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aboylikedave
16-10-2009, 11:47 AM
I am going to be letting my own home out whilst I live broad for 5 years. I have found tenants and will get them checked using a checking agency.

I could use the 'standard' AST available from WHSmiths or online, but are the any advantages to drafting my own (or having a solicitor do it)?

What would be typical additions to it that I should think of adding?

Thanks

jeffrey
16-10-2009, 11:50 AM
Should I draft my own AST? No. Next question?

mind the gap
16-10-2009, 11:54 AM
I am going to be letting my own home out whilst I live broad for 5 years. I have found tenants and will get them checked using a checking agency.

I could use the 'standard' AST available from WHSmiths or online, but are the any advantages to drafting my own (or having a solicitor do it)?

What would be typical additions to it that I should think of adding?

Thanks
If you use an off-the-peg AST, it is wise to have it checked by a solicitor to ensure it is fit for your purposes.

Unless we knew what is in it to begin with, it is difficult for us to advise about 'typical additions' - but some people include clauses about the garden if applicable, pets and smoking. Define the property and if there are areas/rooms/parts of the property (e.g. attics, cellars, sheds etc) which you do not want the tenant to have use of, make it clear in the TA.

If deposit protection applies (which it probably will), there should definitely be a clause explaining that the deposit will be protected in X scheme and that the prescribed information will be supplied within 14 days of receipt of deposit.

aboylikedave
16-10-2009, 11:54 AM
Should I draft my own AST? No. Next question?

But don't some landlords or letting agents add conditions to an AST to add conditions that are applicable for them? (I did mean via a solicitor)

jeffrey
16-10-2009, 11:56 AM
But don't some landlords or letting agents add conditions to an AST to add conditions that are applicable for them? (I did mean via a solicitor)
Yes. Next question?

aboylikedave
16-10-2009, 11:57 AM
If you use an off-the-peg AST. it is wise to have it checked by a solicitor to ensure it is fit for your purposes.

Unless we knew what is in it to begin with, it is difficult for us to advise about 'typical additions' - but some people include clauses about the garden if applicable, pets and smoking. Define the property and if there are areas/rooms/parts of the property (e.g. attics, cellars, sheds etc) which you do not want the tenant to have use of, make it clear in the TA.

If deposit protection applies (which it probably will), there should definitely be a clause explaining that the deposit will be protected in X scheme and that the prescribed information will be supplied within 14 deays of receipt of deposit.
Thanks, that's exactly what I meant. I was thinking of smoking, pets and cutting the hedge once a year. Are there any other common provisions that I might like to consider?

aboylikedave
16-10-2009, 11:58 AM
Yes. Next question?
Question 2 in OP? ;)

jeffrey
16-10-2009, 11:59 AM
Question 2 in OP?
Mind the gap answered it, in post #3.

aboylikedave
16-10-2009, 12:05 PM
Mind the gap answered it, in post #3.
Yes it was a helpful post, but if anyone has any further suggestions for what I might like to consider including as conditions, they would be most gratefully received. For info, its a 3 bed terrace in London and I will be letting to young professional, two of whom are freelance web designers (will be checking via MARAS)

mind the gap
16-10-2009, 12:10 PM
Yes it was a helpful post, but if anyone has any further suggestions for what I might like to consider including as conditions, they would be most gratefully received. For info, its a 3 bed terrace in London and I will be letting to young professional, two of whom are freelance web designers (will be checking via MARAS)

Give us a clue.

Are there any activities connected with normal everyday life, which you especially do - or do not - want your tenants to engage in in your property, which are not covered by the terms of the TA you propose to use?

aboylikedave
16-10-2009, 12:12 PM
Unless we knew what is in it to begin with, it is difficult for us to advise about 'typical additions' -
Not sure if this is helpful, but its the one in the small pack from SMiths, or I could use the downloadable one from Property Hawk' website (which includes pets, cleaning on vacating, no business etc.).
In fact it looks v v thorough, which takes me back to original question - what do others add which I might need to think about?

Sorry - I'm in a bit of a Donald Rumsfeld situation - unknown unknowns!

aboylikedave
16-10-2009, 12:15 PM
Give us a clue.

Are there any activities connected with normal everyday life, which you especially do - or do not - want your tenants to engage in in your property, which are not covered by the terms of the TA you propose to use?

Thanks. Not that I can think of....

mind the gap
16-10-2009, 12:18 PM
In that case, your mental energy is probably best directed to ensuring all the other stuff is in place before you can let your property out : EPC, gas safety certificate (CP12), electrical safety, Inland Revenue SATR, reading up on the deposit protection schemes, deciding on one...

