Renting/letting jargon – A-Z

The property world is full of words and expressions that may be unfamiliar to anyone who is not regularly letting or renting a home.

This guide will help to shed light on what they all mean.

Absent Landlord
A landlord described as absent is one who cannot be contacted. If the lessees wish to create a Right To Manage Company but are unable to contact the landlord, they are free to make a legal application to acquire the right to manage.

Administration Fee
A payment which is charged to cover the costs of processing a property rental application. This is paid by the tenant and will be taken from the initial monies once the tenancy starts.

Agreement Fee
A payment which is charged to cover the costs of drawing up a tenancy agreement. This is usually shared between the landlord and tenant.

ARLA Propertymark
The Association of Residential Letting Agents, the UK’s foremost professional body for letting agents.

Assured Shorthold Tenancy (AST)
A widely used rental agreement where the tenant is an individual and net rent does not exceed £25,000 a year. It covers a fixed period, so both parties know the date the property will be vacated.

Break Clause
A clause sometimes agreed between the landlord and tenant to be inserted in a fixed term agreement, typically if the initial fixed term is for a year or more. A break clause will usually allow either landlord or tenant to give written notice after a particular date or period of the tenancy in order to end the tenancy earlier than the original fixed term.

Credit Search References
References requested for a tenant applying to take up rented accommodation. Many agents and individual landlords use external companies who will contact the applicant’s employer, landlord and check the tenant’s credit history, providing a report on their financial suitability to rent.

Deposit
A monetary sum held by the landlord or agent for security against damage to a property or a breach of the tenancy terms. This is usually the equivalent to six weeks’ rent but may vary. If the deposit is for an Assured Shorthold Tenancy (AST), then it must be protected by one of the approved tenancy deposit protection schemes.

Dilapidations
Items that have been damaged during a tenancy. The tenant is usually responsible for the cost of repair or replacement.

EPC
The Energy Performance Certificate (EPC) shows the energy efficiency and carbon emissions of a property and gives an indication of the fuel bills. It is displayed as two graphs, the energy efficiency and environmental impact of the property. Each is graded from A (the best) to G (the worst).

sale is binding and no terms may be altered.

Fixtures and Fittings
Items usually provided in a letting that may include curtains, carpets, blinds, light fittings, kitchen units and appliances. In some cases it may also include furniture. It is advisable to check what is provided and not to assume that items will be provided.

Gas Safety Record
A certificate that states all gas appliances, pipework and flues are safe. It is a legal requirement for all landlords and must be provided every year by a Gas Safe registered engineer after a safety check.

Inventory
A list of the contents of a rental property. The inventory will note the condition of items and will form the basis of a dilapidation report at the end of the tenancy. It often includes photographs of specific items and existing damage/defects.

Lease
The legal document governing the occupation by the tenant of a premises for a specific length of time. At the end of the period the property reverts to the owner.

Listed Building
Buildings of special architectural or historic interest. A listed building may carry certain obligations and restrictions governing its use, repair, and maintenance.

Maintenance Charge or Service Charge
Many leasehold properties (especially flats) are subject to such a charge which pays for items such as the insurance and maintenance of the building.

Maisonette
A flat with its own private entrance.

Multiple Agent Instructions
Where more than one letting agency firm is instructed by a landlord to offer a property to rent.

The Property Ombudsman
The Property Ombudsman offers a free and independent service for resolving disputes between sales and letting agents, which are members of The Property Ombudsman, and buyers/sellers of residential property in the UK.

Sole Agent
Where only one letting agency firm is instructed by a landlord to offer a property to rent.

Tenancy
Possession of a property by a tenant under the terms of a lease.

Tenancy Agreement
The legal agreement governing the occupation of a property by a tenant.

Tenancy Deposit Scheme (TDS)
An insurance-based scheme run by The Dispute Service Ltd. for the protection of tenancy deposits and the resolution of disputes between landlords, agents and tenants concerning the return of deposits at the end of a tenancy. It is one of three schemes approved for tenancy deposit protection.

Tenant
The person who has temporary possession of a property under a lease or tenancy agreement.

Tenants not taking out contents insurance?

Shocking figures are released in a recent survey about tenants and their lack of contents insurance.

Recent research has shown that 61% of tenants currently have no contents insurance, with 48% admitting that they have never taken out contents insurance at a property they have lived in during their lives.

The survey further revealed that 19% of tenants questioned said they had no idea what contents insurance was, whilst amongst those who actually did have  a policy, 42% of them did not know what it actually covered or what to do in the event of needing to make a claim.

The figures from the Upad research also showed that 78% of tenants have personal belongings that value more than £1,000, with 22% having belongings  with an aggregate value of over £5,000.

