Terms of Business and Fees
We provide a fully comprehensive service and set out our terms of business and fee structure below which is split between our lettings service and full management.
PART 1: LETTINGS
1.1 Ownership and Sub-Letting
Please would you provide us with a copy of your Title evidencing ownership of the property. If you do not have a copy, we shall obtain a copy from HMLR at your cost which will be £19.95 including VAT
If you are a leaseholder it is essential for you to make certain:
(i) That the intended letting is permitted by your lease.
(ii) That the tenancy is for a period expiring prior to the termination of your lease.
(iii) That your Landlord's/Freeholder’s written permission, if necessary, has been obtained for the sub-letting. If in doubt, refer to your lease or tenancy agreement.
Please provide us with a copy of your lease. If you do not have a copy, we shall obtain a copy from HMLR at your cost which will be £34.95 including VAT.
1.2 Mortgages
Where the property to be let is subject to a mortgage, permission is normally required from the mortgagees to sub-let the property. You must obtain your mortgagee's permission to sub-let (if required) in writing, at the earliest date rather than applying for this when a tenant is found. Most mortgages enable the lender to withhold permission without providing a reason.
1.3 Fees
On finding a tenant who is accepted by you or whom you have given us and who completes the Tenancy Agreement, our commission will be charge as follows:
(i) 8% plus VAT (i.e. 9.6%) for a long let (six months or more) of the total rent reserved under the terms of the Agreement (e.g. If the monthly rent is £1,000.00 you will pay a fee of £96.00 per month inclusive of VAT).
(ii) With regard to extended tenancies, whether or not negotiated by us, commission is payable at the same rate.
(iii) If the tenancy terminates before the due date there is a minimum non-refundable fee of 8% plus VAT (i.e. 9.6%) of the equivalent of six months' rent, but after six months there will be a pro rata refund.
(iv) The commission will be deducted monthly.
(v) Fees are due and payable even if you dispense with our services during the Tenancy.
(vi) We reserve the right to retain any interest or commission obtained while carrying out duties on your behalf.
1.4 Services
The services we provide are:
· Taking up references (see 1.12 below) but not including any charges for company investigations. We can give no warranties to the suitability of a prospective tenant.
· Collection of the deposit payable by the tenant against dilapidations and registering same with My Deposits (see 1.11 below).
· Notification to utility companies (gas, electricity, water) at the commencement and termination of the letting. Notification to the local authority of liability to Council Tax at the commencement and termination of the tenancy.
1.5 The Furnished Rent
Unless otherwise agreed, the rent quoted to a tenant by us on your behalf must be inclusive of all outgoings for which you are responsible (ie, ground rent, service charges, etc) with the exception of gas, electricity, water rates, the telephone service, and fuel/oil where there is an independent oil fired heating system, and Council Tax.
1.6 Inventories
Inventory clerks are not employed by us. We can, however, if required, instruct established independent firms to act on your behalf on your accepting responsibility for the cost of the inventory make.
Under the Tenant Fees Act 1999 (https://www.gov.uk/government/collections/tenant-fees-act) all costs in this respect are to be borne by you, as landlord. Costs are available from the inventory company. Whilst care will be taken in giving instructions to inventory clerks, we cannot accept liability for any error or omission on their part.
1.7 Tenancy Agreement and Charges
Unless we are instructed otherwise, we use our standard form of Tenancy Agreement in respect of all lettings. Our charge for this form of Agreement for a tenancy is £180.00 plus VAT (i.e. £216.00) and is a cost to you following the Tenant Fee Ban 2019. If you instruct your own solicitors to prepare an Agreement you are to be responsible for their fees. Any Notice served by us pursuant to the Tenancy Agreement will be charged at £75.00 plus VAT (i.e. £90.00) and is a cost to you following the Tenant Fee Ban 2019.
1.8 Rent Collection
Once a tenant has been found for the property we will arrange to collect the rent on your behalf.
1.9 Rent Remittances
Rents will be paid out only when we receive cleared rent payments from the tenant.