Lawcruncher
16-10-2009, 13:07 PM
The problem with drafts you find online is that you do not know who drafted them. I have seen one published by a well-known organisation and was not impressed. The only other draft I have seen that is publicly available is the one in the Which? Guide to Renting and Letting (second edition 1998) and it is fine; I am sure it has been updated since then and hopefully the draft in the latest edition is equally satisfactory. Apart from that, you should only rely on drafts contained in books published by recognised legal publishers.

When it comes to adding your own bits in you need to exercise caution. Putting in something that says the tenant must not smoke in the premises or prune the trees is probably not going to cause a problem. However, if you go beyond that, trying to draw up your own break clause for example, you run the risk of getting it wrong.

TenantsLuvMe
16-10-2009, 17:27 PM
Should I draft my own AST? No. Next question?


However, if you go beyond that, trying to draw up your own break clause for example, you run the risk of getting it wrong.

OK law boffins, why is this?

..because of wording/phrases being wrong or what...?

Please enlighten us so we know why we should not do this.

PaulF
16-10-2009, 18:06 PM
How much is the rent going to be? This has a great bearing on matters.

Have you looked at the Unfair Terms in Consumer Contract Regulations 1999? if not go to http://www.oft.gov.uk/shared_oft/reports/unfair_contract_terms/oft356.pdf then you will know what you are up against in the knowledge that you require to write a tenancy agreement. Even many solicitors don't get it right so you will need to consult a specialist in Housing Law probably.

If you're going abroad for 5 years who's going to be looking after your tax affairs? What have you done about designating somebaody to deal with this in your absence? Who will complete your tax return? Are you eligible for an exemption from tax being deducted by your representative, because if they don't do it, it will be down to your tenant to deduct basic rate tax?

This is only scratching the surface.

Lawcruncher
16-10-2009, 19:50 PM
OK law boffins, why is this?

..because of wording/phrases being wrong or what...?

Please enlighten us so we know why we should not do this.

As I have said before, legal drafting is tricker than people realise. Even if you are used to writing and writing well and carefully, legal drafting is something else. You have to get in the right frame of mind. You need to work out all the angles and then put it into writing clearly and unambiguously remembering that one day a judge may have to decide what you mean. You also need to bear in mind that someone who is too clever for his own good may want to put a spin on it and you do not want to give anyone that opportunity. Most of what most people write does not have to bear this type of scrutiny.

Some words and phrases are "terms of art" with special meanings that are fixed. If you use them you have to know what they mean. If a lawyer drafts a document using terms of art they will have that fixed meaning unless the result is absurd. If a layman uses them he runs the risk that it will be assumed that he knew the meaning, though the court may be more lenient.

Quite apart from saying what you mean and meaning what you say it also helps to know the law. You do not want to put in a provision that you think you can rely on only to find that it is unenforceable. You also want to be sure that you have covered everything that needs to be covered.

If you do not believe that non-lawyers can go wrong in their drafting I invite you to search for "break clause" in this forum and have a look at some samples.

Drafting by lawyers cannot always be perfect. There is always an angle that can come up that you did not consider. "Loophole" and "statute" are words that are often found in each other's company. There can be an ambiguity or contradiction that you do not spot however many times you check a draft. If the top lawyers who draft legislation slip up what hope does the layman have?

I do not wish to exaggerate the problem, but DIY drafting is fraught with dangers for the unwary.

Mrs Jones
16-10-2009, 20:08 PM
If you are going abroad for five years - you need an agent.

What address are you going to give in England and Wales for the service of notices?

Who is going to organise the repair/servicing of the boiler?

Who is going to organise the annual gas safety certificate?

Who is going to organise the insurance requirements for the property?

Who is going to call the plumber when there is a leak at 2.00 am in the morning?

Who is going to organise the proper checkin and checkout of tenants in the property? (If you get a tenant who stays for 5 years you will be very very lucky...)

Who is going to organise the cleaning and preparation of the property for new tenants?

Who is going to serve notice when your wonderful tenant stops paying the rent?

the list goes on - but you get the drift.....

Lawcruncher
16-10-2009, 20:35 PM
After completing the above post I looked at the case of Church Commissioners for England v Meya in connection with another thread. The judge had this to say:

It is a slightly unusual agreement prepared by Messrs Cluttons, the appellant's agents. For example, some clauses envisage a company as the tenant, which is not appropriate for an assured shorthold tenancy. Further the term is of one year less a day, but a covenant to pay a rent quarterly in advance means that the tenant has to pay an extra day's rent. These anomalies show that not a great deal of concentrated thought was put into the agreement...

aboylikedave
17-10-2009, 08:46 AM
If you are going abroad for five years - you need an agent.

