The Importance of Due Diligence for a Landlord

The Importance of Due Diligence for a Landlord

It is an unfortunate but much realised fact that we live in an age stifled by regulation. Few actions we take in the public domain escape the watchful gaze of politicians and lawmakers these days. There's seemingly a rule for everything - and if we don't comply the consequences can be severe.

 

This is no more acutely felt than in the rental property market. Once upon a time letting out property was a simple and rather straightforward task. A tenant would sign a lease agreement, and if they did not abide by it, in no time he would be out and replaced by someone else capable and willing to pay the rent. Tenants' rights were minimal (if non-existent in some particular cases) and the idea of actually taking a landlord to court and securing a successful prosecution was pretty much unheard of, even going back just a few decades.

 

Of course rules and regulations are in place for a reason; the rental property market is a safer and fairer environment because of the legislation in place. Finally, after much lobbying, being at the wrong end of the equation has now its price tag - for tenants and landlords alike. 

 

What is due diligence?

But progress comes at a price - and that price is landlord due diligence.  Due diligence is best described as a detailed investigation into the 'information aspects' that govern a situation, and on which subsequent decisions and actions are based. For landlords it involves delving into the rules and regulations that apply to the rental property market and then making sure that they comply to the letter of the law.

 

For example, it is a statutory requirement for landlords to abide by the Gas Safety (Installation & Use) Regulations 1998 when letting out their property. These regulations legally bind landlords to ensure the safety and proper function of all gas appliances, pipework and flues in the rental property. This includes maintaining at all times a valid Gas Safety Certificate and providing proof to the tenant of the property's compliance before the tenant takes up residency.

 

Failure to follow procedure here is likely to result in prosecution for the landlord and even a possible jail term -- especially if the tenant was injured because the landlord neglected to perform adequate due diligence. But how, as a landlord, do you know when adequate due diligence is performed?

 

How to perform adequate due diligence

Making sure you comply with the law when renting out your property might sound a bit daunting. But in reality it needn't be too difficult to achieve. All you have to do is find a reliable information source that details landlording regulations and then apply those rules to your own circumstances.

 

To help get you started you should look for information on the following areas of legislation…

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  Gas Safety (Installation & Use) Regulations 1998 -- gas safety in the property.

  
  

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  The Furniture and Furnishings (Fire) (Safety) Regulation 1988 (as amended 1993) -- law pertaining to furnishings supplied to the property.

  
  

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  The Electrical Equipment (Safety) Regulations 1994 -- electrical safety at the property.

  
  

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  Plugs and Sockets (Safety) Regulations 1994 -- plugs & socket safety.

  
  

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  Building regulations part P, Electrical safety in dwellings -- compliance with work on electrical installations at the property.

  
  

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  Selective licensing of private landlords – (Housing Act 2004) -- Local Housing Authority licensing.

  
  

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  Houses in multiple occupation (HMO) - (Housing Act 2004) -- rules governing HMOs.

  
  

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  Section 47, Landlord and Tenant Act 1987 -- rules applicable to demand for rent.

  
  

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  Section 11, Landlord and Tenant Act 1985 -- law pertaining to structure and maintenance of property.

  
  

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  Taxation of Income from Land (Non-Residents) Regulations 1995 -- Inland Revenue legislation.

  
  

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  The Accommodation Agencies Act 1953 -- rules relating to advertising rental property.

  
  

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  The Protection from Eviction Act 1977 -- possession of property.

  
  

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  The Data Protection Act 1998

  
  

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  Energy efficiency certificates

  
  

 

Applicable legislation relating to the rental property market might seem complex and quite convoluted at times. But, by choosing to spend some time gathering information in these areas and then performing your own due diligence to make sure that you comply with all that is being asked, you'll have little to worry about. You can then be safe in the knowledge that you have done all in your power to ensure the safety of your tenants, their visitors, the property and its contents and most importantly: protect yourself and your business at the same time.

New Service Lineup

Power Safety - Keeping Your Power Safe

Power Safety is a company committed to protecting the safety of electrical wiring at home, in business and public buildings (schools, offices, shops and warehouses).

Our experts will guide you in the maze of an ever changing legal environment regarding:

• Electricity related Enactments by Government

• Health & Safety Executive Legislation

• NICEIC rules and regulations

What is NICEIC ?

