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Buy to let

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What Do You Need to Rent a House?

26/04/2017

Renting a house may not come easy when someone has less knowledge about the requirements. You need a list of documents. To most people, compiling these documents and everything else that makes a person considered trustworthy is what is most stressful. Searching for a house or property for rent may not be that much of a hassle as long as you know the specifications of what you want. That is the type and size of the house, the geographical area and, the amount of rent you will be paying. For all those, you can depend on an agent but for the documents you must get involved. So, in actuality, what do you need to rent a house? Check out below:

Proof of Identity

Who are you? Your prospective landlord will need to establish your identity as a requisite of the law. The law requires that only persons with over eighteen years are liable to rent property. Also, what is your immigration status, are you legally entailed to rent. Such are the questions you can expect when seeking to rent a house in the UK. To proof your identity, you will need to provide:

  • A photo ID. This may include a valid driving licence or current passport,
  • An electoral register entry,
  • A UK visa and any other documents permitting you to rent in the UK if coming from abroad, and a
  • Tax, utility bill or any official letter dated within the last three months.

How will you pay the rent?

Your landlord is permitted to know of your capabilities to paying the rent. So they will need tangible evidence. For the employed folks, it is easy. You will be asked to provide a current employment contract, a letter from your current employer confirming your salary amount and job title. Tax return evidence and recent pay slips dated within the last 3-6 months may also be necessary.

Nonetheless, no need to fret if you are a freelancer or self-employed you can also rent. However, you will have to provide much proof that you are earning and can pay your rent. Some landlords will ask you for bank statements of your active account backdating to three years ago. You may also have to give him or her company details, tax returns and any other certificates of earning you may possess.

References

Now that you have proofed your identity and convinced your landlord that you are capable of paying the rent, some potential estate agents or landlord may require references to confirm all that. Reference may come from sources such as your colleague or friend confirming your character. Alternatively, your employer. Besides that, if your relationship with the previous landlord was smooth you can ask them to be your referee in writing. However if not, copies of your previous timely rent payment can also serve the purpose.

If the proof is insufficient according to your landlord or agent, and they think you are unable to support your rent payment, you can bring in a guarantor to stand in. Nonetheless, the landlord can ask for a significant amount of rent upfront to clear you.

Feel free to contact an expert for more info on what you need to rent a house. 


Some of the items in the housing disrepair protocol

21/02/2017

A housing disrepair protocol is a systematic procedure that is followed in cases where a tenant believes that a landlord has neglected his housing repair responsibilities. Homes must be maintained in proper working condition. Tenants have the right to live in a comfortable environment. The law has clearly defined both tenants’ and landlords’ responsibilities towards property maintenance. Responsibilities of tenants are usually minor. It is the landlords who must account for major repairs in the house. Neglect of property maintenance forces tenants to live in dilapidated environments. These tenants have the right to sue their landlords.

Use of Housing disrepair protocol

The purpose of the housing disrepair protocol is to guide tenants and landlords in solving cases of house disrepair without engaging the law. Intervention of the courts can only be sought when all procedures in the protocol have been followed in vain. It is the tenant who usually initiates housing disrepair disputes. This is because they usually have lesser house repair obligation than landlords. Nevertheless, they cannot seek help of the court before following the procedures of the housing disrepair protocol to the latter.

The reason why the protocol is given first priority over the court is the long and expensive litigation procedures that are associated with court cases. A tenant who approaches the court for help in disputes of house disrepair may have to pay more for the litigation process than the cost of repairing the house. This is also true for landlords. It is more economical for the two to solve the disputed between themselves. Court cases may also take long because evidences must be collected and witnesses questioned. All these litigation process are inconvenient and should be a last option.

How to start Housing disrepair protocol

First in the dispute resolution procedure for cases of house disrepair is involvement of a mediator. Landlords and their tenants are encouraged to seek the help of a mediator before presenting their case to court. The protocol gives examples of mediators that landlords and tenants can engage in dispute resolution. Each of these mediators are suited for every type of tenancy that in the UK. Council tenants can seek mediation from their local authorities. The local authorities have procedures, rules and regulations for settling out disrepair disputes. However, disputes that are solved by the Local Authorities are limited to house repair costs not exceeding £250.

