Anglian Leasehold Consultants
What to do when you become a landlord.
There are a couple of things you should in fact do before becoming a landlord.
Read the Lease.
First, read the Leases! You may think that is a somewhat tedious pastime, as indeed it is! Ask any conveyancer. However it is important. The lease is among other things a contract between the landlord and the leaseholder and it sets out (sometimes none too clearly) the obligations of both parties. What is usual and what you expect may not be what this lease says. It is essential for the future good management of the building that you as landlord understand your obligations and those of the leaseholder.
The other essential thing to do is arrange building insurance in accordance with the terms of the lease. Most leases impose on the Landlord the duty to insure the building as a whole. A few do not which is one reason to read the Lease. This is not ordinary insurance but Landlord Insurance. So it is a good idea to get it set up in good time. You will find that most household brokers do not do it and those that do have a separate department that deals with it. The insurance should be put in place as soon as completion of your purchase happens which means that you should have done the preparatory work before completion. This will mean that initially the costs of insurance will be out of your pocket. However if you have the obligation to insure, it will be the case that you have the right to re-cover the costs from the various leaseholders. Sometimes it will be possible to take over the existing building insurance policy of the previous landlord. Whether this is possible will depend on the attitude of the insurance company, the nature of the policy and other factors. Bear in mind that the leaseholders will not be pleased to receive a request for further payment as they will already have paid the previous landlord for his insurance and will not be impressed by being directed to look for a refund from him! It is the previous landlord’s obligation to pay over to the leaseholders any rebate of premium received.
S48 Landlord and Tenant Act 1987
This law requires you as Landlord on acquiring the freehold interest to notify your Leaseholders of your name and an address within the UK at which you may be contacted. This address does not necessarily have to be your home address; it can be a business address or that of any managing agents you appoint. It is however an address at which any legal notice will be sent to you by your leaseholders so it is important that if it is not a home or business address of yours, you can rely on any notices being forwarded to you promptly. A failure to give an address for service will prevent you taking legal action against the leaseholders.
Right of First Refusal
Unless of course you acquired the freehold under the Right of First Refusal you are also obliged to inform the Leaseholder whether or not the right of first refusal applied to them, if it did why you have bought the freehold and not them (most obviously because they failed to respond in time or at all) and if the right did not apply, why. If the Right did apply and for whatever reason the previous landlord failed to meet the requirements of the Right in some way then a majority of the leaseholders will have the legally enforceable right to buy the freehold from you at the price and any other terms you paid for it and subject any other terms that you were subject to.
There is no legally binding obligation on you to appoint managing agents to act for you in the management of the property. It may be that a management company was appointed under the terms of the lease; it may be the Leaseholders have exercised the Right to Manage; and it may be you just don’t want to.
However, if you appoint a managing agents do it is important to choose an agent that suites you. Most are very good at what they do but not all will be right for you. It is important to choose an agent that has a good reputation, that provides the service you require in particular with weekly or monthly reports at one end of the extreme to just sending the rent cheque annually at the other. Whilst no leaseholder is ever unconditionally happy with a managing agent, one that keeps them (relatively) happy is an advantage.
Finally it is generally a good idea to keep leaseholder’s informed of what you propose to do as landlord; even if that is nothing! Also given them the ability to let you know their concerns can save a lot of time and expense in the long run.