As a landlord it is essential that you are up to date with legislative changes and have the necessary due diligence in place to ensure you comply. We have made it easier for you by creating a short compliance page as a guide to assist you in your landlord journey.
Property investors are considered Non-Resident Landlords if they spend more than six months in any tax year outside of the UK.
As an agent who receives rent on behalf of Non-Resident Landlords, we have a statutory obligation to deduct 20% of the net income and make payments to the Inland Revenue on a quarterly basis.
In cases where properties are jointly owned, each Owner is liable to pay tax. Both the income and the expenditure is split equally between the two parties. Owners who are outside of the UK temporarily (less than six months) are not Non-Residential Landlords.
Non-Resident Landlords can apply to the Inland Revenue for approval, which will permit us, as agents, not to deduct tax at source by completing an NRL1 form. However, approval of an NRL1 does not mean that the rent is exempt from UK tax.
As the agent who proposed tenants, we are required to register with HMRC's Non-Resident Landlord Scheme within 30 days of the start of a tenancy.
It will be our duty to keep records of rent paid, emails or letters to landlords about where they live and details of any expenses paid for the landlord. It is important for us to keep this documentation for four years.
The rental amount, any expenses paid on behalf of the landlord is deducted, such as repairs (if any), the figure is then multiplied by the basic rate of tax - 20% for the 2015-16 and 2016-17 tax years.
Tenant pays £1,250 a month rent between April and June 2016. During that time, tenant also pays £350 for insurance and £150 in plumbing repairs for on the landlord’s behalf.
Rent £1,250 x 3 months = £3,750
Deductible expenses £500 (if applicable)
The taxable amount is £3,750 - £500 = £3,250
The tax due is £3,250 x 20% = £650
Client Money Protection safeguards all client moneys (such as deposits and rent) held by LiFE.
Protection with LiFE:
LiFE Residential are proudly regulated by ARLA Propertymark, providing you with the assurance that your money is protected and safe under their Client Money Protection Scheme. Our membership certificate can be viewed here.
More information on the ARLA Propertymark Client Money Protection Scheme can be viewed here. You are also able to access the ARLA Code of Practice here.
The Money Laundering Regulations 2017, the law requires us, as managing agents, to follow procedures to prevent criminals from being able to use our services to launder money, or to finance terrorism. All references in this policy to money laundering include terrorist financing. LiFE Residential is required to maintain records and hold identification and proof of address for all customers for at least five years from the end of our business relationship with them. Data protection law protects personal data received from clients; it must be used or processed only for the purposes of preventing money laundering.
It is also our responsibility to establish whether there are any beneficial owners, on whose behalf transactions or activity is taking place. We would therefore ask you to identify anyone who you would consider a beneficial owner.
For any large sums transferred into our account, we will request proof of the source of funds, as without such information we will be unable to accept such payments.
Valid UK driving licence
EEA member state Identity card
Bank statements dated within the last 6 months
Council Tax bill
(the address must reflect on all documents listed above)
If you are acting as a representative of a UK company, we will also require the following:
Certificate of Incorporation
Articles of association
Memorandum of association
Latest annual return or confirmation statement, with details of current company officers
If offshore, nominee director declaration and a general power of attorney
Individual ID and proof of address evidence
Certificate of incorporation
Articles of association, Memorandum of association, latest annual return with details of current company officers, Share certificate(s) showing the Ultimate beneficial owner or Certificate of tenure
If the shares are owned by another company, repeat steps above for the holding company
Nominee director declaration and/or general Power of attorney (if applicable)
Individual ID and proof of address evidence
Since 1st October 2008 it is a legal requirement for Landlords to provide all prospective Tenants with an Energy Performance Certificate (EPC) when a property is first marketed or re-marketed for rent. An EPC is valid for ten years and can only be produced as a result of a survey by an accredited Domestic Energy Assessor.
An EPC will automatically be obtained on your behalf when the property first goes onto the market, and the fee is payable by you, unless you provide an up to date EPC with your signed terms and conditions. If the property is a new build, the EPC certificate is issued upon completion. There are exemptions for property types, and all exemptions have to be registered on the national register and valid for five years.