You can get information about how the Local Authority settles disputes from the Department of Communities and Local Government, Eland House and Bressenden Place. Housing Association tenants can present their complaints to the Housing Ombudsman Service.

Other claims within Housing disrepair protocol

There is much more to the housing disrepair protocol. Each stage of the protocol is meant to prevent the dispute from escalating beyond unmanageable level. It is also important to note that the nature of disrepair claims are never similar. The cost of disrepair is different from one claim to the other. These are treated differently. Disrepair may also involve personal injury claims. This may call for involvement of a General Practitioner or even a more specialised medic. Every situation is dealt with differently. Parties involved in disrepair claims must go keenly go through the housing disrepair protocol so that they know the procedures that they are expected to follow.

Tax for landlords made easy

17/02/2017

Taxes are always a headache. They are difficult to understand and pay. Unfortunately, they have to be endured by anyone who earns an income. The tax for landlords are those taxes that are levied on every income that a landlord makes. Rental properties are viewed as a source of revenue just like any other jobs. Therefore, they must be taxed. The rate of income tax on rental properties has been changing in the past few years. Keeping up with the changes can make these taxes difficult to understand. What a landlord needs to know is the tax group that he is placed in every year. This is what underlies your obligation as a taxpayer.

When and How to start planning taxes?

Payment of tax begins right when you start renting out your property. You must tell the HM Revenue and Customs (HMRC) that you are renting your property. Because if the complexity if landlord’s income taxes, you may not know that you actually own the HMRC some taxes. This usually happens to new owners who build their properties and start renting them out without consulting the HMRC. HMRC will take legal action against you if you start renting without paying taxes. It is important for a landlord to consult the HMRC whenever he realises that he has not paid taxes since he started renting out his property. The earlier you make contact, the more chances are that the HMRC will let your fault slip. Otherwise, if he HMRC finds you renting out an untaxed property, they may charge you some penalties.

Levels of Taxation

The most important thing that you need to know is the tax bracket you are in. Every income above a given amount is taxable. Once your income reaches a taxable income, you should expect the HMRC to knock on your doors. Even taxable incomes are grouped into levels. There are three levels of taxation. Each of these levels are determined by the amount of money that a landlord makes from his property. The more you make, the more taxes you will have to pay.

The very first level of income tax is the basic income tax. This is just a step higher than personal allowances. Personal allowances and tax reliefs are other complications of taxation that you will need to know about. The basic tax is the tax that is charged on a landlord who earns anything between £11,000 and £43,000. Tax charged on any income owner income that falls within this level is 20% of the income. An owner who earns £30,000 will be charged £6000, and £8000 for the one who makes £40,000. All these rates fall within the 20% tax rate and attract a tax of 20%. The 20% rule applies to all landlords earning incomes that fall within the basic tax rate.

The other two rates of taxation are the higher rate that attracts 40% tax and the additional rates that attract 45% tax. It is important to know which tax rate you fall in. You should also know of tax allowance that the HNRC can give you.

Step by step guide on how to evict a tenant

03/02/2017

Tenant eviction is a painful process to both the tenant and the landlord. A landlord loses his source of income when he throws out a tenant. He at least gets to keep his property. The most affected party in an eviction is the tenant. The most common cause of eviction is a failure by a tenant to pay his rent. Tenants who cannot pay rent probably do not have any money. They are forced to seek alternative means of accommodation urgently. Most residents end up living in the streets. The court has various mechanisms for protecting tenants. However, they can only do so much. This implies that eviction is sometimes the only option that a landlord and the court has. Eviction must be carried out in legally acceptable manner. Landlords and estate agents must know how to evict a tenant.

Everyone needs a roof over his head. The right to shelter is recognised and respected by the law. The most common form of housing in the UK is rental housing. This is where a tenant pays a given amount of money to a landlord or an estate agent in exchange for a living space. Longevity of tenancy is subject to all parties to the tenancy abiding by an agreement. Included in the conditions of tenancy is the amount of rent to be paid and the conduct of all sides. Breach of this agreement leads to termination of tenancy.

