Full width project banner image

Blog | butters john bee Estate & Letting Agents

May 15, 2024 A Complete Guide to Renting Out Your Property

Renting out your property can be a rewarding venture, whether you're an accidental landlord or diving into property investment as a new venture. However, it also comes with responsibilities, challenges, and decisions. Here's a comprehensive guide for first-time landlords. Why Rent Out Your Property? Renting out a property can provide a steady income stream, cover mortgage payments, and potentially build a portfolio of rental properties. It's a financial decision that can also be beneficial if you're temporarily living elsewhere and not ready to sell your property. How to Rent Out Your Property Decide whether you want to manage the rental yourself or enlist a letting agent to handle administrative tasks. Also, consider offering your property as a single unit or as a House in Multiple Occupation (HMO) for higher rental income, albeit with more responsibilities and expenses. Talking to Your Mortgage Lender If you're renting out your property for the first time, speak with your mortgage lender. They may require you to switch to a 'buy to let' mortgage for long-term rentals or grant permission for short-term rentals under existing mortgage terms. Understanding Landlord Licensing Some areas in the UK have landlord licensing schemes to improve property management standards. There are three types: Mandatory licensing for HMOs Additional licensing for specific HMOs Selective licensing for all landlords in certain areas Check with your local council for details and annual licensing fees. Setting the Rent Determine the appropriate rent based on property size, facilities, local market rates, and tenant incomes. Online rent calculators can provide estimates to help you set competitive rental prices. Tax and National Insurance Rental income is taxable, and landlords must declare profits after deducting expenses like mortgage interest payments. The first £1,000 of property income is tax-free. Landlords may also be subject to National Insurance contributions depending on their rental income and other factors. Legal Responsibilities for Landlords Ensure compliance with safety regulations: Conduct annual gas safety checks by a Gas Safe registered engineer Check electrical installations every five years by a qualified person Install smoke and carbon monoxide alarms as required Implement fire safety measures like fire-resistant furnishings and escape routes Right to Rent Checks Verify prospective tenants' immigration status before agreeing to a tenancy. Landlords are legally responsible for conducting right to rent checks to avoid fines. Creating a Tenancy Agreement Draft a tenancy agreement outlining both parties' obligations. Assured Shorthold Tenancy agreements are standard for private rentals in England and Wales. Online templates can provide a starting point. Protecting Tenants' Deposits Legally protect tenants' deposits using a government-backed deposit scheme. Landlords must return deposits at the end of the tenancy, minus deductions for damages or unpaid rent. Landlord Insurance Consider specialist landlord insurance to cover risks like unpaid rent or property damage. This type of insurance may include public liability, loss of rent, emergency cover, and legal expenses. Possession Rights Understand the legal procedures for regaining possession of your property, such as serving Section 8 or Section 21 notices, obtaining court orders, or negotiating with tenants. How Can butters john bee Help? If managing a rental property seems overwhelming, butters john bee offers full management services. A dedicated property manager handles tenant communication, repairs, and property maintenance, making the process easier for first-time landlords. Renting out a property involves careful planning and adherence to legal requirements. If you're considering this venture, butters john bee can provide guidance and support throughout the process. Contact us using the form below. [form id="36cba0b0-7466-11ee-afc4-12cffd93632d"]

Apr 17, 2024 Rent Increase Notices: Understanding Fair Rent Increases as a Landlord

