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Letting property can be an excellent way to generate valuable extra income or to fund your retirement. But being a residential landlord means that you have both legal responsibilities to fulfil and tax liabilities. And that means paperwork.
It is crucial that you retain all documentation relating to your property and the rental income that it generates. Nobody relishes dealing with paperwork, but it is important to remain organised. Lost documentation will inevitably make any disputes with your tenants much harder to resolve and could mean that you are unable to prove that you have fulfilled your legal obligations.
There are numerous documents that you must keep copies of and you should have instant yet secure access to these. Electronic versions of your documentation could prove useful. Store them via Google Drive or a Dropbox account and you will always have instant access to them via your smartphone or tablet. Retaining only paper copies leaves you vulnerable to loss or damage during a fire or burglary.
Here are six documents which it is particularly important to keep safe:
1. Tenancy Agreement
The tenancy agreement is a legally binding contract between you and your tenants. The most common form of tenancy is an Assured Shorthold Tenancy Agreement (AST) which gives you the right to repossess the property at the end of the agreed term.
The agreement will include your personal details and those of your tenant, the date that the tenancy will commence, the duration of the tenancy, the rent payable and any other expenses that the tenant is liable to pay. It will also state the services that you undertake to provide.
2. Right to Rent Supporting Documentation
Landlords in England must not let their property to anyone who does not have the ‘Right to Rent’. Landlords who rent their property to illegal migrants face significant fines. It is therefore imperative to be diligent in checking your potential tenant and to retain any supporting documentation.
There are certain documents which will be accepted to satisfy a Right to Rent check. The government has issued a comprehensive list of commonly available documents that you can check and retain copies of.
3. Inventory Report
Detailing the contents of the property, the condition they are in and also the condition of the property, this document could prove vital to resolving disputes regarding the return of tenants’ deposits. It is best prepared by an independent party on the day the tenant moves in and should be as detailed as possible. All parties should initial each page and then sign the document and receive a copy.
4. Tenancy Deposit Scheme
Since 6 April 2007, landlords have been required to protect their tenants’ deposits to make disputes easier to resolve and to ensure that tenants get their deposits back when they are entitled to them. Deposits must be protected via one of the government-initiated schemes.
As a landlord, you are required to protect deposits within 30 days of receiving them. Failure to do so will mean that you cannot end the tenancy or regain possession of your property under Section 21 of the Housing Act 1998 until the deposit has been repaid or any dispute has been resolved. Tenants could be entitled to compensation of up to three times the value of the deposit if you do not protect it and you do not provide your tenant with the details of the scheme you have chosen.
5. Gas Safety Certificate
Poorly maintained gas equipment could lead to an explosion or carbon monoxide poisoning. You are obliged to provide your tenants with instructions for the safe use of any appliances. In addition, all gas-related equipment must be serviced at least once every year by an approved engineer. You should keep a record of the checks carried out and provide your tenant with an annual gas safety certificate. If you fail to do so, you are breaking the law.
6. Coping with the demands on your time
If you are a residential landlord it is likely that you are also working full time, have a family to care for or multiple properties to cope with. There will be serious demands on your time which will make keeping track of your documentation and managing your portfolio difficult.
At Oscar Knight, our property management service will take the stress out of being a landlord. You will be able to achieve the rental income you need without having to worry about fulfilling your legal responsibilities.