Upad founder James Davis stated:

It is madness that tenants are exposing themselves like this, regardless of whether they are trying to save money or, for some reason, think their landlord’s own insurance will keep them covered in the event of loss or damage to their property.

Tenants are far better served having contents insurance that they don’t need rather than finding out they badly need it at precisely the time when something goes horribly wrong. Remember that, even in a fully furnished property, tenants will still have plenty of their own belongings. If tenants are unsure about their level of cover they should check their insurance policy or with their letting agent or landlord.

During the tenancy application process, Paul Carr Residential Lettings recommend that our prospective tenants take out both contents cover for their personal possessions and also cover for accidental damage to the landlord’s contents (such as carpets).

We can assist our tenants in getting the appropriate cover and will provide a free no-obligation quote.

Further details can be found in our Tenants Guide available on our website.

Right to Rent could impact those without a British passport

According to the Residential Landlords Association (RLA), almost 20% of British citizens could find it harder to access rental property.

The industry trade body surveyed over 900 landlords and reports that 44% of them said they are less likely to let homes to tenants without a British passport.

Currently 17% of British people do not own a passport and this means that gaining access to housing in the private sector may become more difficult for them.

The government’s Right to Rent scheme has been in operation since February 2016 and the RLA has been researching its impact.

Under this legislation, landlords, or letting agents acting on their behalf, are required to check the immigration status of all prospective tenants.

The survey found that over 50% of the participants are now less likely to consider letting to people who are currently living outside of the UK.

Also, 22% said that they are now less likely to let to EU nationals or those from the European Economic Area.

What are the biggest causes of deductions from rental deposits?

When renting out a property, most landlords – or their letting agents – opt to take a deposit from the tenant(s) prior to the tenancy starting.

Deposits offer a level of protection to landlords, meaning that, if the tenant breaches the terms of the tenancy agreement, they can them make appropriate deductions from the deposit.

Clear property damage, poor cleanliness or anything that is different from the property’s original state, which is easy to identify if there is an inventory management report and a schedule of condition in place at the start of the tenancy agreement, will enable the landlord or their agent to rightly off-set the compensation from the tenant’s deposit.

Research by interior specialists Hillarys, part of ongoing research into the habits of Britons and their attitudes towards renting, showed that top reasons that tenants were given for why they had lost part, or all, of their tenancy deposit.

Marks on the walls, carpet stains, the need for redecorations and mould were among the five most common reasons listed as to why tenants had had money deducted.

Broken furniture29%
Marks on walls24%
Carpet stains21%
Redecorations12%
Mould9%

Spokesperson for Hillarys, Tara Hill, said:

Security deposits are an unavoidable part of renting a property, and can be an essential way for landlords to deal with damage caused by tenants. But they can result in disputes and are a major cause of distrust among tenants.

Whilst there appears to be an issue around the lack of trust when related to deposit protection, according to the research, Paul Carr Residential Lettings use The Tenancy Deposit Scheme (TDS), which is run by The Dispute Service under a government awarded contract.

For further details in regards to The Tenancy Deposit Scheme and the guidelines Paul Carr Residential Lettings follow, please see our Tenant’s Guide.

Quarter of households will be private renters by 2021

According to new research, the proportion of households living in the Private Rented Sector (PRS) will rise to 24% over the next four years.

The Knight Frank Multihousing Report has suggested that some 5.79 million households will be private renters by the end of 2021.

The survey of over 10,000 tenants revealed that 68% expect to still be living in the PRS in three years’ time.

The young professional demographic, 25-34-year-olds, make up the largest proportion of private renters.

The biggest concerns for tenants are affordability, location and then the rental property itself.

Tim Hyatt, head of residential lettings at Knight Frank, said:

The flexibility that renting offers has reinforced its popularity as both a sensible and accepted solution for young couples without children and those living on their own but also highlights an expected rise in older households over the next five years.

The number of people renting out of choice rather than due to affordability of ownership constraints is an interesting indicator of how the market will continue to thrive in terms of tenant demand.

Institutional investment in the PRS is set to rise to £70 billion over the next five years, according to the research. The changes in recent years, including the 3% stamp duty surcharge and the restriction of BTL mortgage interest tax relief, have made institutional, large scale investment in the PRS more appealing.

If you are currently a landlord or are looking to invest in a rental property, please contact our Lettings Hub and find out how we are committed to getting you the best rental value for your property.

Almost half of BTL landlords are looking to expand their portfolios

Almost half of buy-to-let landlords are looking to expand their property portfolios, according to a new poll.

