LANDLORDS INFORMATION PACK SPECIALISTS IN LETTING AND MANAGEMENT History: Clarendon Letting and Management began trading on the 2nd August 1999. The company was formedbyStewartMoorewhohasworkedinthelocal property market for the last 18 years. Stewart seized upontheopportunityofsettingupafullyindependent letting agency covering all local areas after realising thatitwasnotservicedbyanyspecialistcompany,only by estate agents doing the job more as a side line and hoping to sell the property at a future date. Clarendon is independent.We are not tied or related to any bank, building society, mortgage broker or estate agent. Our advice is totally impartial and our understandingofrentaldemand,rentalvalues,tenant selection and the care of property is second to none. This information pack contains everything you need to know about letting with Clarendons, along with comprehensive information about all aspects of being a landlord - from preparing a property to let to legislationandtaxation.Whilstweexpecttheenclosed tobeaninvaluablesourceofinformationtherecanbe no substitute for expert face to face advice and would thereforerecommendavisittoyourpropertyfromone of our experienced letting managers. ClarendonLettingsisafirmaccreditedbyTheNational Approved Letting Scheme - a Government backed accreditation scheme which offers peace of mind to landlordsandtenantsthroughtheknowledgethatthe firm they are dealing with offers clearly definedlevels of customer care. LETTING SERVICE Our Letting service is suitable for landlords who live locally and are willing and able to maintain their property throughout the tenancy and comply with all up-to-date legislation. We will carry out all of the following: • Free rental assessment • Marketing, advertising and conduct viewings at the property • Full tenant referencing checks • Preparation of the tenancy agreement • Check compliance with up-to-date Health and Safety regulations • Arrange inventory and schedule of condition (optional) • Arrange gas safety inspection • Arrange for tenancy agreement to be signed (collect first months rent and security deposit) • Set up standing order mandate to landlords nominated account • Arrange the check-in at the property • Diarise gas safety inspections • Serve notice to end the tenancy or arrange an extension Fees for Clarendon letting service: First year of the tenancy: Second year of the tenancy: Third and further years: 10% +VAT of the gross rental income 8% + VAT of the gross rental income 6% + VAT of the gross rental income Our commission fee is deducted from the first payment received from the tenant along with any further deductions for inventories, gas checks and any other costs incurred in the preparation of the tenancy. The current charges for inventories and gas checks is available on request. T: 020 8647 1123 F: 020 8647 2678 E: smoore@clarendonlettings.co.uk www.clarendonlettings.co.uk LETTING AND MANAGEMENT SERVICE This service enables you to leave Clarendon the responsibility of looking after both your property and your tenant. This is the best option if you do not live locally or are planning to live overseas for all or part of the duration of the tenancy. We will keep you informed of any developments during the tenancy and will send you quarterly updates on inspections carried out. The net rental will be sent to you or paid directly to your We will carry out all of the following: bank or building society on a monthly basis. If any repairs or maintenance are required we will use a reliable handyman or qualified engineer/tradesman to handle it. If any major work is required we would consult you prior to any work being commenced, unless in an emergency. In general terms we will monitor, maintain the property and deal with any day to day problems and queries raised by the tenant. • Free Rental Assessment • Market the property using newspapers, internet sites, letting lists and office displays • Accompanied viewings arranged • References taken out on prospective tenants • Tenancy agreement drawn up • Check compliance with Health and Safety regulations • Arrange inventory and check-in • Tenancy agreement signed by tenant and first months rent along with deposit paid • Transfer utilities • Diarise gas safety inspections • Rent collection • Quarterly inspections • Serve notice to end the tenancy or arrange an extension • Arrange check-out report Fees for Clarendon letting and management: First year: 10% + VAT for introducing the tenant + 5% monthly management fee Second year: 8% +VAT for continuation of the tenancy + 5% monthly management fee Furtheryears: 6% + VAT +5% monthly management fee The current charges for inventories and gas checks is available on request. ADDITIONAL INFORMATION We recommend you notify your insurance company that the property is to be let as this may effect your cover and it is essential to ensure that the policy covers third party claims and accidental damage. Landlords are responsible for the buildings insuranceandtheircontentswiththetenantresponsiblefortheirownpossessions. When the property is subject to a mortgage you will need to obtain the mortgagers consent to the letting before entering into an agreement. TAXATION Income Tax The rent after deducting allowable expenses will be subject to UK tax whether you are resident in the UK or not, and must be reported in your Self Assessment Return. However with careful planning and good advise it is possible to minimise tax exposure. Allowable expenses include: • Mortgage interest • Ground rent and maintenance charges, if leasehold • Agency letting and management fees • Buildings and contents insurance • Repair and maintenance of the property and contents, but not the cost of improvements • Accountant fees • The Inland Revenue will allow a deduction if the property is furnished, which is calculated as rent minus water rates x 10% CAPITAL GAINS TAX Home owners do nor incur CGT when they sell their own home, because there is relief from CGT in respect of the principal private residence. Owners who buy an additional property that is then let will be liable to CGT when this property is sold. Therefore, whenever a property that is not the main home is sold, any rise in