Vetting the Landlord and Due Diligence

Protect yourself fully by always properly vetting the Landlord and their right to let the property.

We live in a society where deception is rife. There are numerous cases where Letting Agents have been duped into renting a property where the person who instructed them had no lawful right to do so; the greatest threat is to claims against your liability insurance.

The way to minimise your risk of being sued is by satisfying yourself [and being able to demonstrate your diligence] that the person granting you the right to grant a tenancy had the right themselves. Unfortunately, it is you who may be liable if things go wrong. Have a check list and photocopy documentation that you have relied on to satisfy yourself the person had the lawful right to instruct you. Such documentation may be :-

A photocopy of the ID provided.
A copy of the Landlord Mortgage statement.
An Insolvency IVA check - this is FREE after all.
Are they the lawful sole owner of the property? - If not then request all owners to sign your management agreement, nominating one of them as the head landlord whereby they agree that this person is the one to whom all payments should be made and from whom all instructions taken. This also saves headaches where you receive conflicting instructions from partners in dispute.
A Land Registry check is inexpensive and confirms owners and joint owners, ‘Charges’ on the property (mortgage lenders usually), and restrictive covenants affecting the property.This search will confirm who is/are the owners of the premises; whilst you can accept instruction from a single party provided other parties agree for they may have an equitable interest in the property then you must also obtain their consent before letting since they would be joint landlords. The property may be subject to a Divorce Settlement and the rent may be payable equitably to both parties. This gets more complicated if the property is owned by a Company you require instruction from a Director at the very least.

Do they have the permission of the Mortgage Company? Permission is usually denied if the mortgage is in arrears. You fail to check this and the tenants have paid 12 months’ rent in advance. The Landlord never pays their mortgages and the Tenant is evicted the Tenant sues who [You]. The answer here is paying the Landlord in the month the service has been delivered.

Do they have the permission of the Management Company and/or Freeholder to Let? Some properties have exclusions in their deeds that prevent them from being rented for they are exclusively owner/occupier.

Restrictive Covenants - You need to be aware of anything that may impair a Tenant’s enjoyment of the premises. For the Tenants will be bound by these, unless such is unlawful or dated; which many are for they have been superseded.

Is the property appropriately insured. [A buy to Let Policy covering Landlord's Liability; will tradesmen or staff you instruct to enter the premises be covered?]

Do they have appropriate permissions in respect of Planning laws, HMO and Selective Licensing? You receive rent in respect of a shared house, the property is not licence as the rent receiver you could be liable for a £20,000 fine.

Pre Let Inspection Any agreement you enter to manage a property should always be subject to a property inspection for you have a duty of care to the incoming tenants to ensure the property is fit for purpose.

Other situations to protect you from are:-