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…
- Gas Safety (Installation & Use) Regulations 1998 -- gas safety in the property.
- The Furniture and Furnishings (Fire) (Safety) Regulation 1988 (as amended 1993) -- law pertaining to furnishings supplied to the property.
- The Electrical Equipment (Safety) Regulations 1994 -- electrical safety at the property.
- Plugs and Sockets (Safety) Regulations 1994 -- plugs & socket safety.
- Building regulations part P, Electrical safety in dwellings -- compliance with work on electrical installations at the property.
- Selective licensing of private landlords – (Housing Act 2004) -- Local Housing Authority licensing.
- Houses in multiple occupation (HMO) - (Housing Act 2004) -- rules governing HMOs.
- Section 47, Landlord and Tenant Act 1987 -- rules applicable to demand for rent.
- Section 11, Landlord and Tenant Act 1985 -- law pertaining to structure and maintenance of property.
- Taxation of Income from Land (Non-Residents) Regulations 1995 -- Inland Revenue legislation.
- The Accommodation Agencies Act 1953 -- rules relating to advertising rental property.
- The Protection from Eviction Act 1977 -- possession of property.
- The Data Protection Act 1998
- 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.
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