Landlord guide

Pick the right mortgage

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 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. Your home may be repossessed if you do not keep up repayments on your mortgage. Fees may become applicable at a later stage.

Include “running” costs in any calculations

When considering a buy-to-let investment and carrying out your financial calculations don’t forget 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.

The decision whether to have your property managed

The legal obligations for a Landlord in the current climate is ever increasing. If Bychoice is managing your property we will ensure that you, as landlord, remain compliant with all statutory and contractual obligations throughout the term of the tenancy.

We will visit your property quarterly to check the tenant is looking after your investment and report back, we will deal with maintenance issues promptly and efficiently.

Make sure you are covered

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.

Is rental income taxable?

Yes, rental income is subject to income tax, and will need to be declared to HMRC. In addition any profit you make when you sell your buy-to-let property will be liable to Capital Gains Tax (CGT). As with all tax related matters seek professional advice.

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 and maintenance expenditure.

Produce a detailed inventory

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.

Insist on a deposit

It is usual to insist on a deposit of five weeks. 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.