Virgin Landlord... any tips

md_14uk

I am about to but my first invesment property (well i'm buying a new house and renting out my old one!). What I want to know is what are the top five do's and don't of being a landlord!

Thanks in advance

MD

Jorgan_2

I don't have a top five do's or don'ts however I have found the following to be useful; always take photos of the property, close ups of carpets etc, get two sets printed, get the tenant to sign the back of one set, which you keep, the other set the tenant keeps. They seem to look aftr the place a little better that way. Always ensure the bond is more than one months rent, tenant less likely to do a bunk. If you are finding the tenant yourself, try & meet them at their exisiting home so you can see if you want them as a tenant or not.

Make sure the property is clean & tidy when doing viewings, if the tenant has any problems with the property, get them sorted ASAP. Tenant is more likely to respect you if they think you respect them & their 'home.'

Pennywise

Well I'm not a landlord, but I am an accountant, so I can give you some tips regarding the tax position.

1. You have already made the best decision - to buy a new house to live in and rent out your old one. This is known as "let to buy" rather than "buy to let" and works well because you'll get some principal private residence relief on your previous house, now let, and also lettings relief of upto another £40,000 of exempt gain. Well done!!!

2. Keep full details and documents relating to the costs of renovating all your properties. Such details are needed when you come to sell one or other and you need to calculate the profit made for CGT purposes. Many people don't keep records and so can't claim relief for the money they've spent. Keep these until you sell the relevant property - forget any notion of destroying after 2 or 6 years or whatever.

3. Keep full details and documents relating to the expenses of whichever house is being let at the time. Your rental income profits are reduced by the expenses you incur, such as mortgage interest, gas certificates, postage, stationery, management fees, insurance, maintenance, etc., etc. Basically think of anything that costs you money that you wouldn't have spent if it hadn't been for renting out the property and claim it.

4. Make sure you claim all the mortgage interest allowable. The figure isn't the money borrowed against the property, nor the amount spent on buying the property. In your case, the maximum is the value of the property when it was put to rent. So if it is worth £250,000 when it is first rented out, you can claim mortgage interest relief on £250,000 of borrowing. Even if you have taken out a mortgage secured on and to finance your new house, you can claim mortgage interest relief on it. So you claim whichever mortgage has the higher interest rate first then the balance, until you get to £250,000. This is a relatively new change in the rules and is still little known.

5. If you are legally married or in a legal civil partnership, you can freely transfer the ownership of the property between yourself and spouse/partner without tax effect, which may be useful to get the taxable income taxed on the lower tax rate person and ultimately to put it in joint names to get two lots of reliefs upon final sale. NB this doesn't work if you are "just living together" or own it jointly with other friends or family.

westernpromise

Pennywise wrote:

4. Make sure you claim all the mortgage interest allowable. The figure isn't the money borrowed against the property, nor the amount spent on buying the property. In your case, the maximum is the value of the property when it was put to rent. So if it is worth £250,000 when it is first rented out, you can claim mortgage interest relief on £250,000 of borrowing. Even if you have taken out a mortgage secured on and to finance your new house, you can claim mortgage interest relief on it. So you claim whichever mortgage has the higher interest rate first then the balance, until you get to £250,000. This is a relatively new change in the rules and is still little known.

Are you saying that if I have a flat, worth £400,000 when it was first let out, I can claim mortgage interest on that £400,000 as an expense even though the actual mortgage on the flat is only £289,000??

Kaminari_2

Make sure you know what your legal obligations are and your rights. Join the landlord association for support, stay friendly and supportive to your tenants but give them space. And as J said above, fix things as soon as possible. It makes you look like you care. Being a landlord is not only about getting money for a property but also providing a service.

WHA

westernpromise wrote:

Are you saying that if I have a flat, worth £400,000 when it was first let out, I can claim mortgage interest on that £400,000 as an expense even though the actual mortgage on the flat is only £289,000??

Look at example 2 on:-
http://www.hmrc.gov.uk/manuals/bimmanual/BIM45700.htm

BobProperty

(Where've you been Westernpromise?)

1. Think about what you want from this investment, income or capital gain.
2. Don't buy anything with less than 12% return.
3. Join a Landlord group, go on some courses, meet fellow landlords and keep up to date with the law.
4. Be prepared for out of hours work and emergencies.
5. Remember you are running a business.

md_14uk

bump - just moving it up the list!

Thanks guy's it's all going in my soon to be set up house renting file... any one else have any advice?

Jorgan_2

It may sound obvious but keep a seperate bank account for the property, its easier to keep records of income, outgoings etc.

realwildone

Prey for a good tenant and that the value doesnt go down

clutton_2

get the best quality Assured Short hold TEnancy AGreement you can (probably from a landlords association ) - a few quid skimped here, could cost you thousands down the line. NEVER give new tenants a 12 months agreement they may turn into the tenants from hell, and y ou will have the pleasure of their company for a long-unpaid-rent-period !!

you have to give your tenants "Quiet Enjoyment" which means you have NO legal right of entry whatsoever, except for an emergency (gas leak or flood basically )

Credit check them to the highest level. Get a tenancy application form (free from https://www.landlordzone.co.uk) get the deposit and first months rent in cash and do not give keys will this has happened. keep a spare set of keys.

good luck !!!