buy to let mortgages

Buy to let legal aspects

Information on this page is for information purposes only. It is not intended as investment advice

Legal matters

Prior to 1989 most residential tenancies were based on the ‘rent acts’ which gave tenants substantial rights. This type of tenancy was known as a protected or statutory tenancy and they still exist today.

Since 1989, landlords have been able to implement the Assured Shorthold Tenancy. Most mortgage lenders today will ONLY accept this type of tenancy.

A shorthold tenancy provides the tenant with security of tenure for the contract period (normally 6 months), but none thereafter.
If you are purchasing a property with sitting tenants, it is important to establish the type of tenancy and the rights it infers.

Not all mortgage lenders will accept assured shorthold tenancies that are contracted to end beyond 12 months.

There is no problem with six month or annual tenancy agreements that have been extended

If you are letting a property for the first time, you should put in place an assured shorthold tenancy agreement. Take advice over the terms of the tenancy, from a reputable letting agent or solicitor that specializes in let property. This should ensure that your interests are protected.

The tenancy agreement might include a ‘break clause’ which would take effect after 6 months, this would allow either party to terminate the agreement with 1 or 2 months notice.

Tenancy Deposit Scheme

You will need to involve an independant scheme to hold your tenants deposit . Please visit Tenancy Deposit scheme for more information.

Consent to let

If you intend to let your current property. You will need to obtain the consent of your mortgage lender to let. If you let the property without consent you will be in breach of contract and the lender could demand full repayment of your mortgage.

If your mortgage lender is unwilling to consent to your application then you should remortgage to a different lender that will allow you to let your property.

We are in a good position to advise you of your remortgage options. Please contact us to discuss buy to let remortgage options

Insurance

You will need to obtain the consent of your insurers to let the property. If this is not available then you should switch to another insurer.

You should consider landlords liability cover. This may provide some protection if you are sued by a tenant

Another option is rent guarantee cover. This may provide you with an income if your tenant is unable or unwilling to pay.

The landlord cannot insure the tenants possessions. The tenants will have to insure their own possessions themselves

Planning

If you are converting a property from one dwelling to several flats then planning permission will be required. Any building works will be subject to building control approval

Safety

As a landlord, you have a legal responsibility to keep your property safe and fit for use.

Gas appliances should be inspected every 12 months by CORGI registered plumbers. A record of such visits should be kept. It is recommended that you fit carbon monoxide detectors where there are gas appliances or open fires/stoves fitted

Electrical fittings and appliances should also be checked on a regular basis

If you are letting the property as furnished accommodation then the furnishings should satisfy the fire safety regulations. These regulations cover all soft furnishings, mattresses etc.

There are no specific fire regulations unless the property is classed as a house in multiple occupation (HMO)

Smoke detectors are recommended for all let properties

Houses in multiple occupation (HMO)

Where a property is let to several unrelated people, for example bedsits with shared facilities then the local authority may class this accommodation as multiple occupation. This is likely to be the case where there are over 4 unrelated occupants.

In this situation, it may be necessary to register the property with the local authority. You may also need planning permission to change the use from single to multiple occupation.
The insurers should be told if the property is in multiple occupation.

The landlord is responsible for the payment of council tax.
There will be higher degree of management required owing to the greater number of tenants.

read further information about houses in multiple occupation (HMO)