When it comes to rental agreements, it's important for landlords to consider how and when rent increases will be addressed. The specifics can vary depending on the type of tenancy in place. Periodic Tenancies For tenancies that roll on a week-by-week or month-by-month basis, landlords can typically only increase rent once a year without the tenant's agreement. Fixed-Term Tenancies During a fixed-term tenancy (e.g., six months), rent can generally only be increased if the tenant agrees to it. If not, any increase can only take effect after the fixed term concludes. Rent Review Clauses Some tenancy contracts include rent review clauses, outlining when and how rent increases will occur. This clause specifies the timing of the increase, the notice period provided to tenants, and the calculation method for the increase amount. If you need assistance managing payments or drafting tenancy contracts, butters john bee's property management services offer dedicated support to landlords. Learn more about Landlord Advice. Section 13 Notice When a tenancy agreement lacks a rent review clause or has expired, and the landlord wishes to raise rent, a Section 13 notice can be used. This notice requires at least one month's notice for weekly or monthly agreements, and up to six months for longer-term agreements. Determining Rent Increase Amounts Landlords must obtain tenant permission for rent increases exceeding previously agreed amounts. The increase should also align with local average rents for similar properties. For instance, if one-bedroom flats in an area rent for around £600 per month, it wouldn't be fair to ask £900 for a comparable property in the same location. Notice Period for Rent Increases Landlords must provide adequate notice before increasing rent. For weekly or monthly payments, one month's notice is required. For yearly tenancies, landlords must provide 6 months' notice. Remember, rent increases during fixed-term tenancies can only occur if explicitly allowed by a rent review clause in the tenancy agreement. Proposing a Rent Increase Landlords can propose rent increases by: Renewing a tenancy agreement at the end of the fixed term with an increased rent Agreeing to a rent increase with the tenant and documenting the agreement Using a 'Landlord’s Notice Proposing a New Rent' form to increase rent after the fixed term ends Tenant Response to Rent Increases Tenants can refuse a rent increase and challenge it through a tribunal process (e.g., Section 13). During this time, they must continue paying rent at the existing rate. If landlords and tenants cannot reach a rent agreement, the tenant may decide to vacate the property. For expert advice tailored to your local area, butters john bee offers comprehensive support to landlords and tenants alike. Contact us! [form id="36cba0b0-7466-11ee-afc4-12cffd93632d"]

Feb 9, 2024 A Guide to Right to Rent Checks for Landlords

Right to rent checks have been mandatory for landlords and letting agents since February 2016. It's crucial for landlords to ensure that prospective tenants are legally permitted to reside in the UK and rent residential properties. Failure to conduct these checks or allowing tenancies to commence with ineligible tenants can result in significant fines. Understanding the Right to Rent Scheme The right to rent scheme requires landlords to verify that prospective tenants have the legal right to reside in the UK. This check is a legal requirement for all landlords in the private rented sector. Commencement of the Right to Rent Scheme The right to rent check was implemented in England in February 2016 under the Immigration Act 2014. Currently, it is not applicable in Scotland, Wales, and Northern Ireland. This requirement only applies to tenancies that began in or after February 2016. Responsibility for Right to Rent Checks Landlords are responsible for conducting right to rent checks on prospective tenants in the private rented sector. Additionally, this responsibility extends to: Occupiers allowing lodgers to reside in a property Tenants sub-letting part or all of a property (with written agreement from both parties) Letting agents appointed by landlords in writing to oversee compliance with the right to rent scheme Components of Right to Rent Checks Landlords should conduct right to rent checks on all prospective tenants, regardless of nationality, to avoid any allegations of discrimination. Here are the criteria for conducting these checks: UK and Irish Citizens Manual inspection of original passport, driving license, or UK birth certificate EU, EEA, Swiss Citizens Use the Home Office online service to verify tenant's documents by requesting their date of birth and 'share code'. Citizens from Outside the EU and EEA Use the Home Office online service to check immigration status Types of Tenants Subject to Checks All tenants applying for tenancies in the private rented sector, including adults not named on the tenancy agreement, must undergo right to rent checks. However, children under 18 or non-rent-contributing guests are exempt. Certain tenants may also be exempt from these checks if residing in specific types of accommodations. Understanding Tenant Occupancy After completing a right to rent check, it's essential to understand the tenant's status: Unlimited Right to Rent British citizens, Irish citizens, or EU, EEA, Swiss nationals with indefinite leave to remain in the UK under the EU settlement scheme Time-Limited Right to Rent Individuals with limited leave to enter or remain in the UK, requiring status verification within 28 days of expiration No Right to Rent Individuals lacking valid leave to enter or remain in the UK, with no permission from the Home Office to rent Methods to Verify Right to Rent Landlords and letting agents should be familiar with methods to verify tenant evidence: Manual Verification For UK and Irish citizens, use original passport or birth certificate, verified with the tenant present Home Office Right to Rent Service For EU, EEA, Swiss nationals, and non-EU, EEA citizens, request a 'share code' from the tenant and conduct a digital check using the Home Office online service Penalties for Illegal Tenants Landlords can face fines up to £3000 for renting to individuals without a right to rent or who fail right to rent checks. The Home Office may issue a referral notice requesting evidence of correct checks. Landlords who demonstrate compliance with right to rent checks can mount a defence against penalties. Get Expert Guidance on Rental Property At butters john bee, we offer advice on all aspects of the rental process, especially for first-time landlords. If you're considering letting your property, we provide a free valuation to guide you through the process. Contact us! [form id="36cba0b0-7466-11ee-afc4-12cffd93632d"]

Dec 16, 2023 Let Agreed: What Happens Next?