1.10 Insurance
You should make certain that your property and contents are adequately insured and that you have informed your insurance company of your intention to let your property as many household policies do not cover lettings. Further, please ensure that any insurance policy you hold includes public liability insurance.
Please also note our comments below under 1.12 Referencing and Right to Rent in respect of tenant insurance.
Insurance and mortgage companies are now becoming stricter with putting covenants on how many people can reside at the property and exemptions on HMO properties (see 3.1 Houses in Multiple Occupation) For example: Some insurers require non mandatory testing or regular documented inspections to take place. It is becoming more frequent for Property Managers to be asked to provide evidence of the property having been inspected recently prior to a claim.
Please check with your insurer to confirm whether there are any requirements under your policy that we should be informed about.
1.11 Security Deposit
All security deposits are held by ourselves, as your agent, throughout the tenancy. Once dilapidations have been agreed and copies of all receipted final invoices have been checked, the balance of the deposit will be returned to the tenant.
As from 6 April 2007 all deposits taken by agents must be protected by a tenancy deposit scheme for the regulation of disputes between Landlord/Agents and Tenants. Any deposit taken by us will be dealt with in accordance with the terms of My Deposits of which we are a member.
My Deposits is sponsored by the National Landlords’ Association and administered by Hamilton Fraser Insurance, a company authorised and regulated by the Financial Services Authority. The cost of registering a deposit is £48.00 inc VAT and any tenancy renewal will also require a fresh registration fee of £48.00 inc VAT.
1.12 Referencing and Right to Rent
We currently use HomeLet Innovate for our referencing which consists of a credit check, previous residential and financial reference and includes a twelve (12) months legal cover up to fifty thousand pounds (£50,000.00) to evict the tenant if they fail to pay their rent in the first twelve (12) months. This referencing costs £32.40 including VAT per tenant and is to be borne by you.
HomeLet also offers a new package: Inspire Pro which includes the referencing of all tenants, per property, for the life time of the service being in place. This package also gives you rental payments and legal cover if your tenant falls into rent arrears, breaches the tenancy agreement or fails to vacate after a Section 21 notice has been served. HomeLet Inspire Pro costs £396.00pa (inc. VAT) and would be deducted from the first monthly rent remittance and annually that month thereafter.
Where we have already taken out referencing with existing tenants, Rent Recovery Plus is available through HomeLet which gives you up to six (6) months’ rent guarantee and legal cover if your tenant defaults in their rental payment. This costs £355.68pa (including insurance premium tax) which would be deducted from the first monthly rent remittance and annually that month thereafter. Please note, however, that this cost is only applicable for a monthly rental of not more than £2,500.00. If the monthly rental is above that amount, HomeLet will calaculate the annual premium at the time of application.
Please let us know whether you would like to take advantage of either the HomeLet Inspire Pro package or their Rent Recovery Plus package. If you have any further queries and/or require further information please do contact HomeLet direct https://homelet.co.uk.
We check immigration status and that of anyone aged eighteen (18) or over by seeing the original passport, visas or work permits before the commencement of the tenancy as required by the Government’s Right to Rent scheme introduced in the Immigration Act 2014 https://www.gov.uk/check-tenant-right-to-rent-documents.
PART 2: MANAGEMENT
In addition to the letting, we can provide a management service at an extra charge as follows:
2.1 Outgoings
We are able to attend to payment of current outgoings such as groud rent, insurance premiums and any service charge and/or maintenance charge or similar contribution to shared expenses by utilitising your rental income and we shall account to you regularly. Although we shall do our best to query any obvious discrepancies, it must be understood that we are entitled to accept and pay without question, demands and accounts which appear to be in order. In particular, we cannot accept responsibility for the adequacy or any insurance cover or for the verification of service/maintenance charge demands or estimates where applicable.
2.2 Repairs and Replacements
We shall deal without any additional charge for day to day management matters including repairs up to approximately £1,000.00 for any one item, except in an emergency. Wherever practical, estimates are obtained and submitted to you for approval in respect of works of redecoration, renewal or repair likely to cost more than five hundred pounds (£500.00).
