it is the responsibility of the landlord. It is not the responsibility of landlords to take out contents insurance on the tenant’s property, because it’s the tenant’s property, but since the rented property is ultimately the landlord’s they have to take out the building insurance. This is true whether the property is a house with multiple storeys or a small flat.

The main advantage of building insurance is that it pays off over the long term. On average, building insurance costs £181 a year, according to the AA Premium Index. Over the years, it’s very likely that some fixture, such as the boiler, will break down. This could cost you in excess of £500 for the boiler alone. If you aren’t able to pay for the repairs immediately because you don’t have building insurance, the leaking boiler could cause water damage to the floors and walls of the house. Adding to this the fact that the home won’t be properly heated could result in the spread of damp, which could make the house unliveable. Having insurance can ensure that these problems are solved before they get out of hand, or even before they arise.

Even if these problems don’t manifest, it is hardly worth the risk to put tenants, possibly families, in homes that aren’t insured. More people are finding themselves in privately rented accommodation due to the housing crisis in the UK. These people sometimes end up in damaged or unsafe properties which are not covered for building insurance. When they complain to landlords about the poor conditions, they are sometimes threatened with eviction on no reasonable grounds, simply for making the complaint. These rogue landlords give others a bad name, but taking out building insurance can help tenants to have more confidence in you as a landlord. If you do not have building insurance and put tenants in unsafe accommodation, you can be charged with negligence if they are injured as a result. You can also adjust the rent on the property to take into account the cost of the insurance.

How do I get building insurance?

When getting building insurance, you need to ask several questions. How much cover do you need? Which items does the insurance cover? Over what length of time do you wish to pay the insurance?

You need to consider all these things when choosing an insurance package. You also need to compare insurers, which you can do using an insurance comparison site online such as comparethemarket.com.

You will need to set out with your insurer which items you want to be covered under the insurance package, as well as how you want to pay, whether you want to pay on a monthly basis or in one lump sum. You should also be aware that some insurance packages have additional features for landlords, so look out for those. Insurers are adding more stipulations to their insurance packages in terms of what conditions are included or excluded in coverage, so be sure to read the fine print carefully. You will need to decide if you wish to pay for extras such as legal cover, or if you are confident enough to manage the process yourself. If you do, remember that it is still prudent to consult a legal professional when taking out insurance.

Make sure that you have enough coverage for the full property, otherwise if a part of the property not covered under the insurance is damaged, you might end up having to pay for the repairs in part or in full.

Now you know the basics of why and how to get building insurance. This will hopefully get you closer to your goal of covering your buy-to-let property of damages.

By Admin Landlord 0 Comments

The “How to Rent” Guide: What Landlords Need to Know

On 1 October 2015, new rules came into force in England regarding Section 21 Notices. One of the changes is that, for any tenancies starting on or after the above date, the landlord must provide the tenant(s) with a copy of the government’s “How to Rent” Guide. Here we will explain what landlords need to know about this new obligation.

What is the “How to Rent” Guide?
You can download a copy of the “How to Rent” Guide from the Gov.uk website. It is essentially a checklist for prospective tenants which guides them through the process of finding and securing a rental property, advises on what they need to know from their landlord and what the responsibilities of both parties are, discusses what happens at the end of a tenancy and offers guidance on what to do if problems arise. How to rent guide
Some of the information in the guide are defunct by the time you issue your tenants with their copy on the first day of their tenancy – for instance the checklists about what to do before looking for rental properties and what to ask about before agreeing a rental. However, there is still a lot of useful information in there about their rights and responsibilities during their tenancy, and what to do when the tenancy period ends, so it is worthwhile for them to have this document to inform themselves. Crucially, it advises them on what will happen if you choose to end the tenancy, which is why the new rule relates to Section 21 Notices.

What are my responsibilities as landlords/agents?
You are responsible for providing a copy of the most up-to-date “How to Rent” Guide on the first day of a new tenancy, effective from 1 October 2015. This can be in the form of a hard copy (printed at your cost from the Gov.uk website) or e-mailed to the tenants where they have provided e-mail addresses. The current guide states that it is best viewed online as it contains hyperlinks to further information and so an e-mailed copy would be ideal. It would be wise to gain some form of proof that you have issued the guide. If you have provided a hard copy, you could keep a second copy signed by the tenants on file, or ask them to sign a form stating they have received the guide. For guides supplied by e-mail a simple reply to acknowledge receipt would suffice.
You do not need to supply a new copy of the guide in the event of it being updated, as long as the tenancy is ongoing. For tenancy renewals, and in the event of one tenancy coming to an end and a new tenancy beginning, you would need to obtain and issue the most up to date version.
It is important to note that if you do not provide your tenants with a copy of the “How to Rent” Guide, you will not be able to serve a Section 21 Notice to regain possession of your property. This can have serious consequences, and so compliance with this minor task could save you a lot of hassle in future.

By Admin Landlord 13 Comments

Assured Shorthold Tenancy Agreements Explained

Most tenancies in the UK come under the category of Assured Shorthold Tenancy. A Tenancy Agreement is essential for the protection of both landlord and tenant, and while it can be in the form of an oral contract, a written document provides more security for all parties in the case of a dispute. This article will explain what landlords need to know about Assured Shorthold Tenancy Agreements.