So, your property is let agreed—this means it's no longer on the market, and you've found a tenant. Now, it's time to move forward with the necessary steps to finalise the lease. Post-Let Tasks by Your Lettings Agent Your chosen lettings agent now takes charge of several crucial responsibilities, whether they're managing the property or not: Sending written confirmation to all parties outlining the rent amount, payment frequency (e.g., weekly or monthly), and any specific tenancy conditions. Obtaining references from tenants and, if required, a guarantor. Ensuring all parties read and sign the Tenancy Agreement. Collecting initial payments, including the deposit and first month's rent. All deposits should be registered with a government-approved deposit protection scheme. Landlord's Responsibilities While the lettings agency handles the above, there are tasks that fall on you as the landlord: Arranging a comprehensive inventory report detailing all items in the property, such as carpets and furnishings, and their condition. This report is crucial for documenting any damage at the end of the tenancy. Ensuring all furniture and furnishings comply with fire safety regulations. Arranging gas appliance servicing by a CORGI-registered engineer and maintaining safety records. Ensuring electrical wiring is checked and approved by a qualified electrician. Tenant's To-Do List Before Moving Day Tenants also have their own responsibilities to fulfil before moving in: Undergoing a credit check and providing references. Signing essential documents detailing rent payment details and contact information. Preparing the deposit payment or exploring deposit-free options like flatfair for a hassle-free move-in. Moving Day Once everything is set, you can agree on a mutually convenient moving day for both you and the new tenants. If the lettings agency holds the keys, instruct them to release them to the tenants on moving day. If the property is managed by a property management service, ensure tenants receive the necessary contact details. Congratulations on Letting Your Property! Well done on successfully letting your property! Now, if you need to discuss further letting opportunities or have questions, butters john bee's dedicated lettings teams are ready to assist. Looking Ahead If you want to speak to butters john bee about letting your property, use our branch finder to locate your nearest office. Our experienced lettings teams are eager to support you in your letting journey. Questions about letting your property? Contact us anytime for assistance. [form id="36cba0b0-7466-11ee-afc4-12cffd93632d"]

Sep 28, 2023 Understanding Different Types of Tenancies

A tenancy agreement serves as a contract between a landlord and tenant, outlining the terms of their arrangement. Let's explore various types of tenancies to shed light on this topic. What are the Different Types of Tenancy Periods There are two primary types of tenancy periods: Fixed-Term Tenancy This type runs for a specified period, typically between six months to a year. The duration must be clearly stated in the tenancy agreement. It's important to note that ending a fixed-term tenancy early usually requires a break clause. After the initial term ends, the tenancy automatically converts into a periodic tenancy. If you intend to vacate the property, proper notice should be given to the landlord or agent. Periodic Tenancy This arrangement has no fixed end date and continues until either the landlord or tenant provides notice to terminate it in writing. Fixed-term tenancies automatically transition into periodic tenancies unless the tenant notifies the landlord of their intention to leave. Assured Tenancy An assured tenancy grants the tenant the right to live in the property for life—a relatively uncommon arrangement nowadays. Tenancies starting between 15 January 1989 and 27 February 1997 may be assured. Post-27 February 1997, tenants may qualify for assured tenancy if: The landlord issued a written notice prior to the tenancy, confirming its assured status. The tenant previously held an assured tenancy in the same accommodation with the same landlord. Assured tenancy holders enjoy enhanced protection against eviction. Assured Shorthold Tenancy (AST) An AST is the most common type of tenancy, governed by the Housing Act 1988. Key features of an AST include: The property is private (not commercial). The tenancy commenced after 1989. The property serves as the tenant's primary residence. The landlord does not reside in the property. Most ASTs stipulate an initial fixed term of six or 12 months, during which rent increases are typically not permitted unless agreed upon by the tenant or outlined in the agreement. Non-Assured Shorthold Tenancy This type of tenancy is used in specific circumstances where an AST cannot be applied, such as when rent exceeds £100,000 per year or when the tenant's primary residence is elsewhere. Unlike an AST, landlords are not obligated to deposit funds into a government-backed scheme, and they can terminate the tenancy without a Section 21 Notice. Excluded Tenancy An excluded tenancy applies to situations where a lodger shares living spaces like kitchens or bathrooms with the landlord or lives rent-free with family or friends. This type of tenancy generally offers less protection against eviction. Company Let A company let occurs when a corporate entity rents a property to accommodate its equipment or staff. Such arrangements are not typical for individual landlords and tenants. Regulated Tenancy Regulated tenancies, once common, are now rare and governed by the Rent Act 1977. They offer long-term security and often involve lower rents compared to market rates. Statutory/Rolling Periodic tenancies automatically commence when fixed-term agreements expire. The tenancy continues until terminated by mutual consent, eviction, or proper notice from either party. Choosing the Right Tenancy Agreement Selecting the appropriate tenancy agreement involves understanding your rights and the responsibilities of both landlords and tenants. Key considerations when reviewing a tenancy agreement include: Start and end dates of the tenancy. Landlord's details, which could include a company name. Property address. Rent amount, due dates, and payment methods. Deposit amount and protection details. Responsibility for utility bills. Terms regarding deposit deductions. Get In Touch Whether you're a landlord or tenant, our team at butters john bee is here to address your tenancy-related queries and provide the information you need. Contact us via our website or call us directly for personalised assistance. You can also find legal resources on tenancies at Gov.uk. [form id="36cba0b0-7466-11ee-afc4-12cffd93632d"]