2.3 Project Management
Should you require improvement works be carried out to your property, our fee would be 13.20% inclusive of VAT of the total cost. This fee includes arranging the scope of the work, obtaining quotes for your consideration, liasing with contractors, and supervising the works to their conclusion.
2.4 Inspection and Defects
Our management will include investigation of defects which come to our notice or are clearly adequately brought to our attention by the tenant. We will arrange with the tenant to inspect the property twice a year and inform you of any problems that have arisen, and the action taken. It should be appreciated that any such inspections can extend only to apparent and obvious defects and would not amount in any way to a structural survey of the property. We cannot accept responsibility for hidden or latent defects.
2.5 Tenancy Changes
In the event of there being a change of tenancy during our management, we deal with the preparation of the property for the new tenant, subject to being in funds to do so.
2.6 Terms of Management Appointment
Except in cases where you intend to re-occupy the property and where special arrangements are made, our appointment is for an agreed initial period and thereafter subject to three months’ notice to terminate on either side. We expect to be place in sufficient funds being a minimum of five hundred pounds (£500) at the commencement and during the term of the management to enable us to meet all expenditure prior to the next rent collection. We hold this working balance to your account so that we can undertake to meet any outgoings up to the limit of that amount.
You agree that you appoint us or our assignees as your agent in connection with the agent's functions under this Agreement and the Tenancy Agreement to be entered into and authorise us (without any obligation to do so) to enter your property and take all reasonable steps with regards to our appointment as agents.
2.7 Void Periods
Our management function does not include the supervision of property when it is not let, although, in the normal course of letting, periodic visits may be made to the accommodation. It also does not include any period before the property is let.
As a landlord, you must ensure the property is safe and free from health hazards that could impact your tenant. Under the ACOP (Approved Code of Practice), a landlord has a responsibility to assess the risk of exposure of Legionella to their tenants. Whilst there is this duty, a detailed assessment is not required in practice. Generally the risk in residential properties is quite low due to the regular use of water and turnover of occupants. Also, most residential properties do not have stored water tanks and the main outlets of water are toilets and sinks.
We are happy to manage your property during a void period and will run both hot and cold water through taps at least once every two (2) weeks in an effort to keep the legionella risk as low as we are able. Our costs in this respect will be £75.00 inclusive of VAT per month.
2.8 Fees
Subject to our remarks in Part 2 above, our management charges will be payable monthly at the rate of 6% plus VAT (i.e. 7.2%) of the total rent reserved under the terms of the Agreement (e.g. If the monthly rent is £1,000.00 you will pay a fee of £72.00 per month inclusive of VAT).
PART 3: GENERAL REMARKS
3.1 Instruction to Solicitors
You will be informed of any rent arrears or breaches of covenant brought to our attention. However, if it is necessary for a lawyer to take action, you will be responsible for instructing your own lawyer and for all fees involved.
3.2 Taxes Management Act
https://www.gov.uk/tax-uk-income-live-abroad/rent
If you do not reside in the United Kingdom, the Commissioners for Inland Revenue will hold us, as your agents, responsible for the payment of any tax liability which arises on rents collected by us on your behalf. Accordingly, if you are resident abroad, it will be necessary for us to deduct income tax at the rate of 20% of the gross rent and pass this on to the Inspector of Taxes.
If we are given an Inland Revenue Approval Number for you it will not be necessary for us to deduct this 20%. Our approval number with HMRC in this respect is NA023314 2002. Please see this form: http://www.lwmltd.com/sites/www.lwmltd.com/files/documents/nrl1_bw.pdf
Similarly, if you at present live within the UK but subsequently move abroad, it will be necessary for us to commence this deduction from the time you leave the country. The monies deducted will be handed over to the Inland Revenue as set out above.
The eventual liability for tax may be considerably less than the amount we have handed over to the Inland Revenue and we suggest that you employ accountants or other tax advisers to agree your assessment each year with the Inspector of Taxes.
