Being a landlord....&.... letting through agent

Alias_Omega

I am new to this Landlord thing, well within 5 weeks our house will be added to the list of rental property within the estate agents.

Our mortgage is £292 a month, Our consent to let has been completed and returned (results pending - but told should not be an issue), We have sourced our letting agent and understand the fee's related to them. We have landlord insurance quotes and thats it..


What i dont understand is -

What happens to council tax upon us vacating the property?
What happens to the water bill upon us vacating the property?
What happens to the utility companies upon us vacating the property?


We understand that each month we will have to pay -

Mortgage
Landlord Insurance

We have an idea of proposed rental income, to allow us to accept DSS / LHA tenants. Letting agent fee's are 10% of monthly income, with £175 + vat taken upon new tenant taking our house.

If we rent the house our for £380 per month, that will mean that we will pay the letting agent £44.65 a month (inc of vat). This leaves us with a income of £335.35 each month from the rental of our house, based on it being occupied for the 12 months.

What we dont really understand is how to avoid paying tax on this income at a severe rate, and lose it within repairs etc. We planned to use an accountant to help us with this next year.

What we dont full get it what can be written off from the amount of income to reduce the amount down, but we believe it to be -

Interest on Mortgage
Repairs to property (it needs small bit of repointing / concrete in garden repaired in 12 months due to wear and tear )
Costs to inspect property (a grey area as ill be on overseas landlord)

Garden maintenance if the property is empty
Council tax / Water rates / Utility bills whilst property is empty


Is there anything else that i might of missed from my searches.

When they relate to the Interest on the Mortgage, if our mortgage was £292, we guess that we would be paying close to £160 a month Interest, and £130 on Capital. Is that £160 a month deductable, if so that half the rental income gone...

Regards,

Alias

jennikitten

What happens to council tax upon us vacating the property?
What happens to the water bill upon us vacating the property?
What happens to the utility companies upon us vacating the property?

You will need to charge the tenants for the council tax unless this is covered by the letting agency.

For all the utilities, make sure you take any necessary readings, pay off in full and either close the accounts or put them in your tenants' names, with their agreement obviously. Make sure it's clearly outlined in their contract that they are responsible for bills and council tax. Alternatively you could keep them in your name and charge per month, but imo that's a lot of hassle.

Once you get used to it, I would recommend dropping the agent and advertising privately (on the Internet, through friends, through local newspapers/message boards/post offices etc. as you'll save yourself a lot of money in exchange for a bit more hassle.

As far as I was aware, landlords have a certain limit they can claim in rent (for some reason I'm thinking it's around £3k a year?) and only after that it's taxed.

CloudCuckooLand

check out;

Agent hasn't carried out my wishes.... help!

http://forums.moneysavingexpert.com/showthread.html?t=2120873


You sound like you are trying to think of everything, but there are pointers to Landlordzone, Landlord's Associations etc that may be useful.

Alias_Omega

jennikitten wrote: »

What happens to council tax upon us vacating the property?
What happens to the water bill upon us vacating the property?
What happens to the utility companies upon us vacating the property?

You will need to charge the tenants for the council tax unless this is covered by the letting agency.

For all the utilities, make sure you take any necessary readings, pay off in full and either close the accounts or put them in your tenants' names, with their agreement obviously. Make sure it's clearly outlined in their contract that they are responsible for bills and council tax. Alternatively you could keep them in your name and charge per month, but imo that's a lot of hassle.

Once you get used to it, I would recommend dropping the agent and advertising privately (on the Internet, through friends, through local newspapers/message boards/post offices etc. as you'll save yourself a lot of money in exchange for a bit more hassle.

As far as I was aware, landlords have a certain limit they can claim in rent (for some reason I'm thinking it's around £3k a year?) and only after that it's taxed.

I am going to be an overseas landlord, so no real chance to let the house personally, so will give the landlord access to repairs etc whilst were away.

Im trying to cover things incase the house is empty when we vacate in a few weeks. A last minute check list & work out a budget to be allocated in the uk of the house being empty for the month.

I could probably rent it myself to a close member of the family, but as we wont be in the uk, we would be knackered.

On my list is a local handyman, an old woodworker...just need a plumber & electrician now.

