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A BRIEF GUIDE TO LANDLORDS RENTING YOUR PROPERTY THROUGH COLES & CO.

LANDLORD’S GUIDE TO PROPERTY LETTING & MANAGEMENT

WHO ARE COLES & COMPANY?

Established in the early 1980’s Coles & Co is one of the few truly independent and sole trading agents left in central Kent. Our enthusiastic and fully trained staff are committed to offering a high level of personal attention to you individual requirements.

Coles & Co have an extensive knowledge of the local area with branches covering both Maidstone and the Medway towns.

Whether you are considering selling or letting your property, Coles & Co are keen to offer you advice and assistance.

Coles & Co advertise locally and nationally to guarantee maximum exposure of your property.

Coles & Co let and manage a substantial portfolio of properties on behalf of landlords worldwide and we provide a comprehensive and efficient service in this area.

Apart from residential letting we also specialise in:

• Property Sales

• Commercial Sales & Lettings

• Land Acquisitions & Sales

• Planning Issues & Appeals

• Land Compensation

• Development Opportunities

• Surveys

We are bonded members of the National Association of Estate Agents, and if you would like further information regarding this, we will be pleased to provide this.

HOW IS LETTING BENEFICIAL?

There may be a number of reasons why you would be considering letting your property, including inheritance, investment or you may be moving away from the area and do not want to sell.

Recent changes in legislation make it possible for you to obtain possession of your property at the end of any letting period which removes many of the uncertainties that were previously associated with letting.

Due to the continual rise in the price of properties, rental property is always in high demand at any time of the year, ensuring that you should have minimal periods when your property remains un-let.

INTRODUCTION TO LETTING

Initially, arrangements will be made to inspect the property that is to be let, professional advice will be given to clients with regard to the suggested and achievable rent levels and all other aspects of the proposed tenancy. The location of the property, condition and size as well as the standard of the contents and fittings provided are all factors that will be considered.

Properties can either be let furnished or unfurnished and the rent is exclusive of all outgoings. Tenancies are normally set up on an Assured Shorthold basis for an initial fixed term of six months and may be extended or renewed for longer period, as required. It is important to note with furnished accommodation all furnishings must conform with current fire regulations and all rent accommodation must comply with the current Safety Regulations. Advice regarding these matters is found in this guide and will also be given during our initial visit to the property. If the property is furnished, the standard and presentation of the furnishings will to some degree dictate the rent achievable and also to what speed the property can be let.

Inclusive of our fees, Coles & Co will carry out a brief inventory and condition report, however, should a more detailed inventory be required, an additional charge will be incurred. (This mainly applies to furnished accommodation).

DOCUMENTATION

Coles & Co, after receiving satisfactory references, will exercise the drawing up and signing of all documentation, including the relevant Notices and Contracts, as landlord’s Agents, unless otherwise specified.

The tenancy agreement will usually be on an Assured Shorthold Tenancy. With all tenancies, the minimum initial period is normally for six months and we would not advise any more than a twelve month let. Renewals can be for any length of time, although again we would not recommend more than a twelve month tenancy, for control purposes. Obviously if you wish for us to draw up a longer let and the tenant is in agreement, then we would discuss this and proceed on the basis of your instructions to us.

Contract renewals or extensions to existing Tenancy Agreements are subject to a small additional Administration fee.

SAFETY REGULATIONS

Gas Safety – Landlords are obligated to supply a Gas Safety Certificate for all mains or bottled gas appliances supplied by them in a rental property. This includes central heating boilers, water heaters, cookers, fires and gas refrigerators etc. The Certificate must be issued by an engineer who is CORGI registered for domestic appliance work and a copy of the Certificate has to be issued to the tenant. This Certificate has to be renewed annually and the tenant is entitled to receive an updated copy. If you do not abide by these regulations you could be heavily fined or even receive a prison sentence.

As we must also abide by these regulations, we will only take a property on if

• A current certificate is already in force

OR

• The landlord is obtaining a certificate which is given to us before the tenant moves in

OR

• The landlord authorises Coles & Co to take the necessary action and obtain a certificate via one of our authorised contractors.

