contract terms

lANDLORD TERMS AND Jargon Explained

As a landlord, there's a whole host of terminology, acronyms and organisations you need to be aware of. This list covers some of the most common terms you may come across as a landlord, and what they all mean.

Landlord - the owner of a property who rents or leases it to a tenant.

Resident Landlord - a landlord who lives in the property that they also rent out to a tenant or lodger.

Accidental Landlord - someone who owns a property but didn’t initially intend to rent it out. This can be because they find it hard to sell their property or have inherited a property.

Tenant - someone who lives in a property owned by a landlord.

Excluded Occupier - a type of tenant with certain rights, who lives and shares accommodation with their landlord or a family member of the landlord.

Lodger – someone who lives in a home with a resident landlord. They may share or not share living space with the landlord and their family, which will affect if they are an excluded occupier or not and their subsequent rights as a tenant.

Subletting – when a tenant lets part or all of the property they are renting to someone else, the subtenant. Tenants must get permission from their landlord before subletting a property, otherwise legal action can be taken against them.

Subtenant - a tenant who is leasing from a mesne tenant, who is subletting a property.

Mesne tenant – the tenant who is leasing to a subtenant. They are essentially the landlord of the subtenant but will still have to answer to the landlord who owns the property (known as the Head landlord).

Eviction – when you have someone leave a property permanently, usually for breaking terms of their tenancy agreement, such as not paying rent, or where the landlord needs to regain use of the property.

Retaliatory eviction – When a landlord evicts a tenant after they have complained about the condition of the home or asked for repairs to be done on the property. Landlords who have complaints put against them cannot issue an eviction notice until 6 months after receiving an Improvement Notice to remedy any disrepair reported in the property.

Improvement Notice – a notice served by your local authority in order to resolve any hazards in the property.

Tenancy deposit protection – the legal requirement for all landlords to place a tenant’s deposit into a government-backed tenancy deposit scheme, which differs across the UK. Not doing so can result in a tenant not having to leave a property when a tenancy ends or the landlord or agent having to pay back three times the amount of the deposit to the tenant.

Prescribed Information – information that must be served to your tenant within 30 days after receiving their deposit in England and Wales. In Scotland, this must be given to the tenant within 30 working days of the tenancy start date. This includes: which scheme the deposit is protected by, contact details for the scheme, reasons the deposit may be held back and how to resolve disputes with the deposit.

Permitted Payments – the payments you can legally charge to a tenant, under the Tenant Fees Act 2019 and the Renting Homes (Fees etc.) (Wales) Act 2019. Although these differ slightly between England and Wales, these include rent, tenancy deposit, holding deposit and utilities.

Prohibited Payments – charges that are not legal under the Tenant Fees Act 2019 and the Renting Homes (Fees etc.) (Wales) Act 2019. These include cleaning fees, admin fees, gardening fees and referencing fees. Please note: many fees are also banned in Scotland and Northern Ireland.

Capital Gains Tax – for landlords this means the tax paid when selling a property that is not your main home, applicable to any profit you have made on the increase in the property’s price. The rate currently stands at 28%.

Income Tax – the tax you pay on any profit made on rent or fees paid to you by your tenants. This is in addition to income from other forms of employment.

Utilities – services provided to a home, including gas, electric, water, phoneline and internet.

Section 8 Notice – the process used in England and Wales to evict a tenant where a ground for eviction can be proven e.g. not paying rent, excessively damaging the property or breaking the law.

Section 21 Notice – the process used in England and Wales to evict a tenant without giving a specified reason. The UK Government has announced that these will be abolished in England in the future. The Welsh Government has also committed to limiting the use of “no fault” evictions.

HMO – House of Multiple Occupation. This counts as a single property that holds at least three people who are not from the same household and share certain facilities (a family would count as one household).

HMO Licensing – a licence obtained by a landlord from a local council/authority in order to legally allow their property to be let as an HMO. Landlords in England and Wales should check with their local authority to see if they need a licence. In England, HMOs with five or more inhabitants from at least two unrelated households and sharing common facilities must be licensed. In Wales, HMOs which are three or more storeys high with at least five tenants from two or more households must be licensed. Northern Ireland and Scotland require licences on every HMO property.

Selective Licensing – licensing required in certain local authority areas, usually in areas of low housing demand, prevalent antisocial behaviour, poor property conditions, an influx of migration, high levels of deprivation or high levels of crime. Landlords must obtain a licence to operate legally, as it is designed to ensure that the property is safe to inhabit and that the landlord is managing the property and its tenants correctly.