Legal grounds for Eviction

There are several grounds for tenant eviction. The most common reason for evicting tenants is an accumulation of rent arrears. These include violation of a lease, damage to property, illegal drug activities and the expiration of a contract. It is important for a landlord to talk with a tenant before evicting him. Eviction should be a final option and not the preferred one. Residents are usually willing to speak with their landlords about matters that affect their tenancy. If rent arrears are the cause of the dispute, the tenant may propose ways of paying the rent. Those who are rowdy or negligent may also change their behaviours. Discussion between tenants and landlords helps resolve tenancy problems amicably and in the most human way possible.

Notice of Eviction

The notice of eviction has to be served properly. A tenant can easily deny receiving a notice. It is important for the landlord to keep a copy of the notice as evidence. The owner can take the notice to the tenant by himself. It is even better if a witness accompanies him. If the tenant fails to obey a duly served notice, the landlord is allowed to seek the help of the judicial system.

Refusal by Tenants

If the tenant refuses to listen to his landlord, the landlord has the right to throw him out. There is a legally accepted procedure for tenant eviction. An owner must follow every step in the process or face legal action. The first thing he needs to do is serve the tenant with a notice of eviction. This notice must be written clearly. Grounds for removal must be included in the notice of eviction. Notice of eviction gives the tenant maximum of two months to vacate the property.

What rights do you have as private Tenant rights?

01/02/2017

As you settle as a private tenant in the UK, you are likely to be an assured shorthold tenant. As per the type of tenancy and accommodation, you may have a different kind of tenancy. As a tenant, you have to know what kind of tenancy you fall under. This helps you know your private tenant's rights or any other rights that apply.

Assured Shorthold Tenant

If your private tenancy started after 28th, February 1997, you are automatically an assured shorthold tenant. Tenants before that may have to confirm it with their landlord. As an assured shorthold tenant, the landlord is responsible for the particular type of repairs. This are necessary repairs, and you have a right to claim it. If the landlord tries to evict you instead, it Is known as “retaliatory eviction”, and you can dispute this in a court.

Private Tenancy Deposits

As a tenant, the landlord will ask for a deposit for unwarranted damages you might cause to the property. However, as a private tenant, you are assured to have the deposit returned to you as your tenancy ends. The failure of the owner to inform you of the scheme being used during the tenure and refusal to return the deposit is against your right, and you can dispute the case.

Housing benefits

Housing benefits help tenants with financing difficulties pay their rent. This is a right you have as a private resident, and you need to request approval and check how much you are going to get. This benefit requires eligibility and isn’t equal to the total tenancy cost.

Right to Notice

As a private tenant, you have the right to get prior notices from the landlord for activities that affect your tenancy. In a case the landlord wants to evict you, they have to follow the due legal process to inform you of the cause and other information related to the eviction.

Tenancy documents

As you move into the tenancy legally, you are entitled to the tenancy documents. These include agreements made before the tenancy started, deposit schemes documents and others that relate to your legal agreement with the landlord. You are entitled to this documents within the first month of the tenancy.

Freedom from illegal evictions

As per your private tenancy agreements and laws, if you follow your responsibilities, you are entitled to have a peaceful time with your home without annoyances from the landlord or any other parties. The landlord cannot illegally evict you and cause you a legal burden. Any unhealthy confrontations, threats and forcing illegal evictions from the landlord can be a case to prosecute the owner.

These are some of the primary private tenant's rights you have to understand as a private tenant or a private landlord. Following a search for a tenancy, you have to verify you have these rights before you sign an agreement. If you are within the boundaries and follow your responsibilities you do not have to fear having illegally evicted, services cut or be harassed by the landlords.

Landlords and house in multiple occupation

31/01/2017

House in Multiple Occupation (HMO) represents a property with 3 or more residents that aren’t part of a single family or household. This is a modified definition of HMO from the Housing Act of 2004. The house will have split bedsits for each resident, and each of them will have a different agreement with the landlord. For a household to be considered an HMO, it should be mainly used to accommodate tenants and as residents should use it as their principal residence.

As a landlord, it is your responsibility to register the rented property as a House in multiple occupation to your local authority. Once notified, the local authority will access the living space for all the tenants to see if they are being handled properly. After the assessment, if you are found to be maintaining the property efficiently, you will be giving an HMO licence. If you are unsure if you need an HMO license, it is recommended to contact the local council to check if you require one.

