Category: ask anna

What landlords need to think about for 2018

It looks as though 2018 will be a mixed year for landlords. Some will start to feel the pinch of the legislation that’s recently come into force, such as the loss of mortgage interest relief, while a number of tenants may give notice, due to incentives to buy. At the same time, there are likely to be some good deals around for landlords looking to expand their portfolios. For the rest, who may not have the means to buy in the next 12 months, it’s a good opportunity to take stock of their portfolio and make small improvements where needed to help translate rental income into better profits.

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Should I keep money aside for expenses?

Renting a property is as simple as purchasing the property and letting it out, you need to ensure the property in maintained and that you money set aside to cover these expenses. Although lenders will typically require the rental income of your investment property to be at least 125% of your mortgage payment amount, this doesn’t always mean that the property will generate positive cash flow or give sufficient net profit to cover all the expenses of maintaining the rented property over the typical 15 to 20-year ownership.

As well as regular and one-off maintenance expenses, allowances need to be made for times when there may be no rental income. Tenants may stop paying their rent and the property is sometimes empty between tenancies, and you still need to be able to cover the mortgage and other costs during this time.

It is therefore vital that you budget properly to ensure that the investment is worthwhile and not going to cost you money month-on-month, before you commit to buying a property to let.

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Ten documents every landlord must have to hand

As a landlord, no matter whether you have one property or a large portfolio, it’s important to keep on top of all the paperwork associated with owning buy to lets. Here are ten key pieces of documentation you should have up to date and to hand:

1. Energy Performance Certificate. Before a property can be marketed for rent, the landlord must be in possession of a valid EPC and the rating displayed on all advertisements. A copy of the certificate must be available for any prospective tenants to view and provided to the tenant.

2. Gas Safety Certificate. This certificate proves that the gas system in the property has been checked by a Gas Safe registered engineer within the last 12 months and determined to be in full working order. A copy of the certificate must be provided to the tenant and in a House in Multiple Occupation (HMO), it should be clearly displayed in a communal area.

3. Domestic Electrical Installation Certificate / Electrical Installation Condition Report. The certificate is issued when a system is installed or updated and the condition report when it’s tested. In an HMO, the electrics must be checked, legally, every five years; in a single let property, while there is no specific timescale for regular inspections, you are obliged to make sure the electrical system is safe. Electrical Safety First recommends inspections are carried out on change of tenancy or every five years, whichever comes first. There is no requirement to provide tenants with the paperwork, but it’s important for you to be able to prove when the last inspection took place, in case of any problems.

4. Fire Risk Assessment form. As part of your responsibilities under the Housing Health and Safety Rating System (HHSRS), you have an obligation to identify potential hazards in the property and take reasonable steps to minimise the chance of a tenant suffering injury. The best way to prove you have done this is to complete a risk assessment form, freely available online here or from your local fire service and, to ensure there is no challenge to the validity of the form, it’s a good idea to have a qualified fire safety professional carry out the assessment on your behalf. Keep the form safe and revise it every time there’s a change to the hazards in the property and at least every few years.

5. Assured Shorthold Tenancy, or other tenancy agreement. It’s vital that you don’t move any tenant into the property without being in possession of a signed tenancy agreement, which demonstrates that the tenant is aware of their rights and responsibilities and agrees to comply with them. If you need or want the tenant to leave at any point during their tenancy, it’s essential you can quickly and clearly identify the date the tenancy started and the terms of the agreement, to enable you to serve the correct notices at the right time(s) and help prove any breaches of the terms.

6. ‘Right to rent’ check paperwork. It’s important to keep a record of all correspondence and other information obtained when verifying that your tenant has the legal right to be in the UK. If they should be found to be illegal immigrants at any time, you must be able to show that you took every care to check their status. Remember also to make a note of any visa expiry dates so that you can re-check for valid extensions, etc or outsource this process to an qualified agent.

7. Tenant’s personal details. If anything goes wrong during the tenancy, such as the tenant leaving without notice, falling into rent arrears or suffering an injury, you should be able to quickly access all their details those of their next of kin, emergency contact and any guarantor.

8. Inventory. A thorough inventory should be taken at the start of the tenancy and, importantly, should be signed by the tenant to confirm that they agree with the contents of it. It’s advisable to take this inventory to the property every time a periodical inspection is carried out, so that any damage to the property can be addressed as it is discovered, rather than waiting until the end of the tenancy, which may be some time down the line.

9. Tenancy deposit protection information. If providing an AST and taking a deposit, you have to provide your tenant with details of the scheme you’ve used to protect their deposit, as well as related prescribed information. If you use a custodial scheme, you will need the deposit ID reference and also your repayment ID, in order to apportion and release the deposit at the end of the tenancy.

10. Landlord insurance policy schedule. Emergencies can happen at any time and you need to be able to quickly lay your hands on your insurer’s details and information about what to do if you need to make a claim.

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i am on the hunt for a buy to let. should i buy an apartment or a house?

This is a question I get asked on a regular basis and unfortunately there is no right answer. It is down to personal preference and what you are wanting to achieve from your investment.