What address are you going to give in England and Wales for the service of notices?

Who is going to organise the repair/servicing of the boiler?

Who is going to organise the annual gas safety certificate?

Who is going to organise the insurance requirements for the property?

Who is going to call the plumber when there is a leak at 2.00 am in the morning?

Who is going to organise the proper checkin and checkout of tenants in the property? (If you get a tenant who stays for 5 years you will be very very lucky...)

Who is going to organise the cleaning and preparation of the property for new tenants?

Who is going to serve notice when your wonderful tenant stops paying the rent?

the list goes on - but you get the drift.....

Yes, thanks. I am actually employing a friend to act as agent/contact/arranger of repair etc.

To repeat, my question was not actually about me drafting it, it was about me seeking to have some personal conditions added (by a solicitor). Misunderstanding of the term 'drafting' proves the point about interpretation doesn't it?

But thanks for replies, they have been useful and interesting.

theartfullodger
17-10-2009, 09:52 AM
it was about me seeking to have some personal conditions added (by a solicitor).

Anyone can add any conditions to an AST. The tenant may even sign & agree to them: However that does not mean they will be valid... eg


a) The tenant will give the LL a minimum of 2 months notice if wishing to leave. Illegal (for weekly or monthly paid rent).
b) The tenant must not have any pet on the premises without the prior written permission of the landlord which may be withdrawn at any time. Unfair term (see OFT356)
c) The grass will be cut with north/south oriented stripes only: Any court would chuck this out - unless there was some very very good reason.

Most "general" solicitors don't know the law on tenancies well enough to get such drafting right. I know of a case where an S21 was sent by a solicitor to the tenant (& then the court case was heard) 4 times until he got it right (in each case the judge told his client it was incorrect...). Expensive solicitor!

Cheers!

Lodger

Snorkerz
18-10-2009, 11:59 AM
Yes, thanks. I am actually employing a friend to act as agent/contact/arranger of repair etc.

And your friends experience in Property letting is? How about tenancy law? Lets face it, while you are away you are unlikely to keep up to date with changes in UK law are you?

Seriously, unless your friend does have the relevant experience/knowledge then use an agent who can do the job properly. It will cost you around 10% but give you peace of mind and should avoid any nasty problems in future.

Read the forum about how to identify good/bad agents;)

aboylikedave
18-10-2009, 12:18 PM
And your friends experience in Property letting is? How about tenancy law? Lets face it, while you are away you are unlikely to keep up to date with changes in UK law are you?

Seriously, unless your friend does have the relevant experience/knowledge then use an agent who can do the job properly. It will cost you around 10% but give you peace of mind and should avoid any nasty problems in future.

Read the forum about how to identify good/bad agents;)
Well, actually I was certainly intending to keep up to date with letting law, arrange all safety inspections, frequent this forum. As far as I am concerned if I am charging rent to make money it is a job and I will dedicate time and take it seriously. I will also be available for my tenants to contact if they wish by email at any time. I will also ensure I have a list of available local tradesman etc. MY friend - who is capable intelligent and I trust comp[letley will be available to a) inspect the property every three months and b) act as a point of contact to arrange repairs and keep a set of keys to arrange deliveries of replacement goods etc. I will also brief them clearly on how to deal with tenants, keep audit trails, harassment issue etc.

Your answer is helpful, but I think your assumption that I will let out my house, enter into a legal letting arrangement but consider not keeping up to date with housing law is not correct - I'll be taking it all very seriously.

TenantsLuvMe
18-10-2009, 14:39 PM
Well, actually I was certainly intending to keep up to date with letting law, arrange all safety inspections, frequent this forum. As far as I am concerned if I am charging rent to make money it is a job and I will dedicate time and take it seriously. I will also be available for my tenants to contact if they wish by email at any time. I will also ensure I have a list of available local tradesman etc. MY friend - who is capable intelligent and I trust comp[letley will be available to a) inspect the property every three months and b) act as a point of contact to arrange repairs and keep a set of keys to arrange deliveries of replacement goods etc. I will also brief them clearly on how to deal with tenants, keep audit trails, harassment issue etc.

Your answer is helpful, but I think your assumption that I will let out my house, enter into a legal letting arrangement but consider not keeping up to date with housing law is not correct - I'll be taking it all very seriously.


I don't think Snorkerz was suggesting you wouldn't take the matter seriously, but rather that there are lots of things to consider and have you thought about all of them, if you know about all of them?

I can help you in this area as I have previously done what you are planning to do and there are a number of small things that I didn't consider because I made some assumptions, when things happen because a chain of events that were not envisaged and because one cannot anticipate every eventuality in advance.

