Buy to let property law
There are various legal issues involved with the buy to let business and just a broad outline of issues are discussed here. You should always seek professional advice for specific issues.
One of the major elements of the buy to let property business is the tenancy agreement. This forms the fundamentals of your relationship with your tenants. You can have one drafted to meet your specific requirements by your own solicitor or by a letting agent. There are also standard template agreements available from many websites. A quick search should help you find a supplier covering the UK.
A series of legislation has regulated the activities of private buy to let landlords. The Housing Act 2004 introduced a number of changes to private renting in England and Wales. They include the following:
· The HHSRS also known as risk assessment procedure for residential properties is known as the Housing Health and Safety Rating System (HHSRS)
· The HMO license means that if you own a house in multiple occupation (HMO), you will need a property licence.
· The Tenancy Deposit Scheme aims to safeguard deposits paid by assured shorthold tenants (the majority of private renters fall into this category) and to set up an arbitration procedure to resolve disputes relating to deposits.
· Home Information Packs were introduced from 1 August 2007. Many estate agents offer this as part of their service. In time, the packs will affect you if you subsequently decide to sell your property. See www.homeinformationpacks.gov.uk for more information.
In Northern Ireland, obligations of landlords and tenants are governed by the Private Tenancies (Northern Ireland) Order 2006 whereas in Scotland, obligations of landlords are governed by the Housing (Scotland) Act 2006
In general, there is noticeable differences between the laws of England and Wales, Scotland and Northern Ireland. It would be prudent to do your research and talk to a lawyer from the relevant country. Brief summaries of landlords' responsibilities in each of the countries are available from the Shelter website (www.shelter.org.uk). More advice is available from the:
The key legal issues to think about relate to safety, harassment and what the law describes as the tenant's right to 'quiet enjoyment' of the property.
All gas appliances, from fires to boilers, must have a valid safety certificate issued by a CORGI-registered engineer. These certificates are valid for 12 months. Similarly, electrical appliances should be checked by an NICEIC (National Inspection Council for Electrical Installation Contracting) electrician.
Another important area that needs consideration is Fire safety and attention needs to be given to flammability issues with the property furniture.
Letting your property to students can come under the HMO (house in multiple occupation) legislations, even if the bathroom and kitchen facilities are shared. Further information on these issues can be obtained from your local authority. See www.direct.gov.uk for a directory of local authorities.
A property will need to make the necessary adjustments under the Disability Discrimination Act 1995 to provide disabled tenants and leaseholders.
Any rental income that is earned from a property is subject to income tax in the same way as any other business income. Exemptions apply to rooms let in your own home. Any property that is not your own home will usually be subject to Capital Gains Tax (CGT) when they are sold and your beneficiaries could be liable for inheritance tax. Your solicitor or accountant should be able to offer advice.