Alias_Omega

CloudCuckooLand wrote: »

check out;

Agent hasn't carried out my wishes.... help!

http://forums.moneysavingexpert.com/showthread.html?t=2120873


You sound like you are trying to think of everything, but there are pointers to Landlordzone, Landlord's Associations etc that may be useful.

I did check out landlord zone, but there is alot of stuff and not many guides for first timers.

I hopefully once im set, will update the thread in Post #1 and turn it into a guide for first time letters.

As i wont be in the uk, i can use skype to ring home, but pretty much everything else will be done by the letting agent / close family.

Edit after reading that thread..


I plan for the Letting Agent to supply me with pictures via the internet of the house room-by-room plus gardens on check-in of the tenant. Then to supply me pictures of the 6 monthly inspections they have carried out. This would enable me to have a copy of the house before, and at stages through the rental, not to pry on anyones life, but to look at maintenance side of things, and how things are being kept.

My wife has family 10 miles away and plan for him to check-up on the house if its empty, and too attend the inspections on my behalf, and to inspect if work it to be carried out etc. My ears & eyes.

In fact, this family member wants to rent the house from us, and we are seriously considering it. But family are family, and a business is s business.

We would ensure that the rental income was lower than now, & happy for both sides..

The only issue i can see is that they are living in a council house at the minute, with a possibility to be claiming income support, so if they moved into our property the rental would have to proceed through the letting agent, and they would lose the ability of a council house unless evicted from us.

Regards,

Alias

Fire_Fox

You need to pay all the bills up to the date that the tenant moves in: the council tax you may be able to put onto the second home rate or even empty (if no furniture). The energy you may be able to put onto a 'no standing charge' tariff and the water you pay as normal, you will need to supply final readings DON'T rely on the tenant to do it. Have you got a gas safety certificate? Have you registered for income tax and informed the inland revenue that you are abroad? Have you redirected your post? Don't want tenants getting hold of your personal information ....

carlsberggal

You would also need to still pay for the buildings insurance - the tenant would pay for the contents insurance

Alias_Omega

Fire_Fox wrote: »

You need to pay all the bills up to the date that the tenant moves in: the council tax you may be able to put onto the second home rate or even empty (if no furniture). The energy you may be able to put onto a 'no standing charge' tariff and the water you pay as normal, you will need to supply final readings DON'T rely on the tenant to do it. Have you got a gas safety certificate? Have you registered for income tax and informed the inland revenue that you are abroad? Have you redirected your post? Don't want tenants getting hold of your personal information ....

Hi,

The letting agent will supply us with the final meter figures if a tenant moves in as we wont be here to do it.

Unsure about inland revenue & income tax thing. I still pay taxes & NI through work, we still receive child benefit, working tax credits etc. Its a joint income, so believe we split it 50/50. Wife is unemployed so covered on here side, but a 2nd income for me.

We have the mail re-direction forms here to fill in.

At the minute the gas & electric are on a direct debit, so could clear the accounts into credit, and reduce the montly payments. Both meters are quarterly meters, so only the boiler ticking over keeping the house nice and warm.

Will ask a family member to visit / stay now and then to keep it un-occupied. I wonder how many days before it resets the 30 days un-occupied.

carlsberggal wrote: »

You would also need to still pay for the buildings insurance - the tenant would pay for the contents insurance

Yes, covered by the Annual Landlord Insurance.

At the minute we are going for worst case tenant quotes, which comes out at £257 a year for DSS / LHA.

tbs624

Alias_Omega wrote: »

I did check out landlord zone, but there is alot of stuff and not many guides for first timers.

I hopefully once im set, will update the thread in Post #1 and turn it into a guide for first time letters.

All the info you need is available at LLzone, which is unfortunately down at the moment. Alternatively , join a national LL association or join a local affiliated one. Guides for those who are new to letting are best left to those who aren't themselves new to the "game"

Advice on what you may and may not set against rental income is freely available from HMRC and from .gov.uk web pages. They can also give you the necessary guidance on the rules when LLs are non UK resident.

How did you go about choosing your letting agent? Ultimately, you are responsible for what the LA does , or doesn't do, on your behalf. Do you fully understand the tenancy deposit regulations? Is there an EPC available for this property? See this link for what can happen, even if using an LA. If you are using a relation to carry out property inspections does the relation understand the basics of LL&T law?