Jan 25, 2023 How to increase rental yield

There are many things a landlord can do to increase rental yields. It might involve spending some money on their properties, but in the long term it may provide opportunities to legitimately increase rents and boost annual yields. What is rental yield? Rental yield is the annual rental income, divided by the total property investment a landlord has made, expressed as a percentage. Anywhere between 5%-8% is generally considered a good rental yield. Calculating rental yield The easiest way to calculate gross rental yield is to divide the rental income you receive from a property (let’s say £1000 per month X 12 = £12,000) by the price you paid to buy the property, then multiplying this figure by 100 to end with a percentage. So if the property cost £250,000, the gross rental yield would be 4.8%. However, landlords also need to factor in all the other expenses involved in letting the property. This will be the costs of maintenance, marketing and managing the property, including mortgage repayments and insurance premiums. These need to be totalled up over a year and added to the purchase price. So the net rental yield (the yield in real terms) will be lower than the gross figure. Top tips to improve rental yield Boosting your rental yield is an important consideration for landlords. It could be the difference between making money from letting a property or not. But you should also think about the long term impact of decisions you make and how they will affect your tenants. There are lots of things to mull over as you consider how to increase rental yield. Invest wisely Investing in property requires a lot of research, hard work, and dedication. With each new purchase you will become more experienced and better equipped for the next investment. Nevertheless, it is always important to treat every new property as a business decision by carefully studying each potential investment as well as negotiating where possible in order to maximise your return. Review your outgoings The first place to start when thinking about improving rental yield is to look at your fixed costs. These are costs like your mortgage payments, insurance premiums and leasehold fees. Shop around to see if you can get a better deal on your mortgage and buildings insurance. Invest in up-and-coming areas Look at where the best locations are to achieve greater rental yields. Where are the up and coming towns and cities, with planned regeneration and government investment? Major infrastructure projects (such as HS2 and Crossrail) can give some areas a real boost, with the prospect of increased capital growth and greater rental values for the future. University towns and cities are also locations where yields can be significantly higher. Properties can be rented by multiple tenants who share facilities but are not part of the same household. These are called HMOs (Houses of Multiple Occupation). The drawback of HMOs for landlords is that there will be a higher turnover of tenants. Re-assess the rent you’re charging The easy solution for improving rental yield is to charge a higher monthly rent to your tenants. However, it might not always be reasonable or fair to do so. Ask a letting agent to assess the market rate for similar properties in the local area – you might be charging less than you could, or you could actually be over-charging. Rent review clauses in tenancy agreements give you the option of charging a different rate of rent during a tenancy. Refurbish/redecorate your property Make sure the condition of your property justifies any increases in rent you may be considering. Refurbishing and redecorating your property could also help in establishing long term tenancies, as it will show that you care about your tenants and encourages them in turn to treat the property with more respect. Doing some repainting, replacing carpets and giving bathrooms and kitchens an update could make tenants feel happier about paying a higher monthly rent. Aim for long-term tenants One of the best ways to increase rental yield and reduce your outgoings is to have the same tenants staying in the property for a significant amount of time. You won’t have the one-off costs involved in changing tenants regularly, or the maintenance expenses that are likely to be involved with a high tenant turnover. You can try and secure more long term tenants by being diligent with your tenant referencing process, looking after the property well and fostering good relationships with the tenants. Consider allowing pets To make your property more appealing and unique, you could become pet-friendly. The number of rental properties that allow pets is getting fewer and fewer, especially since the Tenants Fee Act limits the power of landlords to charge a higher deposit to cover potential damage. But prospective tenants who know they won’t be separated from their pets could be wiling to pay a higher rent as a premium. Improve the energy efficiency rating Making your property more energy efficient will also help to reduce energy bills, and perhaps make your tenants more willing to pay that little bit extra. It can be used as a selling point, if tenants can look forward to living in a warmer house that costs less to heat. Have you got the opportunity to extend your property? Not all landlords will have this option, but if there is space you could look at adding more rentable rooms, or increasing the living space. An attic could be turned into another bedroom, for example. Find out more about haart letting property management If you have a property to let, we can help with a range of property management services, advice and information about the lettings process.

