Thinking of becoming Landlord...Many questions

lordmoney

Hiya everyone,

I currently own a property and a big chunk of my mortgage has been paid off with my current property.

I'm thinking of either buying a 2nd property (BUY TO LET) or renting my own in order to purchase another one for myself (LET TO BUY). Now please accept my apologies in advance if I say anything stange as I'm very new to this and want to make sure that I know what I'm getting myself into. I'm hoping some guidance would help me to get on the right tracks.

1. What is the easier way to get a mortgage? Buy2Let or Let2Buy?
2. If I do go ahead and become a landlord, am I classed as self-employed?
3. Am I allowed to claim expenses on any maintenance on a rented property in tax terms, i.e. as a loss for example?
4. How does loss/profit affect me when it comes to tax?

Thanks again

HappyMJ

1 either a broker will help you
2 you are not self employed
3 maintenance expenses yes. capital expenses no but they can be claimed against capital gains tax when you come to sell. losses can be offset against other income or carried forward to future years.
4 you pay the tax or if employed you can have your tax code adjusted so your employer pays the tax for you.

lordmoney

Thank you very much HappyMJ for your prompt reply.

Please could you kindly give me a more detailed explanation regarding question 3:-

1. By capital expenses, you mean the money spent buying the property? If so, I'm not too fussed about this one.

2. Regarding maintenance -Lets say that I'm renting a property for £400 per month, but tenants say they need certain repairs carried out, such as damp course, decorating, roofing etc and these have cost me a large £1000...what can I claim from these and how much is allowed?

Sorry for these noob questions, but I need to be sure I know what I'm getting into.

theartfullodger

Read this lot...
http://forums.moneysavingexpert.com/showpost.php?p=41160642
and buy a book on the subject & read that.

Have a look at landlordzone forums also..

With respect I suspect you don't realise what other questions you need to ask...

lordmoney

Thank you for the link.

I'm not sure if that answers my question relating to tax issues.

G_M

lordmoney wrote: »

Thank you for the link.

I'm not sure if that answers my question relating to tax issues.

It has links within it to the relevant HMRC website (as well as links to many other sources of information).

Rather than seeking answers to a couple of Qs that happen to have occured to you, read the extensive links and you'll suddenly realise there are answers to 100s of other Qs you have not yet thought to ask.....

lordmoney

I understand, thank you.

Cautious_Optimist

Why do you want to be a LL?
What's your background?
Read up on a few stories about nightmare tenants before you go any further...

ognum

Cautious_Optimist wrote: »

Why do you want to be a LL?
What's your background?
Read up on a few stories about nightmare tenants before you go any further...

cautious, are you a LL?

There are of course some nightmare tenants and nightmare LL but in my experience, and I am a LL, the majority of tenants react to the way they are treated and if a LL responds to their issues they pay the rent on time and respect the property that is their home.

G_M

Like you I do not employ agents to manage. Just to 'tenant find'.

My view is that since I will have to deal with the tenants,
a) I want complete conrol of the process
b) I want complete conrol of the choice

I simply use agents (sometimes) as a convenient way to find potential tenants. I do not let the agent do more than pas me the names. I meet them, credit check them, reference them, and get their signatures/money myself, + manage the transfer of utilities, inventory etc etc

If you rely on the agent for this, if they mess up you have little come-back since you will have no contract with them 6 months later.

lordmoney

Thank you for your replies everyone.

@ cautious - I have to agree with ognum in that there are good and bad tenants, but it all depends on the correct checks and how you behave as a landlord. FYI, I'm not a LL, but I have helped a friend manage his tenants whilst he's been working down south. Mostly he's been paid on time, but he once got a tenant who did a lot of damage to the property.

I'm fully aware of these risks, but my main aim other than what damage tenants from hell can do was to understand the tax side of it, such as what I'm recouping costs I'm entitled to, can i recover any damage caused by tenants as a loss, etc.

@ G_M - So do you pay the agent for passing tenants to you? What would you recommend for a newbie LL? Agent or no agent?