You will not need an HMO licence if you are:

  • Living with two other lodgers in your property
  • A care home or a bail hostel
  • The property is flat share
  • The residents of the property are long leaseholders or freeholders
  • Purpose-built blocks or flats

Responsibilities of the Landlord in HMO

There are responsibilities for the owner to maintain the property properly, so it is fit for every resident to live comfortably. In doing so, landlords have to fulfil these criteria.

Fire safety:

The house in question has to have proper fire prevention measures implemented so it can prevent uncontrolled fire related accidents and provide a safe way to deal with one. There should be fire alarms, fire escapes, fire resistant door and windows. This assessment is carried out by an accredited professional. Electrical inspection of the house is necessary every five years.

Uncrowded living space:

The house should provide decent living standards for the residents. It should not be unreasonably overcrowded for every resident to live in a peaceful environment. There should be adequate cooking and washing facilities that should support the resident without the need to take turns.

An inspection will assess what requirements need work. This assessment can entitle you to get HMO renovation grant for fire security, amenities and energy efficiency work. These grants are different based on your location so that you will need more information about the grants.

These are requirements that have to comply with Housing Health and Safety Rating System (HHSRS). If you are unable to bring the house up to HMO standards, you may land yourself in big trouble.

Benefits of House in Multiple occupancy for landlords:

  • There is often higher return on your investment with HMO
  • Higher rent yield can be expected than single tenancy
  • Unlike single residency, you do not have long void periods without tenants
  • Have more control over your property.

If you have an eligible house for HMO, with a bit of added amenities like broadband, TV, phone lines and regular cleaners you can attract many tenants to your property. Students, new couples are highly interested in these type of properties so you can make a decent profit all year around with a house in multiple occupancy licenses. 

Things you need to know about Assured Shorthold Tenancy Agreements

30/01/2017

 If you have rented a property from a landlord after February 1997, you are automatically an assured shorthold tenant. Since then this has been the most common form of tenancy contract in the United Kingdom. The Assured Shorthold Tenancy (AST) agreement is a document that outlines the primary conditions, details regarding the tenancy between the tenant and the owner. The assured shorthold tenancy does not provide long-term security for your stay, and the landlord can legally evict you by following due procedure.

The assured shorthold tenancy agreement is usable to property whose rents are less than £100,000 yearly, holiday home, rented to a private company or a government body. The annual rent also should not be less than £1000 in London and £250 elsewhere in the UK.

What does Assured Shorthold Tenancy contain?

AST can include a lot of details such length of tenancy, rent payable, the person responsible for the tenancy and other details. It can be hugely in detail with terms and conditions of the tenancy. Without a rigid format, it can be sourced by a company or through online sources. However, this is a legally binding agreement and should be taken very seriously while signing the terms. As a tenant, you have to understand the agreement. As a landlord, you should use proper language and words to explain the conditions and clauses easily and not try to confuse the tenant.

The things that are to ATS agreement include are:

  • Complete details of the property including address, numbers of rooms.
  • Length of the tenancy
  • Deposit to be paid by the tenant
  • Agreed weekly, monthly or yearly rental payments and dates
  • Person who’s responsible for the water, gas, heating bills
  • Responsibility of the tenant to keep the property in a healthy condition
  • Damage, repairs and maintenance responsibility
  • Signature of both landlord and the tenant

What AST agreement protects you with?

As outlined in the AST agreement, the landlord cannot evict you without proper grounds. This is against your will and can be used to sue the owner. However if the both parties decide to end the tenancy earlier than the designated date, it can be negotiated.

The landlord also cannot increase the rent as he wishes during the tenancy of the resident. Unless you agreed to a condition allowing a rent change, there is no legal ground for the landlord to confront you with high rents.

The agreement also outlines the deposit to be paid to the landlord at the start of the tenancy period. The landlord is responsible for depositing the money into a government approved Tenancy Deposit Protection scheme and notify the tenant within the first month.

Other basic laws like indiscrimination against tenants also apply with AST agreement even though they are not outlined in the agreement. Residents are entitled to live peacefully in their home during the tenancy period without any confrontation, illegal eviction from the landlord.

Importance of tenancy deposit scheme

27/01/2017

Rent deposit protects landlords from tenant’s failure to pay rent and from damages to the property that the residents live in. This money is paid at the beginning of the tenancy. It is usually equal to the rent paid by the tenant. Rent deposit does not belong to the landlord. It may be reclaimed by the tenant at the end of the tenancy period. The landlord merely holds the deposit until the end of the tenancy. This money is protected in a tenancy deposit scheme. The scheme ensures that the landlord does not use these funds until he is allowed by law. This system also ensures that the tenant is repaid his deposit on time.