An Anergy Performance Certificate assesses how energy efficient a property is, from ‘A’ representing the most energy efficient property to ‘G’ representing the least energy efficient property. This can include anything from the use of energy efficient lightbulbs, hot water systems, insulation and carbon dioxide emissions.
The EPC will expire after ten years and a new EPC (valid for the next ten years) should be produced if the property is marketed for sale or rent, EPC should be arranged for a rental property as soon as an existing certificate expires to maintain a valid EPC at all times.
Since the 1st April 2018, any properties rented out in the private rented sector will need to have an EPC rating of at least ‘E’ – properties rated ‘F’ and ‘G’ cannot lawfully be let out after this date. The regulation came into force for new lets and renewals of tenancies with effect from 1st April 2018 and will take effect on all existing tenancies from 1st April 2020.
Licensing, which was introduced in 2006 and replaced previous Houses in Multiple Occupations registration schemes, is aimed at raising management and amenity standards to ensure that HMO’s are being kept to the required standards. Local housing authorities – the council deal with the requirements of the Housing Act 2004 regarding HMO licensing. Not only Houses in Multiple Occupations require licensing, but also in some local authority areas, all rental properties must be licensed. An application for the licence must be submitted before a tenancy can commence. We will require further information from you in order to process the application if applicable and we reserve the right to charge. Your written approval is required before we can apply for the licence. A valid notice seeking possession under Section 21 of the Housing Act 1988 cannot be served on a tenant if a licence is required but not obtained.
A House in Multiple Occupation (HMO) is a property rented out by at least 3 people who are not from 1 'household' (for example a family) but share facilities like the bathroom and kitchen.
A household consists of one (or more) people who live in the same dwelling. It may also consist of a single family or another group of people.
Married couples or couples living together as married (including people in same-sex relationships)
Relatives or half-relatives e.g. grandparents, aunts, uncles, siblings, nieces, cousins
Step-parents and step-children
Foster parents and foster children
Domestic staff such as an Au pair
Mandatory licensing of large HMOs
This applies countrywide for HMOs where single storey flats or two storey maisonettes will need a mandatory licence if they are let to 3 or more people (depending on the Council) who form more than one household. There is an exception for purpose built flats situated in a block of three or more self-contained flats.
This is required when the local authority (the Council) imposes a policy requiring other sizes of HMOs to also be licenced. For example, a council can bring in additional licensing requiring all HMOs to be licenced.
This license is at the Boroughs' discretion and can affect all rental properties regardless of size, number of storeys, or number of occupants. For example, a Council can instigate compulsory licensing of all residential rental properties within a street or the whole borough.
The suitability of the HMO for the number of occupiers
The suitability of the facilities within the HMO, such as toilets, bathrooms and cooking facilities
The suitability of the landlord and/or the managing agent to manage the HMO (this is called the "fit and proper" test)
The general suitability of existing management arrangements of the property.
The Council also has to carry out a Housing Health and Safety Rating System (HHSRS) risk assessment on a HMO within five years of receiving a licence application. If the inspector finds any unacceptable risks during the assessment then the landlord will be instructed to carry out works to eliminate them. The landlord must also notify the council if they plan to make changes to an HMO (structural or decorative), if the tenants make changes to the property, or if the tenants' circumstances change (e.g. they have a child).
The Council must ensure that a licenced HMO is not overcrowded and has suitable shared amenities and facilities for the number of persons occupying it. If there are too many people living in the HMO at the time the licence is granted, the landlord must take reasonable steps to reduce the number of occupiers to the permitted number.
These regulations deal with various aspects of the supply and use of gas, including the qualifications and duties of people involved in doing so. In brief, landlords are responsible for ensuring that all gas appliances and installation of pipework in tenanted premises are maintained in good order and in safe condition so as to prevent risk or injury to any person. A suitably qualified and regulated contractor must undertake the required checks annually, and issue a Landlord’s Gas Safety Certificate, which must be given to tenants.
Please note: it is illegal to allow a tenant to occupy a property without a valid Gas Safety Certificate and it is your responsibility to provide a Gas Safe Register Gas check and Certificate of Safety for the property. Therefore, unless you provide a valid Gas Safety Certificate with your terms and conditions, we will not be able to proceed with the commencement of the tenancy.
