The rental property market is always evolving - including the rules and regulations. It may not be as volatile as housing prices or rental fees, but it’s still something that keeps changing over time.
As a property investor, it’s important to stay updated on any regulatory changes because it’ll keep your properties compliant with the local rules. Compliance is the key to maximising the rental income potential of your properties. Failure to adapt to new rules might compromise the returns on your property investments. It can lead to losses in your property portfolio.
In this article, you’ll get a checklist of regulatory requirements that your rental properties have to comply with. As a multi-property owner, it’s up to you to make sure that these are all in order before you can have your properties rented out.
A Checklist of Regulatory Requirements for Rental Properties
All the regulatory requirements that local authorities have set are there for a reason. It’s imposed on properties to protect guests and residents and make sure they are safe and protected during their stay. It forces rental properties to keep up with the standards and improve to remain competitive.
If you want to leave a positive impact on residents and guests, here’s a checklist of regulatory requirements you need to comply with.
Part 1: Property Compliance
Compliance feels like an intimidating yet necessary task that you have to follow through. Part of your responsibility as a property owner is to make sure that your real estate assets are compliant with local rules and regulations. It’s not just a legal obligation. It’s a strategic move that should be embedded in your overall investment plan.
Before you can have your properties rented out, you need to meet the following:
Mortgage type
Properties can be rented out even if you still owe a mortgage on it. However, you can only do so if you use a buy-to-let mortgage on the property. If you used a typical residential mortgage, it won’t be qualified as a rental property. If you insist, you’ll have to get approval from the mortgage lender so they can convert your residential mortgage into a buy-to-let. This approval would require you to show proof that the property is capable of earning more than its liabilities - at least 145% of the monthly repayments. In a buy-to-let mortgage, all your payments will only go to the interest amount. The capital can be repaid once you decide to sell the rental property.
License to rent
This license will vary from one location to another. It shows that properties are compliant and meet the standards of the local housing regulations. Unless you have this license, you can’t legally rent out your property. Inquire with the local council about the requirements to get this license. There are some instances when you’ll have to get additional or selective licensing - make sure you can comply. This license can cost you £500 or so. It should be good for a couple of years. Keep the expiration marked on your calendar so you can reapply before the other lapses.
Energy Performance Certificate (EPC)
This is a fundamental requirement for property owners. The UK started their Net-Zero growth plan and part of that initiative is to require all properties to get an Energy Performance Certificate or EPC. This is a document that measures the energy efficiency of properties. By 2025, all rental properties are required to have at least a C rating for their EPC. To get this rating, you need to invest in energy-efficient appliances and smart technology. You also need to improve the insulation in the property through double-glazed windows, etc. Once you’ve been given your EPC rating, it’ll be valid for 10 years before you need to reapply. The EPC won’t just make your property compliant - it can also help you attract eco-conscious guests and residents.
Part 2: Safety Checks
This is part of your obligation as a property owner because it can affect the safety, well-being and overall experience of guests and residents as they stay in your place. Among the safety checks required are the following:
Gas and Safety Check
This should be done annually. It ensures that all gas appliances won’t leak and threaten the health of the people nearby. This safety check should be done by a licensed engineer who will go through all gas-powered appliances and equipment on the property. This includes gas boilers, cookers, water heaters, pipeworks, etc. The engineer will provide you with a report that you can share with guests and residents to prove that your property has been checked and deemed safe from gas-related threats.
Smoke and Carbon Monoxide Alarms
All properties should be installed with alarm systems that would alert people of any harmful smoke or carbon monoxide in the area. This is a legal requirement that should be implemented in every room of the flat (for carbon monoxide alarms, it’s required in rooms where there’s a solid fuel-burning appliance/equipment). It’s best to have them interconnected so all occupants are alerted no matter where they are on the property.
Fire Safety Regulation
Apart from the smoke alarm, all rental properties should meet the fire safety standards of the local fire department. This includes fire-resistant doors, visible escape routes and adequate firefighting equipment (with clear instructions for use). You should also comply with the Furniture and Furnishings (Fire Safety) Regulations that require rental properties to use fire-resistant furniture. The labels on the furniture should remain attached - otherwise, they would have to be removed from the property.