The Mortgages for Business’ Property Investor Survey revealed that, despite the existing phasing out of mortgage tax relief and the introduction of the 3% stamp duty surcharge last year for those acquiring an additional home, including a buy-to-let property, 48% of landlords are currently looking to add to their portfolios.

This figure is up from 45% in November and 41% a year ago.

The study, which was carried out over a two-week period last month, had landlords answering questions about their portfolios.

Steve Olejnik, chief operating officer of Mortgages for Business, said:

“Although we expect buy-to-let lending to reduce somewhat this year, these results demonstrate that landlords are a resilient bunch, capable of adapting their investment strategies to successfully accommodate the new fiscal and regulatory landscape.”

The research found that 62% of landlords have been adapting to the changing environment by consulting tax advisers in regards to recent tax amendments and 42% of investors are currently opting for longer fixed-term mortgages.

He added:

“Incorporation is becoming a standard practice and the move towards five year fixed rates allows landlords to maximise their borrowing options.”

If you are looking to invest in the North Birmingham, Sutton Coldfield or South Staffordshire areas, please contact our dedicated Lettings Hub to start your property journey with Paul Carr Residential Lettings.

Landlords – are you interested in appearing on TV?

Are you a landlord? Do you own 10 or more properties?

Boundless Productions, the makers of Grand Designs and Escape to the Country, are making a documentary series for BBC1 and are looking to feature landlords/property investors at the top of their game.

They would like to show how landlords grew their property business and what role as a successful landlord they now have in the ever increasing rental market.

As a way of exploring how the rental market is changing, each landlord will spend a week as a tenant.

Can you remember being a renter?  How have things changes since you were last renting? Now tenants are renting for longer, how have their needs and expectations changed? Could seeing things from the other side help improve your business?

Filming in soon and the production company are looking for a number of landlords to take part. Applications are open to all.

If you would like to find out more, email the production company at:
laura.neal@boundlessproductions.tv.

Significant increase in first-time investors in buy-to-let sector

A new report has stated that there has been a significant increase in the number of first-time investors in the buy-to-let sector over the past year.

This is despite various tax changes, political and economic uncertainty and tougher mortgage lending conditions.

Buy-to-let specialist, Sequre Property Investment, revealed that new investors entering the market accounted for 61% of their property sales in the 12 months to March 2017, up 15% year-on-year.

Over a quarter, 26%, of those surveyed stated the they had chosen to invest in the buy-to-let market in hopes of generating a secondary income, 23% were doing it for retirement, 18% wanted to start their own property portfolio and 14% had opted to invest for inheritance purposes.

Secure Property Investment reported a 14.8% increase in overall sales over the past 12 months despite the introduction of the 3% stamp duty surcharge on additional properties, which came into force in April 2016, and the reduction in mortgage interest relief. The mortgage interest relief is being phased in from now until 2010.

Graham Davidson, Managing Director at Sequre Property Investment, said:

It’s clear that many investors and landlords remain undeterred from investing in property and are buying wisely to mitigate the changes.

Investors had over a year to prepare for the stamp duty changes and were also given plenty of time to adjust to the revised stance on tax relief, however the level of enquiries we’re receiving are at an all-time-high.

He continued:

Low mortgage rates and rising house prices have both resulted in favourable market conditions for landlords. Savvy investors understand that purchasing buy-to-let property which produces strong yield returns from the rental income is crucial, as is choosing the right property type and location.

A shortage of housing supply in many large cities has continued to keep rental demand high, and these factors are all key attributes of a successful buy to let investment which many novice investors have been keen to take advantage of.

Buy-to-let property in central locations with high yields and great scope for capital growth results in investors continuing to make a sizable profit even with additional tax payable.

How do you store your belongings when you rent out your property?

So, you have decided to rent out your property. What do you do with all your belongings (if you aren’t moving them to another property)?

❏    List the items you plan to store
(Your storage company should be able to advise on the size of space you require. If storing the entire contents of your property, you just need to advise the size, i.e. a large/small three bed house, etc.)

❏    Work out when you will need to put your stuff into storage
(You can take it out when it suits you. Most self storage companies only ask for seven days notice when you want to leave.)

❏    Decide how you will get your goods to the storage facility
(All good self storage companies will be able to recommend a local removal company)

❏    Will you need access outside the reception opening hours?
(If so, find out when these are and when you can get access outside of these times. Check your storage company opens at convenient times, e.g. Sunday.)

❏    Do you need any packing materials?

❏    Check the storage facilities have the following security:

Individually alarmed rooms
24 hour CCTV with external monitoring
Staff onsite 7 days a week
Secure perimeter fencing with electronic gates
Pin code access
Well lit corridors and intercom to the reception

Top tips for renting a property

The private rental sector of the UK property market has grown dramatically since the late 1990’s and the growth is predicted to continue.