Some of things to consider are (in addition to what Mrs Jones posted);

1. You fall out with your friend or they get fed up with doing these things for you, or they want to move out of the area, etc., etc. Who is going to take their place?
What if they are ill, enough that they can't go to the property or attend to something for one reason or another?

2. The tenants, cleaner, builder, plumber, gas engineer, locksmith, inventory clerk etc., know/may learn that you don't live locally and may take advantage of the fact or not be as vigilant with what they do (and also tenants doing things that they shouldn't), because you are not there.
Then what if you have to find a new cleaner, builder, plumber, gas engineer, locksmith, inventory clerk, etc. for one reason or another?

3. Inventory items - if these are not properly described, things can go "missing" and cheap replacements put in their place.
The check out report won't pick this up (unless clear photos are supplied of everything in the property - sometimes this does not happen) and you won't know about it until you go and inspect the property x period of time later.

4. Managing your tenants - what if they fail to pay rent, or they are giving you access problems or not communicating with you, etc.
What if your friend can't help as he/she doesn't have the various skills to deal with prickly/abrasive/evasive/"games" playing and even downright nasty people, etc.?

5. Not meeting people - I found that when you have not met your tenants, the letting agent, tradesmen, etc. the relationships are not as good because you are just a name, a phone number and perhaps a voice.
Its much easier for someone to be negligent/unprofessional/delay doing something to someone who they haven't met/don't know or who isn't present, that to do it to someone's face or someone they know.

Therefore, I would recommend you meet everyone first before going off, preferably with your friend present for introductions and also, return every year or so if you can, to inspect the property, visit your friend, letting agent/plumber/locksmith/gas engineer, etc. to thank them for their help, maybe buy them a gift or something, so that your face is refreshed in all these people's minds.

6. Your overseas life/concerns/priorities/challenges, etc., will have a bigger importance in your mind and once you've been gone for a while, you will become a little more detached from your UK property and it will not be what it is today, especially if all is going well and no major issues arise.


Here's an example of those things that can happen when you are away (not major, but still irksome);

When I was letting rooms out of one house, I had a tenant that was being checked out.
When the inventory clerk finished the check out, unbeknown to me they locked the room door with the tenants set of keys, as is their policy but which I was not informed about.
They retained the keys as I had requested and left.
I had viewings that day and in subsequent days and the other tenants were doing the viewings for me.
When one of the tenants went to open they door with a prospective tenant standing there with them, they couldn't open the door.

Neither I nor the other tenants knew of the door being locked until the above appointment.

My friend who had the only other set of keys was on holiday so calling them was a non-starter.
I then called the inventory clerk, who eventually came back and unlocked the room door, but 2 days later

The above prospective tenant didn't return for another viewing because they found something else in the meantime.


These are just some of things that come to mind on the matter for you to think about.

aboylikedave
18-10-2009, 17:16 PM
I don't think Snorkerz was suggesting you wouldn't take the matter seriously, but rather that there are lots of things to consider and have you thought about all of them, if you know about all of them?

I can help you in this area as I have previously done what you are planning to do and there are a number of small things that I didn't consider because I made some assumptions, when things happen because a chain of events that were not envisaged and because one cannot anticipate every eventuality in advance.

Some of things to consider are (in addition to what Mrs Jones posted);


Dear TLM, thanks for that, v helpful. I appreciate the time you put into the reply and your non-patronizing attitude.

westminster
18-10-2009, 18:17 PM
Yes, thanks. I am actually employing a friend to act as agent/contact/arranger of repair etc.

If a friend asked me to manage their rental property, I'd say fine but it'll cost the same as an agency, i.e. at least 10%. It's just not worth the potential hassle for less money than this. I'd also want a written contract.

Personally, knowing what I know of the sort of things which might happen, I would never leave an inexperienced friend in charge of management/tenant finding. Especially the latter.

You say you'll remain as a point of contact, but you're also inexperienced so it's just not a very promising set-up. What if friend is negligent in some way due to ignorance and tenant sues you. Will you have a contract with your friend? Will you be willing to sue him in turn for his breach of contract?

Business arrangements with friends are always fine until something goes wrong. In this situation there's an added risk because there's a third party (the tenant) involved, a lot of legalities, and no experience on either side. And a lot can happen in five years. Although you're prepared to do the homework, it's no substitute for experience.

Get an agent. A good one, obviously; check they belong to a reputable association of agents/have qualified directors.

aboylikedave
18-10-2009, 19:00 PM
If a friend asked me to manage their rental property, I'd say fine but it'll cost the same as an agency, i.e. at least 10%. It's just not worth the potential hassle for less money than this. I'd also want a written contract.

