Jargon Buster "g"
If you are a landlord letting a property equipped with gas appliances, you need to understand and comply with the law relating to gas safety. If you let a property to tenants, you must make sure all aspects of the gas system in the property are maintained in a safe condition. These include:
All gas pipework All gas appliances, such as a boiler and a gas hob The flue
It is your responsibility to ensure the property has a full gas safety check every year. A Gas Safe registered engineer must carry out the safety check in each of your properties (if you rent out more than one).
You must also ensure your tenants receive a copy of the gas safety record pertaining to the property within 28 days of the check being carried out or before they move in. You are also obliged to show your tenants how they can turn off the gas supply in the event of a gas leak.
As a landlord, you are legally responsible for making sure a Gas Safe registered engineer checks the gas appliances in your rental properties every 12 months. They must also give you copies of the gas safety records.
Gas safety records
When your Gas Safe registered engineer has checked the gas appliances in your rental property, they will give you a gas safety record. This record confirms the gas appliances have been checked and are safe to use. You must then give your tenant a copy of the records within 28 days of those checks being completed. If a new tenant is moving in, you must give them a copy of the records prior to them moving into the property.
Each record of a gas safety check must be kept safe for a minimum of two years.
Gazumping is the term given to the situation where a seller pulls out of a sale after accepting an offer that came in above the original asking price. The term is often incorrectly used by would-be buyers after they have made an offer on a property that is below the asking price. The original buyers have then been knocked out of the running when another higher offer has been received and accepted by the seller.
The moral of the story is to think about offering the asking price rather than going below it. While it is possible you might succeed in buying a property for a price lower than the amount originally wanted by the seller, it can backfire on you. Trying to save money on the purchase is logical, but it can lead to losing the property altogether.
Before contracts are exchanged by the buyer and seller, either or both parties can withdraw from the sale without financial penalty. This means there is a risk that the seller could receive a higher offer on their property from another party. Since every seller wants to get the best price they can, it makes sense they would withdraw and go with the other buyer’s offer instead. Even if a seller seems nice and happy to accept your offer, few would turn down a few thousand pounds more for their property if someone else with deeper pockets came along. If you have found the property of your dreams, dropping below the asking price is a risky proposition, for fear of being gazumped.
Most people know the term gazumping, but few have heard of gazundering. The word describes a tactic used by a buyer to offer less than the price originally agreed for the property. This occurs just before the contracts are exchanged by both parties. Typically, it happens at the last minute before this part of the process.
While gazumping impacts the would-be buyer, gazundering impacts the seller of the property. Up to this point, they would have agreed a price for the sale and gone through many of the required stages before the contracts are exchanged. Once the exchange occurs, very few people back out, as there are significant costs involved in doing so. Therefore, anything can and does happen before contracts are signed.
For the seller, gazundering can be frustrating at best and cause the failure of the property sale at worst. The buyer may have intended to drop the offer price at the last moment all along, being prepared to walk away if the seller does not cave to their demands. The temptation to accept the lower offer is significant. If the seller doesn’t accept the offer, the buyer could walk. The seller might also have placed an offer on another property – an offer they may need to withdraw if the sale is not completed. A lot is riding on the exchange of contracts, hence why some unscrupulous buyers indulge in gazundering in the hope of getting their desired property at a lower price than they originally agreed to. The process is potentially great for buyers – far less so for sellers. It is also legal.
Ground rent is an annual fee paid by the leaseholder of a property to the freeholder. The leaseholder typically owns their property, but the land on which the property sits is owned by the freeholder. The payment is therefore a fee to rent the land on which their property is located. Leasing land in this manner is quite common in the UK, especially where flats are concerned.
Typically, the length of lease on a leasehold property lasts for a long period. Any period that is 40 years or less is deemed to be short. The terms of the lease should be made clear when you are buying a leasehold property. These terms should include information about the ground rent and how much you need to pay each year.
Are there different types of ground rent?
Yes, there are two types:
Fixed ground rent Escalating ground rent
The first type is preferable, since it remains fixed at the same amount each year for the duration of the lease. So, if the lease lasts for 99 years, you’ll know the amount you need to pay each year. There will never be any shocks or increases.
If the lease has escalating ground rent, the terms will tell you how often the amount will rise and by how much. It is always wise to thoroughly check the terms of a lease before purchasing a leasehold property. Remember, leaseholds do not just apply to flats. Some houses have also been built with leasehold status, including escalating ground rent. This can make them harder to sell in future, and more expensive to pay for as the ground rent rises.
A guarantor is someone who guarantees to meet your mortgage or rent payments if you cannot or will not do so for any reason. In many cases, the guarantor is a parent or other relative such as a grandparent. The guarantor is essentially providing back up for someone else’s loan or other financial agreements. They provide a form of insurance against the loan, if the person paying the loan doesn’t do so.
Such an agreement can be set up with a landlord if the person wants to rent a property. It can also more commonly be set up with a lender such as a bank or building society if the person wants to take out a mortgage to buy a property.
Be aware of the risks if you are asked to be a guarantor
It is easy to think you will never be called upon to repay the loan if things go wrong. In reality, no one can tell what may happen in the future. Even if your relative is trustworthy and will do all they can to pay off their mortgage, they could fall into financial hardship. If this occurs, your role as guarantor means the lender can call on you to repay the loan. This could leave you in dire financial straits, hence why it is very important to consider the potential consequences and worst-case scenario before you agree to take on the role.
With young people struggling to save the required amount to put down as a deposit on a mortgage (or to get a mortgage at all), it is no surprise that guarantor mortgages are becoming more common. However, proper advice should be sought prior to agreeing to be a guarantor for anyone – even your own child.