Becoming a landlord has never been more appealing
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 points to remember when considering buying your first investment property, including the implications 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, or for a breakdown of our standard costs, click here. Please click here to see our client money protection certificate.
Pick the right property
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.
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 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. 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, mortgage interest costs 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.
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