Electrical Safety – The Landlord must ensure that all electrical appliances in the property are safe for use.

Smoke Detectors – The law requires that all new houses built after June 1992 and all properties declared as Houses in Multiple Occupancy must have electronically linked, mains operated smoke detectors installed on each floor. Although older properties are exempt from this requirement, we recommend that detectors are installed in all rental properties.

Furniture & Furnishing Fire Safety – The Furniture & Furnishings (Fire) (Safety) (Amended) Regulations 1998 require that all upholstered furniture and furnishings in rented properties pass the “cigarette test”. If any property is found not to comply the landlord faces fines or imprisonment, or both. Any furniture or furnishings that do not comply with these regulations must be removed before the tenancy commences. Also, if any items are replaced during the tenancy, these too must adhere to the regulations.

Generally, most furniture purchased from reputable suppliers after March 1990 should comply with the regulations and will be labelled accordingly.

PRODUCTS COVERED BY THE REGULATIONS

• Furniture intended for private use in a dwelling, including children’s furniture

• Beds, head-boards, mattresses

• Sofa-beds, futons and other convertibles

• Nursery furniture

• Garden furniture which is suitable for use in a dwelling

• Pillows, cushions & seat-pads

• Loose and stretch covers for furniture

PRODUCTS USUALLY NOT COVERED

• Curtains, carpets, sleeping bags

• Bed-clothes (including duvets)

• Loose covers for mattresses and pillowcases

• Furniture made before 1950

REFERENCING

Once tenants have expressed an interest to rent a particular property, Coles & Co require them to complete an application form which includes a signed declaration. References are then taken up, which include current employers (where applicable), Bank/Building Society references and previous landlord’s reference (where applicable). Additional credit checks are available, subject to the Landlord’s request.

Our main aim is to find you the right tenant at the right rent in the shortest possible time. We take up references on every person over the age of 18 who is to be named in the Tenancy Agreement.

We may also decide to take a Guarantor to back up the tenant’s ability to meet their commitments to you. We would reference the guarantor in the same way.

INSPECTIONS

As part of our full management service, we regularly inspect your property during the tenancy and provide you will a written report of our findings. Often, when a tenant knows that they are being closely monitored, they are more likely to maintain a higher standard of living. We normally carry out inspections every 4 months and the Tenancy Agreement makes provision for us to visit the property at a time convenient to the tenant providing reasonable notice has been given. We can also arrange for you to inspect the property during the tenancy if you wish, and again, this is subject to prior notice being given to the tenant.

We also carry out final check out inspections when tenants vacate. When tenants are checked out, we assess any redecoration or minor repairs that cannot be reasonably accepted as fair wear and tear by what we recorded in our original inventory. We will negotiate and agree with the tenants and you, the amount that will be withheld from the dilapidations deposit which is taken from the tenants on commencement of the tenancy. (The deposit equates to one month’s rent plus £250 and Coles & Co hold this bond as stakeholder). Estimates are then obtained by way of confirmation and the net deposit is then released to the tenant. Any necessary work is then arranged prior to the installation of a new tenant.

MAINTENANCE & REPAIRS

Repairs are necessary to most properties during tenancies and Landlords should be prepared for this. We can make arrangements on your behalf for local contractors or contractors of your choice to carry out any necessary works. We will discuss with you when we take your property on how much responsibility you wish us to have with regard to repairs and then proceed accordingly without further reference to you.

Some landlords prefer to deal with maintenance matters themselves once they have been reported to them by us. This is completely acceptable. However, in the case of an emergency repair such as a burst water pipe or a gas leak, we are legally obligated to act first and then report to you. Such decisions often prevent further damage to your property or health and safety risks to the tenant. We make it clear to the tenant that only in extreme circumstances should they consider instructing their own contractor and that they may be liable for the cost of this. We will discuss major repairs with you first and obtain estimates for your approval.