Jan 25, 2023 What is a sitting tenant and what are their rights?

What are the Rights of a Sitting Tenant When a Property is Sold? You may have heard the term ‘sitting tenant’ and wondered what it means. Here we explain what rights a sitting tenant has, how a sitting tenant may affect a property sale, and the choices landlords have if they are buying or selling a property with a sitting tenant. What does 'sitting tenant' mean? A sitting tenant, or ‘tenant in situ’, is a tenant that is still living in the property when it is sold by a landlord. This could be because a tenancy agreement is still in place. Buyers can respect the tenants’ right to remain living in the property. But a seller may choose to evict the tenants, if they are able to do so, because the selling price will be negatively affected with a tenant in situ. What rights do sitting tenants have? Sitting tenants do have rights. If they have an ongoing tenancy agreement with the landlord who is selling the property, they have the right to remain residing there even after the sale. In the unlikely event that the tenancy began before January 1989, the sitting tenants can exercise their rights to ‘security of tenure’ under the Rent Act 1977. In these cases, tenants can remain in the property even after their agreement has expired or been terminated. A landlord has to prove they have ‘ground for possession’ for a pre-January 1989 tenancy in order to evict the tenant. However, there will be few tenants today with such a long standing agreement. Most tenancies these days are assured shorthold tenancies, which gives a landlord the right to use an eviction notice, even for a sitting tenant. Buying a property with sitting tenants If you are buying a property which has sitting tenants, the price you pay will be lower than similar properties which are sold with vacant possession. So if you want to save some money on the purchase this is a great way of doing so. However, you may struggle to get a mortgage offer on a property with sitting tenants, so this might only be an option for cash buyers. You could just wait until the tenancy has come to an end or the tenants have been evicted. Are you buying with a view to letting out the property anyway? Many landlords prefer to have a sitting tenant in the property they are buying, especially if they are long term tenants. It saves the hassle and expense of finding a new tenant, and continuing with a long term tenant is a much less risky option. The new landlord usually takes over the ownership of the tenancy agreement after the property sale. Selling a property with tenants in situ Landlords who are selling a property with sitting tenants may find it difficult, but not impossible. If they allow their tenants to remain in residence, the buyers of the property are likely to struggle to get a mortgage and proceed with the purchase. However, sales with sitting tenants are on the increase. If the sale does go through, the selling price will be lower with sitting tenants. If the landlord chooses to evict the tenant, the sale may be saved or run more smoothly, but rental income will be lost for the time it takes for the sale to complete. Frequently asked questions What qualifies you as a sitting tenant? Sitting tenants are those that have a tenancy agreement or agreement with a landlord in place at the time a decision is made to sell the property they are living in. You have more rights as a sitting tenant if your tenancy began before January 1989. Can you evict a sitting tenant? If you prefer to have vacant possession of the property, to live in the property yourself, or want to find new tenants, you have the right to evict the sitting tenants with a Section 21 notice. Do sitting tenants have the right to buy? Sitting tenants or tenants in situ do not have an automatic right to buy the property they are living in, unless it is a property owned by a local authority. Can you increase the rent of a sitting tenant? Normal sitting tenants have the same rights to fair rent as any other tenants. Landlords can only increase the rent when an existing tenancy agreement expires, unless the tenancy agreement has a rent review clause. If the sitting tenant has security of tenure (explained above), a landlord can only request to put the rent up through a review process. This can only be undertaken every two years, and has to be carried out by a Rent Officer. Find out more about Howards' letting property management If you have a property to let, we can help with a range of property management services, advice and information about the lettings process.