According to the Office of National Statistics, 36% of households in England and Wales were rented rather than owner-occupied in 2011.

Being a tenant is widely accepted as a viable alternative to home ownership, particularly among those who may not yet be willing or able to consider buying a permanent home. Renting a property should be an enjoyable experience and for those who are new to the process, On The Market have put together the following top tips for renting a property.

Preparing your finances
Decide how much you can reasonably afford to pay in rent each month. Take into account your general costs of living and the fact that you will be paying Council Tax as well as fuel bills, contents insurance, TV licence and broadband. In addition, you will need to budget at least six weeks’ rent as the amount to be put down as security deposit for the length of the tenancy.

Finding a suitable property to rent
Search for properties in areas that you want to live in and create a shortlist of potentials to go and look at. Remember that the rental market is usually fast-moving and that good properties in popular areas don’t stay on the market for very long. If you see something that may suit your needs, get your skates on and quickly go and see it. Get in touch with the letting agents and register to receive alerts when new places come available. Many letting agents belong to industry bodies such as the ARLA Propertymark (formally the Association of Residential Lettings Agents) or the National Approved Letting Scheme (NALS). This can provide some peace of mind to tenants that they will be dealt with in a professional manner.

Asking questions
When you find a property that you would like to rent, you will most probably have read about it online or in an agent’s printed details. You will have seen only basic information, so if there is anything that is unclear or not stated don’t be afraid to ask questions. For example, check who is responsible for maintaining the garden, and whether there are any restrictions concerning pets or smoking in the premises. If you clear such questions at the earliest stage you won’t waste money applying to rent an unsuitable property. Don’t hesitate to ask the letting agent for a list of all the charges that you may incur throughout the process of applying to rent the property.

The tenancy agreement
Assuming you pass the checks and referencing process, the agent will draw up an Assured Shorthold Tenancy agreement for signing by you and the landlord. Read the agreement very carefully before signing and if you are unsure of anything don’t hesitate to ask for clarification. The tenancy agreement is a legal document and binds you and the landlord to the terms within it. Make sure they are in accordance with your understanding.

The deposit
You will be required to pay a security deposit that will be held by the agent on behalf of the landlord for the duration of the tenancy. Its purpose is to provide the landlord with compensation if you damage the property or its contents. Fair wear and tear is excluded from these dilapidations. All deposits in assured shorthold tenancies must be registered with one of the government-approved tenancy deposit schemes that guarantees no-one can run off with the money. The deposit scheme will also provide a dispute resolution service if, at the end of the tenancy, you cannot agree the amount charged by the landlord or their agent for the dilapidations.

Inventories
Even if the property is being let unfurnished, it is really important to have a properly prepared and comprehensively detailed inventory, which is carefully reviewed and signed by tenant and landlord. It will list any existing faults in the property such as areas of damaged decoration, marks on carpets or chips in bath enamel. This ensures that when the dilapidations are assessed at the end of the tenancy you will not be charged for those that were in the property when you took it over. A good inventory will include photographs of such faults.

Paying the rent
You will probably be paying the monthly rent by standing order to the landlord or their agent. Always ensure that rent is paid on time and in full. Non-payment of rent is a serious matter that can end up in court. If there is any problem with the property, do not withhold payment of the rent. Such an action is guaranteed to make resolution all the more difficult and puts you in breach of the terms of the tenancy agreement. It can also show up in future referencing checks and might cause problems if you come to rent another property.

At the end of the tenancy
When the tenancy period is nearing its end, you can ask if the landlord will agree to renew the tenancy (the amount of the rent may change and there may be some administration charges to pay) or you can leave the property. Arrange to move out by the agreed time on the agreed day. Make sure the property is clean and tidy and in at least the same condition as when you moved in. On the moving day, the inventory should be checked at the property by the landlord or their agent, with you in attendance, and it should be signed off by you as correct before you vacate. Take a note of the meter readings for gas and electricity and apply for final billing. Don’t forget to arrange with Royal Mail to redirect mail to your new address (ensure the redirection is specifically for mail in your name).

Repaying your deposit
Shortly after you move out, you will receive an account from the landlord or their agent detailing the charges for dilapidations, if any, that you agreed when the inventory was reviewed during the check-out. Providing you agree the amounts, the balance of your deposit should be returned without delay.

If you are looking to rent in the North Birmingham area, please call our Lettings Hub on 0121 308 7676 to start your rental journey with Paul Carr Residential Lettings.

We are committed to making the application process and your tenancy as stress free as possible.