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Short Term Rental of Furnished Flat - need advice please(18 Posts)
DD and I will be spending the next year (possibly two) in America. I own our flat, and have had an estate agent in to value it for rental but have decided not to pursue that avenue due to red tape/commissions etc.
I have been approached by a neighbour who owns another flat in my block. She and her husband have been in the block for a long time, and are the owners of a small investment business. Colleagues from their branch offices often visit the UK for several months at a time. She has asked if I would consider renting my flat to one of her colleagues for a few months.
The flat will be cleared of clothes, and dd's toys. Personal papers will be either locked in a file cabinet or stored in the loft. But all furniture, linens, kitchen utensils/plates/glasses, paintings, books, cds etc will remain.
Utilities/phone will remain in my name. Post will be forwarded to me in America.
Part of me thinks it would be wonderful to have some income (other than appreciation of the property). The fact that potential renters are my neighbours colleagues makes me think renters would not want be 'problem tenants'. There is also a porter for the building who could keep an eye on things and could let me know if anything is amiss.
Would like to hear pros/cons from anyone who has any thoughts/experience please. Presumably I need some sort of rental agreement? What should it include? Deposit? What sort of policy for damage/breakage? Other thoughts?
You usually hold one month's (or more) deposit against any damage to the flat which is reimbursed at the end. There are standard tenancy agreements - Shorthold Tenancy Agreement - which I suspect you can get online, but can definitely get in WHSmith. They are for a minimum 6 months, so you might need to amend it to reflect a shorter tenancy or have a break-clause in it. If it's furnished, then you need to make sure you maintain home and contents insurance and that it covers damage by tenants.
Other than that, I rented out my flat when I was in Sydney for two years. If you are not in the jurisdiction, you won't pay tax on the rent - I think that's right, but can't remember now. It's a good way to make a reasonable amount of money and have someone housesit. If they're colleagues of your neighbours, they are unlikely to wreck the place. But you should still ask for references from previous landlords and you can get credit checks done quite easily. Alternately, get a letting agent to deal with it...
Thanks for your thoughts Mumpbump.
How did you go about setting the price for your flat?
I got a couple of letting agents in to have a look and they both gave me quotes which were roughly the same. You could do the same. Getting a quote doesn't mean that you're obliged to place your business with the letting agent. Otherwise, you could always do your own research and look on estate agents' sites at what other similar properties are going for in your area. One thing I would say is that flats are usually rented out on an unfurnished basis so if you do your own research, I guess you could add a bit on for furniture...
Earlybird, I agree with all Mumpbump has said. I'd ask local estate agents about the value of rental for your type of property - you could pretend you wanted to rent one!
I would definitely have a tenancy agreement, and take a deposit. It can go very horribly wrong if you don't. The ones in Smiths should be fine, they're pretty standard. As an extra protection for you, you could get your neighbour to guarantee the condition of the flat, possibly even the rental - after all you are doing them a favour. There would need to be provisions in the tenancy agreement, which they should then sign. Here's a useful site.
Why would phones etc. remain in your name? Would you continue to pay, and include a sum in the rent to cover the amounts? It might be worth phoning the suppliers to see if they deal with situations like this (they must do!).
Oh interesting mumpbump. I've had one letting agent in (and am aware of rental rates generally here). I was told that in central London (where the flat is located), people want furnished flats. Unfurnished is seen as less desirable, and thus rent for less.
One reason why I don't want to go through the letting agent is that my furniture was mostly bought before 1998. That evidently is the watershed year for new 'flammability regulations'. Agencies are required to certify that any furniture in the flat meets those standards. TBH, the idea of moving/storing my furniture didn't appeal...and buying all new furniture in order to qualify was equally unappealing.
Good point - missed that. Get the utilities/phone changed into their name. It's very easy to swap and then swap back, but you don't want them running up huge bills in your name on international calls and heating the house 24 hours!