We regret the necessity to make such deductions but you will appreciate we have no alternative in view of our responsibility to meet the tax liability on your behalf. We therefore ask you to let us know as soon as possible who will be dealing with your tax affairs in this country.
Should you at present reside within the UK but subsequently move abroad, we ask that you let us know the name of your accountant or tax advisers at that time.
3.3 The Housing Act 1988
Applications for market rent appearances before the Rent Assessment Committee or any other Court or Tribunal will be by special arrangement only and will form the subject of an additional charge, being fifty pounds (£50.00) inclusive of VAT per hour.
3.4 Indemnities
You agree to indemnify us as agents against any costs, expenses or liabilities incurred or imposed on us provided that they were incurred on your behalf in pursuit of our normal duties.
3.5 Fire Regulations
https://www.gov.uk/private-renting/your-landlords-safety-responsibilities
As from 1 March 1993 all furniture in properties being rented for the first time or any new or additional furniture being put in a property already rented out must comply with the fire regulations by displaying a label stating that they are fire resistant.
If items or furniture do not comply with the fire regulations, you must either change the items of furniture or authorise ourselves as agents to either replace or remove the items before any tenancy commences.
Instructions to let a property available for rental will only be accepted if all furniture complies with the regulations and you hereby warrant to us that this is the case. Failure to comply can result in your prosecution.
If your property is a flat which shares common parts with other units, the Fire Safety (England) Regulations 2022 which came into force on 23rd January, 2023 are pertinent and need to have been complied with.
3.6 Gas Appliances Regulations
https://www.gassaferegister.co.uk/help-and-advice/renting-a-property/information-for-landlords/
All gas appliances must be checked by professional tradesmen and all items marked with the date and time of testing to comply with Government Regulations.
Such tests are to be carried out at your expense prior to the rental of the property and on an annual basis thereafter, the cost being deductible from the rent. We shall arrange this for you and will also ensure that your boiler is serviced annually. Failure to comply with the Regulations can result in your prosecution.
All appliances must have instruction books left at the property.
3.7 Electrical Regulations
From 1 July, 2020, all rental properties require mandatory electrical testing.
How this will affect you as a landlord is as follows:
· You have to produce the Satisfactory EICR (Electrical Installation Condition Report) to the tenant before they occupy – much like the gas safety certificate otherwise it will have further implications as far as your legal rights as landlords
· If there are any remedial works required you will also need to provide a certificate of satisfaction for these works within 28 days of the first inspection (or less if the electrician specifies).
· You can’t move in a new tenant until all works are complete and a satisfactory certificate is provided.
· Renewal certificates need to be issued to existing tenants within 28 days of the test
Non-compliance is up to £30,000 fine plus an emergency remedial action notice.
3.8 Energy Performance Certificate (EPC)
https://www.gov.uk/buy-sell-your-home/energy-performance-certificates
All properties let must have a current Energy Performance Certificate throughout the period that the property is let.
An EPC is valid for ten years and tells owners and tenants how efficient the property is by giving standard energy and carbon emission ratings from A to G, with A being the most efficient.
If improvements are made to the property which might affect its energy rating then the EPC may be updated.
EPC assessments must be carried out by approved assessors, which are listed on the EPC register and usually cost between £60.00 and £120.00 inclusive of VAT.
If your property scores lower than an E rating, remedial works are required before the property can be let. If the property is tenanted and fails its EPC, remedial works are required during the tenancy.
3.9 Houses in Multiple Occupation (HMO)
http://www.legislation.gov.uk/uksi/2018/221/
HMO rules are primarily covered by “The Licensing of Houses in Multiple Occupation (Prescribed Description) (England) Order 2018”, which can be read in full using the link above.
Effectively, if a property is rented by three or more unrelated persons forming two or more households the tenancy automatically becomes an HMO (e.g. a woman and her child and a platonic friend of the woman would constitute an HMO whereas two sisters and a child would not).