Personally, knowing what I know of the sort of things which might happen, I would never leave an inexperienced friend in charge of management/tenant finding. Especially the latter.

You say you'll remain as a point of contact, but you're also inexperienced so it's just not a very promising set-up. What if friend is negligent in some way due to ignorance and tenant sues you. Will you have a contract with your friend? Will you be willing to sue him in turn for his breach of contract?

Business arrangements with friends are always fine until something goes wrong. In this situation there's an added risk because there's a third party (the tenant) involved, a lot of legalities, and no experience on either side. And a lot can happen in five years. Although you're prepared to do the homework, it's no substitute for experience.

Get an agent. A good one, obviously; check they belong to a reputable association of agents/have qualified directors.

Interesting. I was actually going o have a written contact with this friend and will be paying them £100 per month. I would be handing any legal communications and they wold be the one inspecting property, contacting tradespeople responding to emergencies at 3 in the morning.

Its a tricky decision, we have a very good letting agency locally but they charge 13% plus VAT so I want to do it myself. I can see how once you start to have a turnover of tenants you might need an agency but I was thinking of going private for the first lot of tenants and then when they leave going agency.

I'll be checking them with MARAS and taking out MARAS insurance.

Thanks all for comments. I appreciate you are saying without experience you could get stung but we've all got the start somewhere. I also appreciate it could be best to start agency to at least get some experience of the sector but I really want to try to earn the extra £300 per month i would be spending on agents. For what its worth I consider myself reasonably savvy, negotiating is part of my work and I have studied law at degree level, enough to know how the law works in civil and criminal cases and what a legal process would involve.

mind the gap
18-10-2009, 19:27 PM
So the monthly rent is over £2300? Is it an HMO?

(Otherwise why would the agency be charging you £300 pcm?)

aboylikedave
18-10-2009, 19:42 PM
So the monthly rent is over £2300? Is it an HMO?

(Otherwise why would the agency be charging you £300 pcm?)

Rent is £1900 pcm. 13% is £247 plus £43 VAT (when it goes back up to 17.5%). So agents will take £290.

mind the gap
18-10-2009, 19:46 PM
Rent is £1900 pcm. 13% is £247 plus £43 VAT (when it goes back up to 17.5%). So agents will take £290.

Do you mind my asking whether you are anticipating having a sole tenant (or couple) paying a very high rent, or students/young professionals all paying a more modest rent?

If the latter, then you may well be into HMO territory.

aboylikedave
18-10-2009, 19:55 PM
Do you mind my asking whether you are anticipating having a sole tenant (or couple) paying a very high rent, or students/young professionals all paying a more modest rent?

If the latter, then you may well be into HMO territory.
Three professionals on one AST. A couple and their friend.

Local council website:

"Under the national mandatory licensing scheme an HMO must be licensed if it is a building consisting of three or more storeys and is occupied by five or more tenants in two or more households."

I have ground floor, stairs up to back bedroom, then stairs up to two further bedrooms.

red40
18-10-2009, 20:24 PM
MTG was right, you are now into HMO territory.

aboylikedave
18-10-2009, 20:33 PM
MTG was right, you are now into HMO territory.

With three tenants when my local council refers to five or more tenants?

aboylikedave
18-10-2009, 20:36 PM
Also I've had several local agents round. none of whom mentioned HMO or the need for licensing or fire doors. One of whom is very reputable in our area and has been operating for over 20 years. Should they have done?

Whilst I am seeking advice could some kind soul point me to a source of info for the key implications for HMO other than licensing?

mind the gap
18-10-2009, 20:46 PM
Also I've had several local agents round. none of whom mentioned HMO or the need for licensing or fire doors. One of whom is very reputable in our area and has been operating for over 20 years. Should they have done?
Yes, in a word! It's because you have three storeys. There are two kinds of HMO : licensable and non-licensable. Which your is, will depend to some extent on your local council who have the authority to insist on additional conditions over and above the national guidelines.

Even if your property does not require a licence, there will be more stringent fire safety regulations which you must abide by. Ring the council, ask for the HMO dept, descibe your property and your plans, and ask their advice.

red40
18-10-2009, 20:46 PM
Also I've had several local agents round. none of whom mentioned HMO

That doesn't surprise me at all, I am surprised how many agents aren't aware of where the HMO definitions start.

If you let to 3 occupants you wont need a mandatory licence, but you will have a HMO. Although a fairly low risk one.

Snorkerz
20-10-2009, 19:44 PM
I think what may not be clear to the OP is that there are HMOs and licensed HMOs. The local council may not want the property licensed but it still will need to comply with the requirements for HMOs.