Landlords must ensure that ALL electrical appliances and the electrical supply is safe and will not cause danger. All new electrical appliances must carry “CE” mark and instruction booklets or clear working instructions must be provided. Newly installed plugs and sockets must also comply. Confirmation that a competent electrician has regularly undertaken inspections could be requested. If deemed necessary or requested by the tenant, and if your property is to be managed by us, we may arrange on your behalf for an Electrical Safety Inspection including a PAT (Portable Appliance Test) to be undertaken to ensure that all electrical appliances are safe within the property. This is currently mandatory for all HMOs and is soon to be made mandatory for all lettings.
An EICR is an Electrical Installation Condition Report. A formal document is produced following an assessment of any deficiencies against the national safety standard for electrical installations. The assessment is to be carried out by an experienced, qualified electrician or approved contractor.
An EICR will:
Reveal if any of your electrical circuits or equipment is overloaded
Find any potential electrical shock risks and fire hazards in your electrical installation
Identify any defective DIY electrical work
Highlight any lack of earthling or bonding ests are also carried out on wiring and associated fixed electrical equipment to check that it is safe. A schedule of circuits will also be provided, which is invaluable for a property.
An EICR is required when a property is up for rental, this is to ensure the property is safe when tenants move in and maintained in a safe condition throughout its duration. It is generally recommended that an EICR is carried out every five years in line with a change of occupancy, when a property is being prepared to be let and prior to selling a property.
All properties built since 1992 must be fitted with mains operated interlinked smoke detectors/alarms on each floor. The Smoke and Carbon Monoxide Alarm (England) Regulations require all landlords to ensure that at least one smoke alarm is installed on every storey of their properties and a carbon monoxide alarm in any room containing a solid fuel-burning appliance. The landlord must make sure the alarms are in working order at the start of each new tenancy.
Health and Safety legislation also requires that risk assessments for Legionnaires’ disease be carried out. In most residential settings, the risk is usually low. It is important however that risk assessments are carried out and control measures introduced. LiFE Residential can arrange any assessments for combined Smoke Detector/CO Alarm and the Legionnaires’ disease testing.
Prior to tenants moving into their new rental property, the property must be sufficiently cleaned. This allows for an efficient move-in and move-out process, which will minimise any disagreements or delays when claims for cleaning are put forward for cleaning omissions at the end of a tenancy.
We advise having the property professionally cleaned before the move-in date and an inventory clerk at check-in to record the exact condition of the property.
The Right to Rent scheme that requires landlords or agents to check ID of all prospective adult occupiers was rolled out in parts of the West Midlands on 1st December 2014 and across the rest of England on 1st February 2016. It was introduced under the Immigration Act 2014 and it is important for both tenants and landlords to understand the implications of this act.
Landlords must check by law that a tenant or lodger legally have the right to rent in the UK. The tenant or lodger of the rental property must show their identity documents in person to a landlord or letting agent.
Where an adult occupier has a time limited right to remain, follow up checks must be conducted. These need to be made 12 months from the initial check or at the expiry of the individual’s right to be in the UK, whichever is the later.
LiFE Residential will carry out the necessary immigration checks on your behalf, however cannot be held responsible for the accuracy of the documents provided to us.
Check all adult tenants who will live in the property as their only or main home
Ask tenants for the original documents that show they have the right to be in the UK
Check the original documents with the tenant physically present and ensure they are valid
Make copies of the original documents and record when the check was completed
Conduct follow up checks at the appropriate time (e.g. repeat the check when a tenant's visa expires).
Acceptable documents that a tenant can use to demonstrate their identity and Right to Rent are dependent on their nationality.
A passport (current or expired) showing that the holder is a British citizen, or a citizen of the UK and Colonies having the ‘Right of Abode’ in the UK.
Valid EEA*/Swiss national ID card
Combination of valid UK driving licence & original UK birth certificate (British citizens only)
UK birth certificate
UK Birth certificate and letter from employer
Evidence (identity card, document of confirmation issued by one of HM forces, confirmation letter issued by the Secretary of State) of the holder’s previous or current service in any of HM’s UK armed forces.
A letter issued within the 3 months prior to the check from a UK further or higher education institution confirming the holder’s acceptance on a current course of studies. This letter should include the name of the educational establishment, as well as the name and duration of the course.