Despite the stigma, apartments do make fabulous buy to lets for a number of reasons:

  • They are generally cheaper to buy than houses and some can offer very similar rental prices
  • They are lower maintenance as there will be a management company to look after the building and the communal area – no sudden need for a new roof!
  • Apartments are popular with young professional tenants who will pay a premium for low maintenance accommodation, close to train/tram/motorway network

However you need to be aware that most/all apartments come with a monthly service charge and an annual ground rent which can eat into your profits. These are not items which can be charged to the tenants or added to the rent so you must take these into account.

Houses are always popular with families with children who are looking to settle in a home in the catchment area for their desired school. The addition of a garden also really helps.

With this in mind, tenants renting houses will generally stay in the property for longer, instead of moving each 6/12 months meaning less costly void periods.

You will also generally find that houses will increase in value quicker, and more dramatically than apartments and its larger plot also gives you the opportunity to extend/renovate.

The most important things to look for in a buy to let aren’t whether it is an apartment or house, it is its location, type of tenant likely to be attracted and yield. If all of these seem positive, the style of property doesn’t really matter.

If you would like any advice on your hunt for a buy to let, or have a questions for Octobers ‘Ask Anna’ then please feel free to get in touch either by phone 0161 442 1118, email annacorrigan@julianwadden.co.uk or by visiting me at the office on Moorside Road.

Anna

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should i allow pets in my property?

Cats, Dogs, Birds, Rabbits, Fish, Lizards, ssssssssnakes…in my 10 years as a Letting Agent I have seen them all! Some cute and fluffy, some scaly and slimy but all are the heart and soul of the family in which they live. But for landlords, the fear of pets in their property is a harsh reality.

With every tenant stating that their pet is well behaved and fully house trained, should you allow pets to live in your rental property?

The national average, according to a PMFA survey in 2017, stated that a whopping 44% of households in the UK currently have a pet of some description. In the North West alone, 27% of households own a dog and 16% own a cat.

With families flocking to The Heatons for the excellent schools, parks and family friendly atmosphere you would be excluding a large section of the market if you declined to have pets in your property. However, can we ignore the potential damage that cats and dogs in particular can cause?

The good news is that tenants are responsible for any damage/issues caused by their pets with most offering a higher deposit as a sweetener to encourage landlords to accept their four legged friend(s).

When accepting pets in your property it is imperative that you take a healthy deposit and carry out a detailed, photographic inventory so that a deposit claim can be made in the event of any damage (I always recommend inventories of this standard, pets or not). I would also recommend an addendum is added to a contract (if there isn’t one already) stating that a professional flee treatment is carried out at the end of the tenancy and proof of this provided upon vacation.

The decision ultimately lies with yourself and how comfortable you would feel with allowing pets to live in your property however with the proper measures in place, tenants and their companions can live in harmony in your house.

If you would like any further advice, or would like to submit a question for Septembers ‘Ask Anna’ then please feel free to call me on 0161 442 1118, email me at annacorrigan@julianwadden.co.uk or visit me at my office on Moorside Road.

Anna

 

 

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which landlords insurances are available?

Landlord insurance is similar to your normal home insurance but is designed to cover rental properties. Your standard home insurance will not be adequate for covering buy to let properties also.

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i have just purchased my first btl property and would like to know what reference checks you conduct on tenants?

We employ the services of an external referencing agency to ensure thorough checks are carried out on every applicant. These include, full credit checks, employment references, affordability checks and previous accommodation reference. We are also required under the immigration Act to check each applicant has the Right to Rent in the UK. As an agency it is important for us that we find you the right tenant for your property.

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i am looking at renting out a property, should i rent it with or without furniture?

The question of renting a property furnished or unfurnished does depend on the location and type of property. For example, if your particular property is more suited to a family, they may already have their own furniture which they would prefer to use. However, young professionals renting flats may prefer the property to be furnished. One of the most important things to note is that any furniture supplied must comply with safety regulations and if it was to break you would have an obligation to provide a replacement for the tenant.

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i have been living abroad for some time and would like to rent out my property in the uk. what do i need to know about tax?

As an overseas landlord, your letting agent would be required to deduct tax from your rental income before sending it to you unless they have permission from HMRC to pay the rent to you in full. This tax would then be paid to HMRC quarterly and at the end of the tax year you would be provided with a certificate in order to complete a self-assessment tax return and prove how much tax you have paid. If you would prefer the rent to be paid in full so you could complete a tax return and pay any money owed directly, HMRC will provide your letting agent with an approval number once you have registered with them which they need to pay the rent to you in full.

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why do i need an inventory? it’s just walls and carpets, there is no furniture in the property.

An inventory is a list of all items in the property, the walls, flooring, fixtures & fittings are just as important as any furniture as these can still be damaged by the tenant. Once a tenancy has come to an end we conduct an inspection based on the original inventory to establish whether the tenant has caused any damage above fair wear and tear in order to recover any costs to rectify the issues from their deposit.

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