Additional Licensing – HMO licensing in England and Wales which is brought in to cover a specific area or whole district in order to cover properties that don’t require a mandatory HMO licence. Usually, this occurs when a local authority believes HMOs aren’t being managed properly.

HHSRS – The Housing Health and Safety Rating System. A list of 29 hazards in a property, set out by the UK Government, that are considered detrimental to a person’s health. This system applies to England and Wales only. Having a hazard in the property can result in the landlord being served a notice of varying degree to improve the property, or risk being unable to evict a tenant, prosecution or a fine.

Universal Credit – a monthly benefit payment that has replaced Child Tax Credits, Housing Benefit, Income Support, Job-seekers Allowance, Employment ad Support Allowance and Work Tax Credit, also known as ‘legacy benefits’.The payment goes directly to the claimant, and if they are using Universal Credit to pay their rent, it will usually be the tenant’s responsibility to send the money to their landlord. Tenants that need support managing their Universal Credit may have their rent paid directly to their landlord through an APA instead.

APA – Alternative Payment Arrangement. An arrangement set up by Universal Credit to have a claimant’s money sent in a different way than the usual monthly payment.

MPTL – Managed Payment to Landlord. A form of APA where a claimant on Universal Credit has the cost of their rent sent straight to their landlord from Universal Credit, rather than the money going to the tenant first to pay to the landlord. This can be requested by the claimant or the landlord.

Scottish Choices – In Scotland, tenants can opt to have their Universal Credit paid to them twice monthly rather than monthly, and their rent paid directly to the landlord after receiving their first payment.

Fair Wear and Tear – the natural and fair amount of damage that may occur inside a property, to its furniture, fixtures and fittings. This takes into account the amount of time the tenant has lived in the property. It is damage that is expected to occur over time and is not something the tenant is liable for.

Section 24 – a clause of the Finance Act 2015 that states that landlords will be taxed on all rental income, not just profit, and be given the basic tax rate relief (20%) on their mortgage interest from April 2020.

MIR – Mortgage Interest Relief. The tax relief that is being phased out for landlords. Before 2017 landlords could deduct 100% of interest on their mortgage and other financial costs, but from April 2020, this will be reduced to 0% and replaced with the basic rate tax relief.

Legionella – a bacteria commonly found in water, that can cause serious illness. Landlords have a legal duty to assess and control the risk of legionella in their properties, through risk assessments and any necessary measures to reduce the risk of the bacteria.

EPC – Energy Performance Certificate. A document that contains information on a property’s energy use and typical energy costs, along with recommendations on how to reduce energy use and thus save money. In England and Wales, from 2020, all privately rented, domestic properties must have an EPC rating of E or better. In Scotland, a minimum EPC of E is being phased in from 2020. Failure to provide an EPC for a property can result in a landlord being unable to evict a tenant.

CMP – Client Money Protection. Schemes that all letting agents in England, Wales and Scotland must be part of, that allow a client’s money to be protected, should the agent go bust or misappropriate the funds. For landlords, this means that if an agent misuses rent or a deposit that is owed to you, or loses it, you can claim for it back through the CMP scheme they are a part of. All ARLA Propertymark members across the UK have CMP as standard.

MEES – Minimum Energy Efficiency Standards. The minimum standard that must be reached on your EPC in England and Wales. Currently, the rating is E for properties being rented on new leases or renewed leases. From 1 April 2020, all domestic properties that are leased will require the minimum standard, and from 1 April 2023, all commercial properties will require it as well.

Right to Rent – the legal obligation of landlords in England, to check the immigration status of any tenants that wish to rent their property. Only tenants that are legally allowed to live in the UK, either permanently or temporarily, are allowed to rent a property.

Rent Smart Wales – the Welsh Government’s licensing scheme for landlords and letting agents. All landlords leasing properties in Wales must be registered and licensed by this scheme.

Scottish Landlord Register – the register that all landlords leasing a property in Scotland legally must apply for. Landlords apply through their local authority and comply with the requirements made by the register.

Scottish Letting Agent Register – the register that all letting agents operating in Scotland must apply for. It also introduces a Code of Practice by which Scottish letting agents must comply with.  Letting agents must apply to the Scottish Government in order to continue business legally. Landlords must check that their agent is on the Register.

Letting Agent Code of Practice – the rules by which letting agents operating in Scotland must follow. This includes how they work with landlords, property management, and communications. This also places a duty on letting agents to inform their landlords where their property legally requires a licence.

 

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