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A guide to letting for landlords
The following article gives advice about letting a property.
If you have a mortgage or loan on the property you must inform your lender in advance of any letting and get their consent. If you do not do this you may breach your mortgage conditions and could have potentially serious consequences. If the tenure of the property is leasehold - for instance, a flat in a block or converted house, you may need to obtain the consent of the freeholder or the Management Company for the building. Make sure the property is adequately insured You must inform your insurance company of your plans to let a property as your cover and premiums may be affected. Failure to do so may result in refusal to pay any subsequent claim. You will need to ensure that you are covered for third party/public liability so that you are covered against any accidents. Other insurance products worth considering include protection against rent arrears and legal costs. Comply with safety regulations As a landlord you have a legal obligation to provide a safe property for your tenants to live in. All gas equipment must be serviced annually by a suitably qualified engineer and the relevant safety certificates issued before a tenant can occupy the property. You should also ensure that all equipment is serviced regularly and provide instructions/user manuals so tenants know how to safely operate appliances and equipment. Further information about safety can be found on the Health and Safety Executive Web site at www.hse.gov.uk. The consequences of endangering the health and safety of tenants are very serious for landlords and can result in fines or a prison sentence. The condition of the property We have found from experience that a clean and tidy property attracts good quality tenants. A property that has been maintained to a reasonable standard of decoration should achieve a good level of rent. Try to keep the interior decoration plain, light and neutral. This will appeal to a broader range of tenants and maximises the chances of finding tenants. Decide whether to let the property furnished or unfurnished? You have the option of letting your property fully furnished, part furnished or unfurnished. What is most appropriate will depend on the type of property, the type of tenant you are trying to attract and the standards expected in your area. Furnishing a property does not guarantee that you will be able to charge more rent for it. In most cases you will be able to, but the difference is relatively small when looked at on a monthly basis. Having said that, some exclusive properties will almost be required to be furnished to an exceptional standard. As a guide, tenants usually prefer smaller properties such as one and two bedroom flats to be furnished, whilst larger houses, which attract families who probably already have their own furniture are in greater demand when let unfurnished. However, as with everything in life you will always get exceptions to the norm. From a legal perspective, there is no difference in the type of tenancy agreement for a furnished or unfurnished property. What is the definition of an unfurnished property? An unfurnished property will have only the bare minimum. This must as a minimum include carpets or other floor coverings, curtains and white goods such as a fridge and freezer, oven and possibly a washing machine. With an unfurnished property you will not be eligible for the 10% wear and tear taxation allowance. What is the definition of a furnished property? Furnished means different things to different people, with some properties that are let as furnished but have little more than those items found in an unfurnished property. Most letting agents will indicate that the furnishings are somewhat sparse, by advertising the property as part furnished. The minimum requirements of a furnished property must include kitchen appliances, fixtures and fittings, curtains, carpets, beds and other lounge furniture. Then there are some landlord that will provide absolutely everything, from kitchen utensils to bed linen. The crucial thing is that a fully furnished property should be ready for immediate occupation. One of the major downsides to letting a furnished property is the increased cost of equipping the property in the first place. This can add a substantial amount to the overall cost of letting the property. Items will get damaged and become dirty with heavy use, so as a rule of thumb use durable items that can be easily replaced and are relatively inexpensive. In addition to supplying and replacing the items found in a furnished property, you are also required to ensure that all furnishings are compliant with safety regulations. Who is responsible for Council Tax, Ground Rent and Service Charges? Whilst the property is let (for a period longer than 6 months), the tenant is responsible for paying the Council Tax directly to the local authority. If the property is not occupied, the landlord is accountable for the council tax on the property. It is in your best interest to let the council know when there is a change of occupancy as you will be held responsible until they are informed of the change in occupancy status of the property. As the landlord you will usually be responsible for maintaining the property. It is also normal for the landlord to pay the Ground Rent or any Service Charges on the property. You should agree who is responsible for the payment of other bills (gas, electricity, telephone) with the tenant and have this stated this clearly in the tenancy agreement. The tenancy agreement The Housing Act (1988) has resulted in greater protection for the landlord. If you have any questions and would like more information, we can advise you on the most appropriate letting agreement to suit your circumstances. You should provide one set of keys for each tenant. For properties that are managed by us, we will arrange to have duplicates cut as required. What is an inventory check? As the landlord, you must provide an inventory for the property that can be signed and agreed upon by both tenant and yourself at the start and end of the tenancy. The letting agent will draw up an inventory and guide the tenant through the signing. An inventory can help clarify and settle any disputes that may arise due to loss or damage during the tenancy period. How will I receive my rental income? You will need to discuss with us how you will receive your rental income. Do not be afraid to ask your letting agent questions. They are there to help you with the letting process and will be able to advise you if you are unsure of anything. Will I have to pay tax on rental income? You will normally be charged tax if you receive rent from letting property. The amount will depend on whether you are classed as a UK resident or not. For tax purposes most business expenses arising from renting your property such as:
Following these simple guidelines should help make the letting experience trouble free and financially rewarding. |
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