What is an Assured Shorthold Tenancy (AST)?
The majority of new tenancies are automatically classed as Assured Shorthold Tenancies (ASTs). If you are a private landlord or housing association and not resident in the property, the tenancy started after 27 February 1997, and the property is the tenant’s main residence, then the tenancy type is almost definitely an AST. There are some exclusions from this, for instance if the yearly rent is less than £250 (£1000 in London) or more than £100,000, but in all likelihood, if you’re a private landlord then your tenants will be renting under an AST.
Tenancies that began between 15 January 1989 and 27 February 1997 can either be ASTs or Assured Tenancies. Any tenancy which started before 15 January 1989 cannot be an AST.Assured Shorthold Tenancy Agreements

What should an Assured Shorthold Tenancy Agreement include?
An Assured Shorthold Tenancy Agreement should give details of the following:
The names of all parties involved, and the address of the property to be tenanted;
The amount of the deposit, how the deposit will be protected and under what circumstances the deposit can be partly or fully withheld (usually in the instance of repairs needed due to damage by the tenant);
The rental price, how and when it is to be paid and, if applicable, how and when the rent can be reviewed;
The start and end date of the tenancy, and, if applicable, how the tenancy can be ended early;
Any tenant or landlord obligations, including who is responsible for minor repairs where the landlord is not legally responsible, and
Which bills tenants are responsible for.

What do I need for Assured Shorthold Tenancies (ASTs) starting on or after 1st October 2015?

Importantly, remember that for Assured Shorthold Tenancy that begin on or after 1st October 2015, you must provide the following documents to tenants at the start of each fixed term tenancy:

i) Gas safety certificate / report

ii) Energy performance certificate (EPC)

iii) The government’s document called ‘How to rent: The checklist for renting in England’ – you can download a copy from the link below.

https://www.gov.uk/government/publications

Read our articles In relation to serving section 21 notices and carbon monoxide and smoke alarm regulations.

Can I change a Tenancy Agreement?
If you wish to make changes to your agreement before the tenancy expires, you must gain the agreement of the tenants. You must also ensure that your agreement does not discriminate against tenants on the basis of age, gender (including if the tenant is transgender), sexual orientation, disability, religion, race, or if your tenant becomes pregnant or has a baby.
If you wish to end the tenancy before the agreed end date then you must have a valid reason under the Housing Act 1988, for instance if the tenants are in arrears or you wish to move back into the property.

How can I get an Assured Shorthold Tenancy Agreement written up?
You can create the agreement yourself, and there are several templates available online to do so. The government has provided a model Tenancy Agreement on the Gov.uk website, or you can find alternative templates on a number of legal and landlord associations’ websites.
For more information on Assured Shorthold Tenancy Agreements, you can visit this useful guide for landlords on the Gov.uk website.

By Admin Landlord 0 Comments

Understanding Section 21 Notice

The Section 21 notice is the procedure put in place for a landlord to commence a 3 step eviction process – for tenants with an Assured Shorthold Tenancy (AST) contract.

First step – Issuing a Section 21 notice

The landlord does not have to give a reason for wanting the property vacated, but the landlord must give at least 2 months’ notice.
However, the landlord CANNOT use a Section 21 notice to evict the tenant during a fixed term contract, only at the end of the fixed term can 2 months’ notice then be issued.

For the Section 21 to be legal it must:

be delivered to the tenant in writing and give the tenant at least 2 months to vacate the propertysection 21 notice
it must be on s special form IF the tenant signed or renewed a contract after 1st October 2015

Next step – Going through court

If the tenant fails to vacate the property by the agreed date, the landlord can then apply for an Accelerated Possession Order. The eviction process through this possession order normally takes 4 – 6 months.

The tenant has the right to challenge the eviction procedure if they feel the Section 21 notice was not issued correctly or is invalid. The tenant can fill out a defence form to explain to the court why they feel the landlord cannot use the Section 21 notice to evict them (for example a tenant complaining about condition/repairs of the property or the rental deposit was not protected). The tenant will only have 14 days to submit the deference form to the court, if it is not submitted within that time the landlord may proceed with the accelerated possession procedure without the need of a court hearing.

If the court receives a defence form within 14 days,the court will arrange a hearing for both tenant and landlord, in order to evaluate the circumstances, then a judge will make the decision to either dismiss the possession order (in the case of a Section 21 not being valid by the landlord) or the tenant will be given a date to vacate the property.

Final Step – Court Bailiffs

If the case goes through the court and the court then issues a date for the tenant to vacate the property, if the tenant fails to vacate by this date, the landlord can then apply to the court for a bailiff to evict the tenant.

Only court bailiffs have the authority to evict the tenant and remove their belongings from the property – but not by force.
Changes to Section valid from 1st October 2015

These apply for all new assured shorthold tenancies starting after 1 October 2015 (and then after 3 years to all tenancies). By new, that means new, but will include a ‘renewal’ tenancy – a newly produced AST – granted on or after 1 October 2015
Retaliatory Eviction – the provisions of Deregulation Act will come into effect for all new assured shorthold tenancies granted on or after 1 October 2015
A section 21 cannot be served in the first 4 months of a tenancy (but this is not applicable to a statutory periodic arising, or a replacement tenancy)
A possession claim cannot be started on a section 21 after the end of 6 months from the date the notice was given
End date for a section 21 notice. The new section 21(4ZA) Housing Act 1988 removes the need for any section 21 notice to expire on the last date of a period of a tenancy (at least in England). Two months notice (for a weekly or monthly rent period) is all that is required. To accompany this is the requirement to repay the tenant pro-rata the ‘unused’ proportion of any rent paid in advance – where the section 21 expires in the course of a rent period

Differences between a Section 21 and Section 8

The differences between a Section 21 and a Section 8 seeking possession are:

For a Section 21 the landlord does not need to give a reason for the tenant eviction, whereas for a Section 8 notice the landlord must meet one of the statutory points for eviction of the tenant (there are 8 mandatory grounds, and the landlord must also adhere to the legislation Schedule 2 of 1988 Housing act).

The landlord can give anything from 2 weeks to 2 months’ notice, depending which mandatory point the tenant has broken.