The management of HMO properties have strict regulations that landlords must comply with when managing a HMO. This includes certain measures relating to fire safety, waste disposal, water supply and drainage, and general maintenance of the property.
All HMOs, whether licensable or not, must comply with the management regulations. Private landlords, property managers, and letting agents can be held liable if the property is not correctly licensed or there has been a breach of the management regulations and/or any breach of the pertinent council’s requirements. You may need to carry out works to ensure that your property is compliant, for example, installing fire doors.
Please note that we reserve the right to no longer act as your agent if your property is not compliant.
3.10 The Homes (Fitness for Human Habitation) Act 2018
This Act affects all new tenancies and renewals of existing tenancies from 20th March, 2019 (i.e. tenants would not be able to claim a rent rebate for the period either prior to the start of their agreement or the start of the renewal of their tenancy after 20thMarch 019. It affects tenants who are on existing statutory periodic tenancies from 20th March, 2020.
Previously property standards were regulated by formerly Environmental Health, and latterly HHSRS (Housing Health and Safety Rating System Regulations 2005), both of which were enforced by the local Borough. Should the local Borough inspect they would put a notice on the property to improve the standard. This is still in place but additionally landlords can now be taken directly to court by tenants if they feel their property is not fit for human habitation. If the court deems the property unfit, tenants can be awarded with a rent rebate backdated to the time the property was deemed uninhabitable, as well as damages and compensation for ill health etc.
The matters that could now cause a property to be unfit (only if it is so defective that it is not reasonably suitable for occupation) include:
· Repairs
· Stability/structural collapse
· Damp and mould growth - there is a provision for all properties to be free from damp/mould. If you have been holding off resolving a property defect, or asking your tenants to use a dehumidifier to remove moisture levels to avoid damp/mould, this will no longer be seen as adequate. We would recommend obtaining a specialist report to ascertain whether the problem is with the property or the lifestyle of the tenants. Should the report bring up any recommendations for the property to be upgraded you will then need to consider these upgrades)
· Internal arrangement
· Natural lighting
· Ventilation
· Water supply
· Drainage and sanitary conveniences
· Facilities for preparation and cooking of food and for the disposal of waste water
· Electrical hazards
· Pests
· Hazards under the Housing Safety Rating Systems
Please note that if your building is in a block of flats, your obligations extend to all parts of the building.
Insurance, mortgage companies and inspections
3.11 Data Protection
3.11.1 We require to process and retain certain personal information that you have provided to us. From time to time we may pass any or all of that personal information on to third parties who may carry out specific work on our behalf for processing. Full details of the personal information we hold, why we hold that information, how long it is held for and with whom that information is shared are set out in the Fair Processing Notice provided to you.
3.11.2 In the event that we require your consent to process and retain any of your personal information we shall seek your written permission to do so separately
3.11.3 In terms of the EU General Data Protection Regulation 2016/6769 (hereinafter “GDPR”) you are entitled to request and inspect personal information of yours that we hold. Should you wish to inspect any of your personal information that we hold, you have the right to request sight of this data, provided it is done in writing and detail the specific information that you are seeking. We will provide you with a copy of any personal information held (which constitutes “Personal Data” in terms of GDPR) within one month of receipt of your written request.
3.11.4 To comply with moneylaundering regulations, we will require a copy of your passport and proof of your residental address i.e. a utility bill/bank statement dated within the previous three months.
3.12 Consumer Redress
The Property Lodge Management Company Limited is a member of The Property Ombudsman. For more information please go to www.tpos.co.uk.
3.13 Client Money Protection
The Property Lodge Management Company Limited is a member of the Propertymark client money protection scheme : Client Money Protect Certificate.
3.14. Right to Cancel
You have a fourteen (14) day ‘notice of right to cancel’ from the date of signing the contract if you have signed this contract away from our office. Please note that this cancellation period means that marketing of the property cannot start until after the fourteen (14) days.
If you wish the contract to begin before the end of the fourteen (14) day cancellation period you must request this in writing and have an agreement to cover any costs incurred during this cancellation period.