Anyone have knowledge/suggestions about insurance policies I'd need - especially for the contents of the flat?
You'd need specialist contents insurance for landlords. Also,as you are out of the country, you will need to find someone to "check in" the tenants, and "out" again. Doing this without use of an agency, sounds a little nightmare-ish.
You will also need to draw up an inventory of the furnishings etc you are leaving in a flat, so you can tally this up each time a tenant leaves, and deduct from their deposit in the event of excess damange/breakages.
I rent out a furnished flat, but do not provide bedlinen/towels etc - most people prefer to use their own, unless they are only there for a week or two.
I have rented the flat out to a company - so you collect rent from them each month, and its up to them how much they use the flat. This is much easier than renting to individuals for a week or two.
There must be companies/agencies in London ( there are in the provinces!)that are looking for flats for short term rental - this may suit you better. Higher income, but less guaranteed than a conventional AST. hth
Who will maintain the flat for you though? I mean, who will replace the washing machine if yours goes belly up or call a plumber in if the toilet backs up? You will be too far away in the US to do that kind of thing. You will also need someone who will do the check-in and check-out inventory for the tenants. You will probably also need to pay for the flat to be professionally cleaned at the end of each tenancy. People's ideas of clean vary and while your flat may be left immaculate, it might also be left slightly grubby by one tenant just before someone incredibly particular arrives to rent it for three months.
If you can do without the possible income from the flat it's possibly workable but if you are depending on some rental then you may not get enough consistent income via your neighbours business. An agent will at least market the property for you when one letting comes to an end, this way you are dependant on when someone is coming over from an overseas office.
Thanks to all for your thoughts/advice.
I'm underway with specialist contents insurance for Landlords, and expect quotes tomorrow from the broker.
THanks also for warning me of pitfalls of 'private letting' arrangements. All food for thought.
My building has a porter who can recommend tradesmen to tenants if anything goes wrong - though tenants will need to notify me, and get agreement before instigating any repairs. I also have a property developer/landlord friend who lives in the area. He will be able to help me/tenants if anything more complex arises. I'm hoping it doesn't, obviously...........
Unless it has changed recently(last 2 years or so), for us it was pre 1988 for soft furnishings and you could still be held liable should anything not conform even if you leave the agent out. Also you are obliged to have a pre-lease electrical check and an annual Gas Safety Certificate done. Assured Shorthold tenancy is for 6 months minimum (you can roll it over without renewing) one month notice their side and 2 on yours usually. 6 weeks deposit and a month in advance is normal,and there are new regualtions re: deposits which may apply.
We found that our Lettings insurance didn't cover accidental damage(tenant dropped an iron on carpet) when we tried to claim so read the small print. You may also need permission form the freeholder and mortgage company to let it out.
Tax issues arising are dealt with under the Non Resident Landlord Scheme based in Nottingahm btw. an agent wodul automatically dedcut tax before passign the net income on unles you certify to the contrary but you may need to register with them anyway.
LIZs - thanks for that info.
Exactly what could I be held liable for concerning soft furnishings?
Do I have any other liability as a landlord?
tbh I was never quite sure but think if a fire was deemed to have spread as a result of non compliance then you could be held responsible for consequent damage (wonder if it might affect insurance ?) I got a leaflet from the then DTI (iirc) about it . You need to maintain insurance for your buildings and contents and have someone ensure the utilities are switched over and read at start and end fo a tenancy. Also be clear who is responsible for Council Tax and water rates.
this may be useful . Not sure about the site itself but it should give you some pointers .
There's been a change in the rules over deposits, they now have to be held by a 3rd party as of 1st April this year. There are two types of schemes available, can't remember the details, but if you google I'm sure it will come up.
Interesting that contents insurance quotes for Landlords will cover damage due to fire, floods, etc but not accidental damage. So, if the tenant burns a hole in the sofa, or drops a lighted candle on the carpet, it wouldn't be covered.
Does anyone know - is that standard?
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