THE GARDEN

It is a good idea to ensure that the garden is in good order prior to the tenants moving in. We can arrange for a contractor to carry out necessary works if required. Once the tenants move in, they are generally responsible for the upkeep of the garden. Alternatively, if you have a larger garden, you may wish to arrange for a regular gardener during the tenancy and reflect this cost in the rental charged.

The tenant will be required to return the garden in the state that they found it and this will be recorded in the inventory prior to the tenants moving in.

CONTRACT RENEWALS

We will contact you about three months before the end of each tenancy in order to receive your further instructions about renewing or terminating the tenancy. We will then send all the relevant Notices to the tenant and take the appropriate action either renew their tenancy for a further period or to check them out of the property.

We would recommend either a 6 or a 12 month tenancy with each subsequent renewal. However, if you and the tenant are in agreement to sign up to a longer term, then we can make the necessary arrangements.

We sign all subsequent tenancy agreements on your behalf as landlord’s agent.

If the incumbent tenants decide not to renew their contract, we will remarket the property prior to the current tenants vacating and aim to have another tenant in place to move in as soon as possible.

TAX IMPLICATIONS

You will be liable to pay income tax on your net income from the property, which is the gross income less allowable expenses which are incurred in letting the property.

If you live abroad permanently or are working abroad for a long period you will still normally be required to pay income tax on the net income from any property letting. There are some additional obligations on our part with respect to overseas landlords that you should be aware of. We are required to withhold a proportion of the rent (equivalent to the basic rate of tax) and pay this directly to the Inland Revenue unless we receive specific written exemption from the Inland Revenue not to do so. We can provide you with the necessary documentation to apply to the Inland Revenue for this exemption, thereby allowing us to pay you the rent without the deduction of any tax.

The granting of exemption to withholding tax is at the discretion of the Inland Revenue and is likely to be withdrawn if you are subsequently not diligent in making the appropriate tax returns.

SOME OF THE EXPENSES USUALLY ALLOWABLE AGAINST RENTAL INCOME

• Mortgage interest (usually allowable to the full value of the mortgage)

• Managing Agent’s fees

• The cost of providing services included in the rent e.g. gas, electricity, water rates

• Legal and accounting fees

• Insurance for buildings and contents

• Ground rent

• Repairs and redecoration

• Wear and tear allowance for furniture, fixtures and fittings

CONSENTS

Mortgage Consent - If you have a mortgage on your property, you must advise your lender that you wish to let your property and obtain their written consent.

You may be charged an administration fee for their issuing a consent letter.

Leasehold Consent - If your property is leasehold, your head lease will state whether or not you require permission from the Freeholder to sub-let the property.

Your lease will likely contain a clause indicating that you must obtain consent from your head leaseholder (or freeholder) but that such consent should not be unreasonably withheld from you.

MONETARY SECURITY

Coles & Company has a client account and a deposits account which we operate to professional standards in order to protect the interests of both landlords and tenants. We normally account to Landlords on a monthly or quarterly basis, whichever is preferred.

We also hold comprehensive Professional Indemnity Insurance to cover against claims for errors or omissions and Fidelity Insurance to protect against the loss or misuse of clients’ money through fraud or dishonesty of any member of Coles & Company staff. This provides a protection of the last resort for all our clients’ monies.

We can therefore offer you security and peace of mind essential to you whilst you property is entrusted in under our management. We have a large database of landlords whose properties we manage and who value the dedicated and professional care that we take of their individual properties. This has generated many referrals over the years.

RENT PAYMENTS

Tenancy Agreements are legal contracts that are enforceable by law.

Although the majority of tenants we find conduct their tenancy to the standard we would expect, there are odd occasions when unexpected difficulties arise, such as redundancy, long term illness or relationship breakdown. Even the best of tenants can be affected by these factors.

If the rent begins to fall into arrears, we promptly send out reminders to the tenants and contact the tenant to discuss any problems they may be experiencing and suggest ways in which they could bring their rent account back up to date. In any event, we will try wherever possible to avoid the need for legal action.

We can provide assistance and advice in obtaining a court order for possession in the event of rent arrears.

There are many insurances available to protect landlords against legal costs and loss of rent that could arise.