Alias_Omega wrote: »

I plan for the Letting Agent to supply me with pictures via the internet of the house room-by-room plus gardens on check-in of the tenant. Then to supply me pictures of the 6 monthly inspections they have carried out. This would enable me to have a copy of the house before, and at stages through the rental, not to pry on anyones life, but to look at maintenance side of things, and how things are being kept.

(my highlighting) Maybe we'd be better have a list entitled "101 Ways for a Newbie LL to Fall Out with Their Ts and End up with Regular Void Periods". I suspect that the resultant thread would be a long one.;)

You can, of course, ask your agent to photograph, say, a damp patch on a wall, slipped roof tiles or evidence of damage to a kitchen worktop and to send you a copy . However, most Ts would view it as a gross intrusion for regular photos to be taken - showing their belongings, their furniture, their life etc - supposedly to give you evidence you that they are *not* damaging the property.

N79

Alias_Omega wrote: »

Unsure about inland revenue & income tax thing. I still pay taxes & NI through work, we still receive child benefit, working tax credits etc. Its a joint income, so believe we split it 50/50. Wife is unemployed so covered on here side, but a 2nd income for me.

As you will be non resident you need to register as a non resident LL with HMRC otherwise your Ts or your agents are obliged to deduct 20% of the rent at source and pay it direct to HMRC.

Registering to receive the rent direct is easy. You can download the form from HMRC's website.

However, if you have informed your agent that you will be overseas and they have not raised this point then I think you need to think very carefully about the competance of your agents. What else will they forget (eg S48 notice)?

I would also forget your idea of having picture taken during inspections. This will not be acceptable to most Ts and is, quite frankly, abusing their right to quiet enjoyment. Inspections are to allow you to assess the state of repair of the property and to identify repair issues (which may include the actions of the T), not to investigate how a T decides to live in a property.

Since you intend to maintain child credit etc am I right in thinking that you fall into an exception category as these payments can not be made for children who are not normally resident in the UK? Even though your wife has no job as a joint owner she will still need to fill in a UK tax return as she will be in receipt of the rental income. Don't forget that you will also need to comply with the tax requirements of the country in which you will be resident and will need to decide how best to take advantage of any double taxation treaties that exist.

If there will be a substantial tax liability and you will be officially non resident then it will be worth seeking professional advice. Any tax paid by fully non resident LL's is really a voluntary contribution to the UK exchequer. (Grabs tin hat). Note that I am not advocating tax evasion in any sense.

N79 (a non resident LL)

lazer

Alias_Omega wrote: »

I am new to this Landlord thing, well within 5 weeks our house will be added to the list of rental property within the estate agents.

Our mortgage is £292 a month, Our consent to let has been completed and returned (results pending - but told should not be an issue), We have sourced our letting agent and understand the fee's related to them. We have landlord insurance quotes and thats it..


What i dont understand is -

What happens to council tax upon us vacating the property?
What happens to the water bill upon us vacating the property?
What happens to the utility companies upon us vacating the property?


We understand that each month we will have to pay -

Mortgage
Landlord Insurance

We have an idea of proposed rental income, to allow us to accept DSS / LHA tenants. Letting agent fee's are 10% of monthly income, with £175 + vat taken upon new tenant taking our house.

If we rent the house our for £380 per month, that will mean that we will pay the letting agent £44.65 a month (inc of vat). This leaves us with a income of £335.35 each month from the rental of our house, based on it being occupied for the 12 months.

What we dont really understand is how to avoid paying tax on this income at a severe rate, and lose it within repairs etc. We planned to use an accountant to help us with this next year.

What we dont full get it what can be written off from the amount of income to reduce the amount down, but we believe it to be -

Interest on Mortgage
Repairs to property (it needs small bit of repointing / concrete in garden repaired in 12 months due to wear and tear )
Costs to inspect property (a grey area as ill be on overseas landlord)

Garden maintenance if the property is empty
Council tax / Water rates / Utility bills whilst property is empty


Is there anything else that i might of missed from my searches.

When they relate to the Interest on the Mortgage, if our mortgage was £292, we guess that we would be paying close to £160 a month Interest, and £130 on Capital. Is that £160 a month deductable, if so that half the rental income gone...

Regards,

Alias

Instead of actual repair costs - it is possible to take 10% of the rental income as wear and tear allowance, you can elect wether to use actual costs or 10% - however approach must be consistent year to year.

Although, this depends on if the house is rented furnished or unfurnished