With the rental market becoming more and more popular, becoming a landlord has never been more appealing.
We have compiled a guide of the important things to remember when considering buying your first investment property, to the implication and potential pitfalls of being a landlord.
If you would like any further information, please do not hesitate to contact you local office for more information.
Do your research. You’ll want to attract the right tenants, achieve the highest rent possible for your property, and avoid void periods between tenancies.
Ask Bychoice for the best advice, they will tell you the location and type of properties that are highly sought after by tenants.
Consider regional variance, do apartments let more easily than houses in the area you are looking to buy? Never forget that Buy-to-Let is a medium to long-term investment.
With Buy-to Let slipping into the mainstream there are an ever increasing number of products to choose from. With more choice, often comes more confusion. Again- Research is the key!
Specialist Buy-to-Let mortgages hold obvious advantages. Typically lenders allow people to borrow up to 80% of the property’s value, and the size of the loan is usually linked to the expected rental income.
|For free, professional advice, please call
Elizabeth Jones on
Your home may be repossessed if you do not keep up repayments on your mortgage’
Fees may become available at a later stage.
When considering a buy-to-let investment and doing your calculations don’t forget about all the extra costs incurred when running a second property as a business.
As a Landlord maintenance remains your responsibility, in a house this might mean decoration between tenancies, in a leasehold property regular service charges or maintenance charges as well as any ground rent are still the concern of the landlord. Don’t forget to include costs of annual gas safety checks, buildings insurance and any rent guarantee insurances you might require.
You can manage the property yourself, or Bychoice can manage the property for you and take the hassle out of renting your property. If you do decide to use an agent remember to add these charges into the “running costs” too. It may sound appealing to look after the property for yourself and save a few pounds, but from our experience, it is better for the landlord to avoid personal contact with tenants where possible. If, as the agent we can keep a good working relationship with the tenants, we can often resolve problems before they become costly to the landlord.
Bychoice, like any good letting agent will have access to professional credit referencing services and will use specialist companies to assess the tenants suitability. Decisions are made on credit scores or on the basis that nothing of a bad or detrimental nature shows against the applicant. Where possible references are also taken from an employer, and as a general rule the tenant must have been in continuous employment for at least 6 months and earn at least 2.5 times their annual rental commitment. A tenant assessment would not be complete without references taken from a previous managing agent or landlord where possible.
As a landlord you are responsible for insuring your property, buildings or contents. Many owner occupied policies do not give you the cover you require.
Leaseholders letting out their flats will often need to inform their management company that the property is let. The management company can then ensure that the buildings insurer is advised.
If you let a property that was formerly your main residence and you do not have a buy-to-let mortgage you will need to inform your mortgage company to make sure you are not in breach of any terms. Many mortgage companies simply charge a small admin fee to process this information.
Yes, rental income is subject to income tax, and they add it to your other earnings. In addition any profit you make when you sell your buy to let property will be liable to Capital Gains Tax (CGT) charged at the highest rate of income tax. As with all tax related matters seek professional advise.
It’s not all bad news, there are a number of expenses that can be offset against the rent you receive to reduce your tax bill, including letting agency fees, mortgage interest costs and where the property is furnished a 10% allowance for wear and tear.
This is especially important for any property that you let furnished. In fact according to Tony Booth – Author of the Buy-to-Let Handbook “The inventory of furnishings and fittings is one of the most important documents a landlord can create.”
The inventory is your only proof of how the property was provided at the outset. It should accurately describe, in fine detail everything within it. Should a dispute have to be settled in court, this document will need to paint a tangible picture to people who have not seen the accommodation so that a judgement can be made. Bychoice are able to produce a Inventory carried out to the Association of Professional Inventory Providers standards and would happily assists you with any disputes at the end of the tenancy if your property is managed by us.
It is usual to insist on a deposit of between one and a half and two months. Holding this deposit will offer protection to you against any damage caused by the tenant or dilapidations. A deposit is not to be used for compensations for general wear and tear.