INSURANCE

You should be aware that any existing buildings or contents insurance policies for the property could be affected by rental activity. Do not simply assume that because you have received a consent letter from your lender confirming that you are able to rent the property, that any insurance cover they provide will continue unaffected.

Unfortunately due to the new financial regulations, we are no longer able to arrange insurance or recommend specific insurance providers.

LANDLORD INSURANCE PRODUCTS

• Buildings & Contents

• Legal Protection

• Rent & Indemnity Cover

• Emergency Callout Repair

GAS, ELECTRICITY & WATER

We advise the gas, electricity and water companies etc whenever the property is empty and each time the tenants change in order that the meters can be read and accounts be prepared.

During void periods when the property is empty (between tenants), the utility services will be transferred back into your name, usually care of our office address. We can then forward any bills to you for settlement direct.

During their tenancy of the property, the tenant is of course responsible for the gas, electricity and water/sewage bills generated from their use including standing charges, but their liabilities finish on the day that their tenancy ends.

COUNCIL TAX

Payment of council tax is not the landlord’s responsibility whilst the whole property is let but the tenants.

If the property is let on a rooms basis (for examples to students) no Council Tax will be payable by you as long as all the tenants are exempt from paying.

If the property is unfurnished and unoccupied it is exempt from council tax for a period of 6 months in any year and we apply to the council on your behalf for the appropriate Exemption Certificate during void periods. If the period exceeds 6 months in a year then 50% of the council tax becomes payable.

If you still reside at the property whist acting as landlord, or if the initial term is for less than 6 months, then you will remain legally responsible for the full council tax charge. We inform the council of each new occupant on your behalf.

TELEPHONE

As the majority of telephone companies would not deal with us as a third party on your behalf, you are responsible for informing the service provider that you are leaving the property and advise them what you want to the with your existing number.

The tenants are responsible for arranging to have the line reconnected for their own use and also to cover any costs in this regard.

We suggest that you give the service provider specific instructions regarding your number e.g. if the tenants can change it, if they can take it with them when they leave etc. This is by far the best safeguard.

BUYING TO LET

If you do not already have an investment property but are thinking of buying to let then we can offer helpful advice in this regard as we deal with property sales as well as lettings.

When buying a property to let out, you must try not to only look for a property that you would be happy to live in. For example, it is not essential that you like the décor or the layout personally. As long as the property meets certain requirements then your own personal criteria do not matter.

Important factors are:

• The property’s location - some areas are known as popular ‘letting’ areas

• The property’s letting potential - we can advise you if we feel a property you are considering to purchase could easily be let and the likely rent achievable

• The return - After all the necessary costs have been met, does the property give a good rate of return

With years of experience as Estate Agents we are able to advise you on the type of property to buy and perhaps even more beneficial, the type of property not to buy.

If you have children, if may be worth considering purchasing a property in their name and guaranteeing the repayments thereby minimizing any future Capital Gains Tax liability.

TIPS ON PRESENTATION

• Neutral décor works best

• Painted surfaces are easier to maintain than wallpaper

• Remove all “clutter”

• Gardens should be neat & tidy

• Professional cleaning is recommended

A SUMMARY OF OUR SERVICES

• Advice on letting your property

• Advice and assistance with Statutory Regulations

• Marketing, advertising and showing your property

• Arranging an inventory and schedule of condition

• Thorough tenant referencing

• Preparation of all Tenancy Agreements and Notices

• Checks at the beginning and end of each tenancy

• Notifying utilities of change of occupancy any meter readings

• Collection of rent and pursuing any arrears

• Prompt payment of net rental income into your bank account

• Detailed monthly statements to yourself

• Regular property inspections with written reports

• Arrangement of maintenance and repairs

• Arrangement of gardening and cleaning services

• Property ‘sitting’ during short term absences

Coles & Company

76-78 King Street

Maidstone

Kent

ME14 1BH

Phone: 01622 763322

Fax: 01622 688800

E-mail: coles.co@btinternet.com

Website: www.colesco.co.uk