Financial & Legal Aspects Of Letting

The financial elements of property lettings depend, to a certain extent, on when the property was purchased, how much in the way of refurbishment and furnishings is required and how much borrowed money is involved in the project. UK tax will be payable on the rental income.

A good agent will charge a commission of between 10% and 15% of the rent to let the property, plus an additional 6% to 7.5% for on-going management of the property plus VAT. Please ask for a copy of our printed Terms and Conditions of Business giving full details of our services and fee structure.

Whether or not to choose the additional management option depends upon personal circumstances.

A landlord who is frequently abroad or difficult to contact will almost certainly be advised to pay the additional management fee which commits the agent to handling all repairs, sorting out problems, paying bills etc on the landlord’s behalf. An inventory of the contents of the property and the condition of all items must be prepared and signed by the tenant for all tenancies.

It is standard practice for a landlord to pay an independent inventory clerk a fee for the inventory and ‘check-in’. ‘Checkingout’ costs at the end of the tenancy are usually paid by the tenant. (All costs are subject to VAT). The impartial advice of an independent professional is invaluable in the event of any dispute, or damage caused by the tenant.

Plaza Estates are members of the government approved scheme TDS, which protects the tenants’ deposit and offers a very cost effective dispute service if the need arises. The tenancy agreement which protects both the landlord and the tenant is another essential for which an agent will charge a small fee. Landlords can use their own solicitors, but this will cost considerably more.

It is essential that the correct form of Agreement is used. For a letting to an individual the Assured Shorthold Agreement should provide the most effective safeguard - enabling the landlord to obtain possession of the property at the end of the tenancy. The level of rent must be below £25,000 per annum and other criteria must also be met.

If the tenant refuses to leave, a court order must be obtained before eviction.