Homeowners attempting to stave off the impact of the recession by renting out rooms, or their entire properties, were today warned that a lack of knowledge of landlord’s responsibilities could lead to fines of up to £20,000.
Rising unemployment and bills are forcing many homeowners to look at creative ways of covering the mortgage. Renting out a property can provide extra income, but the message from councils is that ignorance of the laws could end up costing far more. For example, failing to check the background of potential tenants could mean missed rental payments. Not speaking to the mortgage lender before getting in tenants may break the mortgage terms and mean the owner risks losing their home.
People can avoid these and other mistakes simply by following LACORS (Local Authorities Coordinators of Regulatory Services) guidance which includes:
- Speak to your mortgage lender
- Get references from potential tenants
- Prepare a formal tenancy agreement
- If you take a deposit, it must be properly protected
- Obtain an energy performance certificate
- Find out whether you need a property licence
- Get all your gas and electrical appliances checked
- Minimise the risk from fire
Council’s private sector housing teams report they are busier than ever. Examples include:
Islington Council has reported that they are twice as busy than this month last year.
Bristol City Council has confirmed that the number of landlords offering their properties for use in its deposit bond scheme and requests for health and safety inspections have both risen steadily.
Watford Borough Council has confirmed that they are seeing a significant increase in placements through their tenant deposit scheme.
Councillor Geoffrey Theobald OBE, LACORS Chairman said, “The credit crunch has placed many people’s budgets near to breaking point. To try and combat mounting bills and rising unemployment, many people are thinking about getting in tenants to help pay the mortgage.
“But there is more to being a landlord than many people think and the costs of getting it wrong can be high. Failing to put a tenant's deposit in an approved protection scheme could cost a landlord three times the amount in compensation. Worse still, if a property is rented without the mortgage company's agreement, people could risk losing their home.
“Following this simple guidance can mean that landlords save themselves hassle, their letting experience is better and they avoid potential fines of up to £20,000.”
View the national guidance