Portable Appliance Testing (PAT)
This involves the inspection of electrical appliances to see if they are safe for use. It helps improve the safety and protection of guests - especially if they are allowed to use the electrical appliances on the property. This has to be done regularly to check for faulty wiring and to prevent electrical fires and other hazards. The appliances usually checked include the fridge, toaster, microwave ovens, washing machines, etc. Anything that’s deemed unsafe should be removed or replaced.
Electrical Installation Condition Report (EICR)
This report involves thoroughly inspecting all the electrical installations on the property. It focuses on the fuse boards, lighting, sockets, wiring and all electrical components. It makes sure that there are no threats to electrical fires and other hazards that can endanger the lives of future occupants. Like other safety checks, this has to be done at least every 5 years. Any damages should be repaired and replaced within 28 days after the report is given.
Legionnaires’ Disease
This inspection is important for properties with visible water systems. It helps identify and control the risk of exposure to the Legionella bacteria which can lead to serious respiratory problems (e.g. pneumonia). The inspection would involve identifying stagnant water within the area. To pass this test, you should eliminate the chances of stagnant water collecting on empty containers, pots and uneven floor areas.
Working with Property Experts to Achieve Compliance
Complying with and monitoring all the regulatory requirements can be challenging. If you want to avoid compromising compliance, you can partner with property experts. This can save time, money and future headaches in the long run.
Some property management companies include maintenance checks as part of their service. This can be requested as part of their cleaning and maintenance checks between guests. You can ask for a report that details areas, equipment, appliances and other concerns that require repair or replacement.
Among the regulations that property management companies can help with include the following:
- Landlord insurance. This is a condition for some buy-to-let mortgages. Property experts can help ensure that your policy covers potential risks - including those that are unique to your property (e.g. furniture damages, loss of rental income, etc).
- Deposit protection. This protects the security deposit given in advance by guests and residents. This usually covers 5 weeks of rent. Property managers can help you enter this amount into a trustworthy and legitimate deposit protection scheme.
- Tenant references. Tenant screening is crucial to increasing occupancy rates. It helps match the right guest or resident to the property. This involves a thorough reference check on their employment status, financial stability, etc. This ensures that the tenant is both responsible and reliable in meeting their obligations. Property managers can conduct this reference check on your behalf.
- Tenancy agreement. This is an agreement between the property owner and the guest or resident renting the property. This is a legally binding contract that has to be worded carefully. It’s essential to protect the rights of both parties so you want to do this right. Property management companies usually have a template for this and they can help you set this up.
- Right to Rent check. This is a necessary check to ensure that potential tenants meet the legal requirements to be able to rent. This ensures that the tenant has the right to remain in the UK for the time they will rent the property. If they are proven to be illegal, it can compromise the property and you’ll get a hefty fine for it. If you work with property managers, they will vet tenants for you and include this check in the process.
- Property inventory. Getting an inventory of the property is tedious work but it protects your investment. It ensures that you haven’t been robbed. You can also use this in case of disputes and for regulatory compliance purposes. A property manager can also take care of this for you. This list can be checked every time the property is cleaned for the next guest or resident.
- Property maintenance. This is necessary for both compliance purposes and to protect your property investment. It can also keep costs low because you can avoid huge repair costs if you can nip damages as they are starting. Property experts can help with this because they can oversee inspections and initiate repairs when necessary. They can also advise you when there’s a need for an upgrade, too - especially when it keeps the property compliant.
Partner with a Reputable Property Management Company
As a multi-property owner, it’s important to realise that compliance is not just a necessity. It should be treated as a strategic investment that can fuel the success of your property portfolio. Staying ahead of all the regulatory requirements will ensure that your properties will never be legally compromised. Its ability to provide profitable returns will be protected.
With all the regulatory requirements that you have to keep up with, it helps to get assistance from property management companies like Opago. Partnering with a reputable company will provide you with expertise and proper guidance to maintain compliance at all times.
If you want to ensure the longevity of your property investments, get in touch with Opago. Our property experts can assist with regulatory challenges, property marketing and maintenance, tenant relations and many more.