value, subject to indexation, is liable to CGT at the tax payers highest rate of tax. There is a CGT allowance of £7500 (applies to 2005-06, subject to change each year). Where shared ownership applies, there may be two allowances available, obviously less any which have been used on other gains. Clarendon cannot advise landlords on tax matters. For advise on income and Capital Gains Tax, together with assistance with the preparation of annual returns, you should consult an accountant who specialises in advising landlords of residential property. T: 020 8647 1123 F: 020 8647 2678 E: smoore@clarendonlettings.co.uk www.clarendonlettings.co.uk LEGISLATION AFFECTING LANDLORDS There are now more than 20 different regulations, acts or rules relating to the letting of residential property, many of which relate to the physical safety of tenants and carry monetary penalties or even imprisonment for non-compliance. The Housing Act (2004) now allows Ministers to introduce further regulation without reverting to the House of Commons for approval, which means it is more important than ever for landlords to ensure they are fully up-to-date with legislation affecting their investment. Following are some of the most important regulations but we would strongly recommend discussing these and all other aspects with one of our experts at your property. THE FIRE AND FURNISHINGS (FIRE) (SAFETY) REGULATIONS 1988 AS AMENDED • On 1st March 1993 legislation was passed dealing with upholstered furniture, loose fittings and permanent loose covers. The legislation required that all such items in a let furnished property must be compliant • Upholstered furniture must have fire resistant filling material and must pass a cigarette resistance test • Permanent covers must pass a match resistance test • Any furniture added to the property since 1st March 1993 must comply with these requirements whether new or second hand • These regulations do not apply to: antique furniture or any made before 1st January 1950, bedclothes (including duvets and pillow cases), loose covers for mattresses, curtains, carpets, sleeping bags and cushion covers • Currently, the offence of supplying non-compliant furniture carries a punishment of up to 6 months imprisonment and/or a fine of up to £5000 per non-compliant item BUILDING REGULATIONS Part P ELECTRICAL SAFETY IN DWELLINGS • The Landlord and Tenant Act 1985 puts the onus on Landlords to ensure the electrical installation in their property is safe and it is maintained in a safe condition throughout that tenancy • From 1st July 2005, all domestic electric installation work must be carried out by a Government Approved contractor • In addition, electrical contractors will have to verify the work complies with British Safety Standard Safety Requirements (BS7671) • Failure to comply with these regulations is a criminal offence and could result in fines of up to £5000 and/or imprisonment As a summary of Landlord Responsibilities: • Only use competent approved contractors • Ensure that cracked/damaged sockets or plugs and frayed wiring is made good (1994 Plugs and Sockets Act) • Ensure all appliances are safe to use prior to any let • All socket outlets which may be used for equipment outdoors should be protected by a residual Current Device (RCD) THE ELECTRICAL EQUIPMENT (SAFETY) REGULATIONS 1994 • Electrical supply and appliances within a property must be safe • Any unsafe items should be removed from the property prior to offering it to rent • No statutory checking procedure or timescale exists. However, we strongly recommend that all landlords have an annual inspection of electrical appliances including an annual electrical safety check, by a qualified electrical engineer • Smoke alarms are advised to be fitted to all let properties and should be regularly checked to ensure that they are in full working order THE GAS SAFETY (INSTALLATION AND USE) REGULATIONS 1998 • All gas appliances and associated pipework and flues should be maintained to ensure they are safe to use. An annual inspection by a qualified registered CORGI gas engineer is now a requirement of Law • A Gas Safety Record must be kept with the dates of inspection and any defects identified. This record must be provided to the tenant upon signing the tenancy agreement • Any gas appliance that is suspected or known to be faulty or incorrectly installed must not be used by anyone and should be removed/replaced or repaired immediately • Ventilation is needed for gas appliances to work correctly and safely. You should take care not to block vents and air bricks TENANCY DEPOSIT PROTECTION SCHEME 6th APRIL 2007 • By law, ALL landlords and agents in England and Wales taking deposits on assured shorthold tenancies starting after 5th April 2007 must join a Government-authorised tenancy protection scheme • Clarendon has become a member of Tenancy Deposit solutions (www.mydeposits.co.uk). As a member of this scheme we can protect deposits on all properties we are asked to manage on behalf of our landlords • Landlords who let their property through Clarendon but manage the property themselves, will be required to join the custodial scheme (The Deposit Protection Scheme). This scheme is operated by Computershare Investor Services PLC For further information: www.depositprotection.com PENALTIES FOR NON-COMPLIANCE • A landlord will not be able to recover possession of the property under the usual notice only procedure under Section 21 • Tenants will have the right to obtain a court order requiring the landlord to safeguard the deposit and provide requisite information • A financial penalty of up to 3 times the deposit value If you would like Clarendon Letting and Management to visit your property for a free rental valuation or if you wish to discuss any aspects of our letting service in more detail please do not hesitate to contact us: T: 020 8647 1123 F: 020 8647 2678 E: smoore@clarendonlettings.co.uk www.clarendonlettings.co.uk Clarendon House, 35 Pound Street, Carshalton, Surrey SM5 3PG T: 020 8647 1123 F: 020 8647 2678 E: smoore@clarendonlettings.co.uk www.clarendonlettings.co.uk Registered address: 62-64 New Road, Basingstoke, Hampshire RG21 7PW Registered no: 3807037