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Thinking of Renting Out your Property?
This page is designed to offer help
and advice to would-be landlords who are thinking of renting out
their property in the UK.
Bear in mind the information here is not exhaustive and I suggest
you research the subject thoroughly before embarking on letting your
home.
Free Advice for Landlords
You may have done your sums, given it much thought and
decided to purchase a buy-to-let property. However there are some home-owners
who become landlords almost by accident, for example, circumstances might
dictate that you need to move but it's not a good
time to sell.
Letting Agents
Private letting can be a little daunting at first
so if
you want some help there are many letting agencies to choose
from. Don't just go on what they charge but get yourself along to them and have a chat – after all, your property is likely to be
the most valuable asset you own so you need to feel satisfied with
the service on offer and the personnel who'll be finding you a
suitable tenant and/or managing your property.
Your letting agent may offer various levels of
service from a tenant find service to a fully managed one. After
marketing the property and finding a tenant, they will
usually carry out tenant referencing and credit checks on your
behalf, take a deposit and draw up a tenancy agreement. Letting
agents may also take an inventory at the beginning of a new tenancy,
collect the rent (usually through a bank standing order), arrange
any repairs (normally after advising you first) and check the tenants out
when the tenancy ends.
It's important to
communicate with your letting agent, for instance, let them know if you want to
be completely hands-off or more involved and be kept in the loop. You may even
choose to accompany them when they carry out routine property
inspections during a tenancy.
Tell the Land Registry your Change of
Address
If you're renting out your own home it's very
important that you advise the Land Registry of your change
of address for service. Updating your contact details is free
and helps to prevent fraud.
In addition, the Land Registry have launched an
extra security measure aimed at owners who do not live at the registered property. Under this measure you or your conveyancer can make a request using their
Form RQ asking the registrar to enter a
restriction. This is also free of charge. The restriction is designed to help prevent forgery. It does this by requiring that a conveyancer certify they are satisfied that the person transferring or mortgaging the property is the same person as the owner.
Deposits
You or, your letting agent, will usually take a
deposit (generally about one month's rent) from your tenant before
they move in. You can then keep all or part of this deposit if they:
- Leave the property owing rent.
- Damage the property.
- Don't pay their bills.
By law, the deposit needs to be protected in a
Tenancy Deposit Protection Scheme if you've let your property on an
Assured Shorthold Tenancy (AST) which began after 6 April
2007.
The three approved schemes are:
Landlord Insurance
Insuring your residential property for let is obviously of
paramount importance and there are many specialist insurance
policies available especially for landlords. These policies are
designed to provide cover for a large number of risks, many of which
are unique to let properties such as cover for:
- Malicious damage caused by your tenants.
- Theft or attempted theft by your tenants.
- Loss of rent/alternative accommodation.
- Periods of unoccupancy between lets.
- Landlords contents cover.
- And more...
Rent Guarantee & Legal Expenses Insurance
Even the best tenant checks and references cannot
predict a tenant falling on hard times and not being able to pay
their rent. Rent Guarantee Insurance is designed to cover you
against your tenant defaulting, providing you with the peace of mind
of knowing your rental income is secured.
When things go wrong with tenants it can
sometimes end up in court with the landlord footing a legal bill.
This can result in lost profit and a great deal of lost time. This
is where Landlords Legal Expenses insurance comes in, covering your
costs for disputes between yourself and your tenants such as
contractual breach by tenants, recovering rent arrears or eviction
of anyone in the property without your permission.
Tax
If you let out property you can deduct certain
expenses and tax allowances from your rental income. There are
different rules for furnished holiday lettings and overseas lettings
as well as for property let under the 'Rent a Room' scheme.
Allowable expenses can include such things as:
- Letting agent's fees.
- Accountant's fees.
- Buildings and contents insurance.
- Interest on property loans.
- Maintenance and repairs to the property (but not improvements).
- Utility bills such as gas, water and electricity.
- Ground rent and service charges.
- Council Tax.
- Services you pay for, such as cleaning or gardening.
- Other direct costs of letting the property, such as phone calls, stationery and advertising.
It may be a good idea to employ the services of
an accountant who will be able to advise you on all the expenses you
can claim for and any allowances you might be entitled to. They can
also assist you with the completion of a Self Assessment tax return
if necessary.
Health & Safety
As a landlord, you must meet certain health and
safety standards including ensuring any gas and electrical
installations and appliances in your rented property are safe.
Every year you'll need to obtain a Gas
Safety Record issued by a Gas Safe registered engineer (formerly
Corgi).
You should also have a qualified electrician
check your electrical installations periodically and have them carry
out an annual portable appliance test (PAT) on any portable
electrical equipment you provide for your tenants.
In addition, you must make sure your tenants have
an escape route from your property in case of fire and it may be
necessary (and is certainly prudent) to have smoke detectors fitted
on each level. Depending on
the size of the property, you may also have to provide fire alarms
and extinguishers.
Energy Performance Certificates (EPC)
Valid for 10 years, you must obtain an Energy
Performance Certificate if you rent out property. EPCs give
information on a building's energy efficiency and every EPC also has
a recommendations report showing how you could improve the rating
and make the property more attractive to tenants.
Landlord's Energy Saving Allowance
Landlords who make certain energy saving improvements to
their properties could reduce the tax they pay. If you're a landlord renting out residential property
you could do this by claiming the Landlord's Energy Saving Allowance
(LESA). You can claim LESA for what you have spent on:
-
Cavity wall and loft insulation, after 6 April 2004.
-
Solid wall insulation, after 7 April 2005.
-
Draught proofing and hot water system insulation, after 6 April 2006.
-
Floor insulation, after 6 April 2007.
You can claim LESA up to 1st April 2015, when the availability of this allowance will end.
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Disclaimer: The above information was
compiled in May 2012 and may be subject to change. Always carry out
your own research as no responsibility can be accepted if you suffer
any loss as a result of relying upon this information.
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