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6 buy-to-let rules that could cost landlords thousands

From evictions to gas safety, how to avoid a huge fine

Being a landlord has become a more expensive business lately, so the last thing you need is a hefty fine for breaking one of the various buy-to-let rules.

We reported last month that over 300,000 landlords face fines of up to £5,000 under new energy regulations, but this is just the tip of the iceberg when it comes to the penalties on offer for those that don’t comply with a variety of rules.

Here, we take a look at some of the charges imposed by councils against landlords recently, and explain how you can avoid breaking the rules.

  • If you’re thinking of buying a property as a buy-to-let investment, you can impartial advice on finding the right mortgage from Which? Mortgage Advisers on 0808 252 7987.

Right to Rent

Since February last year, landlords have had to ensure their tenants have the right to live in the UK, under the new ‘Right to Rent’ law.

In 2016, 106 landlords in England were fined for Right to Rent breaches, with charges totaling around £30,000.

While the fines doled out so far have been relatively low, the maximum penalty is £3,000 if you are found be knowingly letting your property illegally.

What can I do?

If you let your property through a managing agent, they should conduct these checks for you.

If not, you can find full details of how to ensure your tenant has the Right to Rent in the government’s step-by-step guide.

Tenant safety

Ensuring your property is safe for your tenants is your most important responsibility as a landlord, but not everyone adheres to this.

In the first week of August alone, several landlords have been fined for failing to provide suitable accommodation for their tenants.

The charges have included:

  • Failing to maintain gas safety (£17,990 – Pembrokeshire)
  • Inadequate fire safety, heating and insulation (£10,000 – Birmingham)
  • Undertaking dangerous gas work (£12,000 – North Devon).

What can I do?

Your rented properties must have a valid gas safety certificate, which should be renewed once a year by a Gas Safe-registered engineer.

You must also ensure smoke detectors are fitted and fully operational at the start of a tenancy, and offer timely maintenance of heating and water systems.

Licensing schemes

Various councils across the UK have introduced licensing schemes, which require landlords to agree to a set of regulations before they let properties.

Failing to get a licence can result in tough penalties.

Middlesbrough council doled out its first fines in March this year, and in the last couple of months we’ve seen charges brought against landlords in Dagenham (£2,000) and Wales (£4,000).

In some areas, licences are limited to landlords with several properties or those letting out houses in multiple occupations, or HMOs, (more on this later), but in others they are required across the board.

What can I do?

New schemes are popping up in various councils around the country, with Nottingham the latest to approve licences at a local level.

So far, around 300 councils either have a licensing scheme or are consulting about bringing one in – so check your council’s website to see if you’ll be affected.

Registration fees vary significantly, although you might need to pay up to £1,000.

Evictions

If your tenants aren’t paying their rent, you might be tempted to kick them out of your property – but it’s not as simple as that.

The eviction process can be drawn out and complicated, and failing to follow it correctly can result in a large fine.

A landlord in Stoke was fined £2,800 in July for changing their locks to evict tenants who had defaulted on rent.

What can I do?

You’ll need to follow the government’s eviction process by handing your tenants a Section 21 notice (if their term is set to end) or a Section 8 notice (if they’ve broken their contract).

After this, you should apply for a standard or accelerated possession order.

There are many variables involved when evicting a tenant, so we recommend reading the government’s full guide before jumping in.

HMOs

A house in multiple occupation (HMO) is a property let to at least three people who are not from the same household.

Larger HMOs (buildings at least three stories high that are rented to five or more people) need a licence, which will be granted by your local council.

Many large HMOs are student accommodation blocks, and a student landlord in Durham was fined £5,700 in June for letting out properties without a licence.

What can I do?

Apply to your local council for a licence, or ask your managing agent to do so on your behalf.

Fees vary between councils, but there are unlimited fines for landlords who fail to adhere, so make this a priority.

Deposit protection

If you ask for a deposit from your tenants, you’ll need to protect it in one of the government’s deposit schemes.

Failing to do this could land you with a big bill. A letting agent operator in Essex narrowly avoided prison last month for failing to protect £40,000 worth of deposits.

What can I do?

You should register your deposit into one of the three government-backed protection schemes:

At the end of a tenancy, your can apply to have the deposit released, minus any reasonable charges.

If your tenant disputes this, the deposit protection scheme provider will offer a resolution service.

Your home may be repossessed if you do not keep up repayments on your mortgage.

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