The Landlord's Dictionary: Important Terms to Know
Are you considering investing in a rental property in Colliers Wood?
Whether you're inheriting a family property, starting fresh with a new buy-to-let investment, or adding to your portfolio, navigating the world of rental agreements, property management and tenant relations can feel overwhelming.
At Your Home Managed we like to make your life as a landlord as easy as possible. Our handy dictionary will make sure you understand all the essential terms you need to know as a landlord in Colliers Wood.
Allowable Expenses: Allowable expenses are expenses that are "wholly and exclusively for the purposes of renting out the property." These expenses can be deducted from your rental income, reducing the amount of taxable profit you'll need to pay tax on.
Annual Percentage Yield (APY): This term refers to the total return you expect to receive on your investment over a year, expressed as a percentage. It factors in the rent you receive and any appreciation of the property. Understanding potential yield allows you to compare different rental properties in Colliers Wood and assess their profitability.
Assured Shorthold Tenancy (AST): This is the most common type of tenancy agreement in England and Wales. ASTs typically last for six or twelve months and offer flexibility for both landlords and tenants. Tenants have the right to ‘quiet enjoyment’ of the property and must give two months' notice before leaving the rental.
Deposit Protection Scheme (DPS): Landlords in England, (Wales, and Scotland) are legally required to protect tenant deposits using a government-approved scheme. This safeguards the tenant's money in case of any deductions for damages beyond normal wear and tear.
Energy Performance Certificate (EPC): An EPC is a document that rates the energy efficiency of a property on a scale from A (most efficient) to G (least efficient). Having a good EPC rating can attract tenants who prioritise energy-saving features and can potentially help you achieve a higher rent.
Gas Safety Certificate: This is a legal requirement in England and Wales for all rented properties with gas appliances. Landlords must ensure a qualified engineer inspects the gas appliances every year and provides a valid Gas Safety Certificate.
Guarantor: A guarantor is a third party who agrees to be financially responsible for a tenant's rent if they default on their payments. This can be helpful for landlords who are renting to students or those with limited or poor credit history.
Holding Deposit: This is a non-refundable fee a prospective tenant pays to reserve the property while their application is being processed. Holding deposits are typically capped at one week's rent.
Inventory Report: A detailed record of the property's condition at the start and end of a tenancy is crucial. Inventory reports typically include photographs and descriptions of the property's fixtures, fittings, and any existing damage. These reports are important for resolving any disputes over deductions from the tenant's deposit.
Inventory Check-Out: This is the process of inspecting the property with the tenant at the end of the tenancy to assess any damage beyond normal wear and tear.
Landlord Insurance: This is a specialised type of insurance designed to protect landlords against financial losses associated with their rental property. Unlike standard home insurance, landlord insurance can include buildings, liability, loss of rent and legal expenses cover.
Letting Agent: Letting agents (or property management companies) manage the rental process on behalf of landlords. This can include finding tenants, conducting viewings, drawing up tenancy agreements, and handling rent collection and maintenance issues. Letting agents typically charge a fee for their services.
Letting Fee: This is the fee charged by letting agents for finding a tenant and managing the rental process.
Maintenance: Landlords are responsible for maintaining the rental property and keeping it in a good state of repair. This includes repairs to essential services like plumbing, heating, and electrical systems, along with the structure of the property itself. Tenants are responsible for general upkeep and reporting any issues promptly.
Mortgage Interest Relief: With a buy-to-let mortgage, landlords can claim tax relief on a portion of the mortgage interest payments.
Notice Period: This refers to the amount of notice a tenant or landlord must give to terminate the tenancy agreement. The standard notice period for tenants in an AST is two months, while landlords typically require longer notice periods for repossession.
Rent Arrears: This refers to the unfortunate situation where a tenant falls behind on their rent payments. Landlords have legal options to recover unpaid rent, but it's always best to try and communicate with the tenant first to find a solution.
Rent Guarantee Insurance: This type of insurance protects landlords against financial loss if a tenant defaults on rent payments. Costs vary between providers.
Rent Review: The process of renegotiating the rent amount with the tenant is typically done at the end of a fixed-term tenancy.
Right to Rent Checks: Landlords in England have a legal duty to conduct "Right to Rent" checks to ensure their tenants have the legal right to be in the UK. This typically involves verifying passports or visas.
Section 21 Notice: A Section 21 notice is a legal document used by landlords in England and Wales to repossess a property at the end of a fixed-term tenancy agreement, provided they have complied with all their obligations under the tenancy agreement.
Selective Licencing: In certain areas of the UK, local authorities may require landlords to obtain a selective licence to rent out a property. This is typically done in areas with high concentrations of rented properties to ensure proper management standards. Ask the team at Your Home Managed if you have a rental property in mind and we can advise you.
Tenancy Agreement: This is a legally binding contract between the landlord and tenant outlining their respective rights and responsibilities. It includes details such as the rent amount, payment schedule, deposit information, notice periods, and maintenance responsibilities.
Tenancy Deposit Scheme Dispute Service (TDS DRS): If a dispute arises regarding deductions from a tenant's deposit, both landlord and tenant can access a free mediation service offered by the TDS.
Unfurnished vs Furnished Tenancy: Understanding the difference between these tenancy types helps clarify what is included in the rent and the landlord's responsibilities regarding furniture and appliances.
Wear and Tear: Normal wear and tear refers to the deterioration of a property that occurs through everyday use. Examples might include faded paintwork, worn carpets, and minor scratches on floors. Landlords cannot deduct from a tenant's deposit for normal wear and tear.
What Next?
Understanding these key terms will empower you to make informed decisions as a landlord.
Remember, there's always more to learn, and the team at Your Home Managed are here to help!
With knowledge and preparation, you can navigate the world of property rentals in Colliers Wood with confidence and success.
Rental Property Management in Colliers Wood
At Your Home Managed, we are your local property management experts in Colliers Wood. If you need expert letting agent or property management services to help market and manage your property, our experienced team can help.
Call us today on 0208 125 7780, book a valuation or browse our letting and property management services.