NICEIC (National Inspection Council for Electrical Installation Contracting) is the electrical contracting industry’s independent voluntary body for electrical installation matters throughout the UK, especially to help with compliance of Part P of the Building Regulations 2004, the Electrical Equipment (Safety) Regulations 1994 and the Consumer Protection Act 1987 respectively.

Welcome to Power Safety - Your Flexible Choice

Contact us for a reliable, fast and price conscious service:

- Reliable: We use only vetted and NICEIC certified engineers;

- Fast: Turnaround of certificates within 24 working hours;

- Price: we do it right the first time round, saving you money on re visits, repairs and recharges!

Q: Do I need a NICEIC Inspection?

A: As a Letting/Managing Agent, or if you are just dabbling in the Buy To Let market, you could be responsible for any mishaps in rented property. Should anything happen during a tenancy it might cost the good part of a year’s rent to cover fines, legal charges and damages.

Electrical Safety

How safe is the wiring in your place? To find out, don’t wait until it’s too late! Have your electricity inspected by our competent engineers who will tick all the boxes for you and if necessary, point out any flaws in the system.

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Backed by industrial strength technologies, we are on the ready to give you a hassle free service, for all your NICEIC related requirements.

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Price quoted excludes V.A.T. Offer only applies on pre-paid orders, when there are no repairs required, the keys are made available to us and there are no other costs involved (i.e. Congestion charge, Parking Meter).

Offer expires 30 September 2009.

E. & O. E. All trademarks property of their respective owners. Full Terms and Conditions of business available.

Power Safety Limited, Company Registration Number: 06934917

PAT – Portable Appliance Testing

Computers, vacuum cleaners, toasters, hairdryers – we all have portable appliances in our homes that run off mains electricity. We acquire these items on a promise that they will work, and that they are safe to use. But over time equipment can become damaged, or simply deteriorate through regular use. Wiring may become loose, internal components may malfunction – any of which could render a once safe to use portable appliance as dangerous!

To make sure these items are always safe to use it is worth getting them periodically tested using a Portable Appliance Testing (PAT) service. Many approved NICEIC electrical contractors offer this service.


Types of appliance
Any electrical appliance with a plug on it may be classed as a portable appliance and therefore be eligible for the PAT service. These include:
· Movable items that are easily transported around the room (toaster, food mixer etc) and items that are moved as part of their operation (vacuum cleaner, lawnmower etc).
· Fixed equipment and appliances that plug directly into the mains. This covers off most kitchen appliances such as washing machine, refrigerator and microwave. Included here are items like televisions and computers.
· Handheld devices can also be tested. For example a hairdryer or an electric razor.
Once an appliance has been tested it will be marked as passed. The PAT tester will also supply you with a log or report of items that have passed, and those which have failed. Any failed items will need to be fixed before use again. This can sometimes be a simple matter of opening up the plug and rewiring the item. However, if a more serious problem has been identified then the item will need to be discarded.


Gas
Portable appliance testing is not just confined to electrical appliances. Safety tests can be carried out on gas appliances too. So, your gas fire and gas cooker for example should be inspected periodically to ensure that they are safe to use and comply with existing gas regulations. A CORGI registered engineer will need to perform the safety test, and will issue a safety certificate for items that pass.


Landlords
Portable appliance testing is not a legal directive for electrical items – that is to say that there is no direct obligation on landlords to ensure portable appliances (electrical) supplied to a tenant as part of a rental property are tested on a regular basis. However, current legislation demands that all reasonable care is taken to guarantee a tenant’s safety in rental property – specifically the Consumer Protection Act 1987 and the Health and Safety at Work Act 1974. With this in mind it is strongly advisable that any electrical equipment provided to the tenant with the property be checked annually, both for yours and your tenant’s peace of mind. Should any issues then arise from problematic electrical equipment in rented property, as landlord you will be able to prove that reasonable steps were taken to ensure the tenant’s safety.

Old Homes - A Burning Issue

Old homes-a burning issue
Menasche Scharf has some timely warnings on maintaining houses from another era

Period properties, by their very nature, are older-style buildings constructed in an age when safety regulations were less stringent than they are today. Many contain copious amounts of wood and other flammable construction materials, such as thatching on the roof - all of which could feed a fire more efficiently than when compared to the fire resistant materials used in modern properties. If electrical, gas and other installations are not updated in line with current safety legislation, your period property may well be at high risk from fire.


19th century thatched cottage burns to the ground
Douglas Hatterman had a lucky escape last year when his beloved thatched cottage went up in flames, along with his most prized possessions. Faulty wiring dating back to the 1960s was to blame. Investigations after the fire showed that some of the wiring had corroded. The fire started close to wood panelling, and then spread to the wooden stairs and eventually up into the thatched roof. The cottage burned quickly, largely gutting the property before emergency services were on the scene. However, had the wiring been inspected and updated where necessary by a NICEIC approved contractor, it is quite possible that the fire could have been avoided.
Use government safety regulations and guidelines to stay safe
So, if you live in or rent a period property, what should you or your landlord be doing to stay safe in a period home? The answer is to observe government regulations and use their advisories and guidelines to make the property a safer place. Here's how:
Electricity: Deterioration of electrical wiring is the principal hazard to contend with in period properties. It is strongly recommended that all electrical installations and wiring be professionally inspected by a NICEIC-approved engineer annually. Should wiring be more than 10 years old, rewiring is highly desirable.
To lessen further the risk of fire from wiring in thatched properties, it is advisable that ceiling mounted lighting is limited or avoided. Exposed cables running across attic floorboards could be targeted by vermin living in the thatch, and gnawed through. Should you have wiring in the ceiling consider placing a minimum of 30 minutes worth of fire resistant material between the wires and the thatch.
On the outside of the property it is also a requirement to space external electrical connections - such as aerial leads - to the property a minimum of 300mm away from the thatch.
Gas: The Gas Safety (Installation and Use) Regulations 1998 govern gas safety in all types of properties in the UK, including period properties. If you reside in the property as an owner-occupier the law advises that gas appliances and flues should be safety checked annually by a CORGI-registered engineer. Should you be residing in the property as a tenant, or if you are the landlord, the regulations demand that an annual gas safety check is carried out by a CORGI-registered engineer, and that a Gas Safety Certificate is issued. A copy of the certificate MUST be given to the tenant within 28 days.
A fire in any property is always bad news. In a period property, where the construction is of wood or where wood forms a substantial part of the structure, it is especially bad news as it can burn very quickly. If you live in or own a period property always heed the government's electricity and gas safety advice / regulations, fit smoke detectors and alarms, and have a fire escape plan in mind should the worst happen.

Residential Tenancies - The Rules 2

Residential Tenancies -the rules (2)

Letting residential properties in the UK requires that the landlord grant the tenant a legal right to reside at the property in question. In UK law this is achieved by raising a tenancy agreement. In this second article, Menasche Scharf explains further the technicalities in layman’s language
Residential tenancy agreements are rarely that easy to comprehend. To help you navigate a path through their legal minefields I have assembled below some base rules that you will need to observe, both as landlord and as tenant.

As Landlord
· Creating a tenancy agreement is absolute. It cannot be changed for another type of agreement upon renewal.
· Never attempt to force a tenant out of the property. If they won't leave in accordance with the tenancy agreement you have in place you will need to obtain a court possession order.
· All occupants of legal age in the property must sign the tenancy agreement.
· Should you be worried about the financial viability of a tenant, obtain a surety / rent guarantee from a third party, such as a parent or guardian.

As Tenant
· Tenancy agreements protect the rights of the tenant AND the landlord. Should the landlord invoke a clause in the agreement that requires you to leave the property, then you MUST leave.
· If your tenancy agreement is an AST, and you feel that your rent demand is too high, you may apply to a rent assessment committee to have it reduced so that it is in line with rents for similar properties in the area.
· Should you breach the terms of your tenancy agreement - for example, if you default on rental payments for several successive months - the landlord has the right to start repossession proceedings against you.
Notices
When a landlord requires a tenant to leave his property, he must serve the correct notice at the correct time in accordance with the tenancy agreement in operation. One of three formal types of notice are used - Section 21a Notice, Section 21b Notice or a Section 8 Notice.
All notices are available as template forms and can be sourced through stationery outlets on the high street.