Tenancy deposit schemes are only available for assured shorthold tenancy (AST). AST is the most common form of tenancy in the United Kingdom. AST was instituted on 15 January 1989. An AST tenant is one who considers his current residence as his main home. The property that the tenant lives in is owned or managed by a private landlord or a housing association. The private owner of an AST should not be a resident landlord. Rents charged in AST must fall within the range of £250 to £100,000 per year. The property should not be used for business, and neither should it be a licensed premise.

Tenancy Deposit Protection (TDP) Schemes

Landlords are required by law to protect the deposit within the first thirty days of tenancy. There are two types of tenancy deposit scheme. One of these is the custodial scheme. In the custodial scheme, the landlord files the tenant’s money into a TDP scheme which then protects the money. TDP scheme is a government project that protects tenancy deposits. The other deposit protection scheme is the insurance-based scheme. In the insurance-based scheme, the landlord holds the deposit but pays insurance to the scheme.

Landlords responsibility

The owner must inform his tenant the type of deposit scheme he used to protect the money. He must also disclose to the deposit scheme and the tenant all prescribed information. Specified information include the amount of deposit the tenant paid him, the address that the deposit relates to and the manner in which he will repay the deposit at the end of the tenancy. A landlord who fails to disclose this information can be taken to court by their tenant. The landlord also loses his right to evict a tenant if he fails to disclose this information and cannot repay the deposit.

Return of Deposits

Deposits are returned to tenants within ten days of the end of the tenancy. The only exception is when the tenant fails defaults in rent payment or if he damages the property. The tenant of a deposit that is protected by the custodial TDP scheme is required to fill a form before getting his money back. This form enables the scheme to know that the tenant and his landlord have agreed on the amount of deposit to be repaid. In the insurance plan, an owner is required to repay the deposit directly to his tenant. Sometimes disputes arise as to how much deposit the landlord should give back. These typically occur when the tenant damages the property, but the cost of repair is less than the amount of deposit. It is the responsibility of TDP schemes to resolve such disputes.

Calculating housing benefit rates

25/01/2017

The government has established several incentives for making people live comfortably without paying too much on rents. One of these incentives is the housing benefit. Housing benefits are rent allowances that are given to tenants to help them pay off their rents. The allowance is usually less than the rent of the house. The tenant is expected to pay off the rest of the rent from his personal income. The housing benefit rates that resident can receive vary. Generally, the larger a household is, the more allowance he will receive.

Eligibility for Housing benefits

The Housing Executives administer housing benefits. The benefits are usually geared towards making low-income earners pay their rents easily. Some of the biggest beneficiaries of these benefits are those receiving state benefits, those working in part-time employment, and low-income earners. These people tend to struggle with rent payments and are more predisposed to homelessness. Housing benefits are also available to people living in hostels, lodgers and those living in bed and breakfast accommodation. Anyone who pays for tenancy and accommodation can apply for the benefits. The benefits are however not available to people living with close relatives and are not paying rents to Housing Associations, private companies or private landlords.

How much can you get?

There are many criteria for determining the amount of housing benefit that each household can get. One of these criteria is the amount of rent you pay and the type of landlord owning your property. The housing executive spends a portion of each tenant’s rent. The rest is paid for from the income of the household. If your landlord is a private freeholder, he may be forced by law to charge you lesser rent. Rents for tenants under the age of 35 who are living in a property of a private landlord can be subjected to shared accommodation rates.

The other criterion is the “means test”. Means test weighs the income of a tenant against the amount of rent he has to pay. It also puts into consideration the number of people in a household. The housing executive compares personal allowance with eligible income to decide whether to increase or decrease housing benefit to a household. The personal allowance is the state projection of what each household should spend in one week. The eligible income is what the household earns. If available income is more than personal allowance, the housing benefit will reduce. The means test is not applicable to those receiving passported benefits. They are automatically assumed to be earning zero eligible incomes.

Other things to know

Deductions from housing benefit can also be based on the number of people over the age of 18 years whom you are living with. The amount of housing benefit you receive will reduce if the person you are living with does not financially depend on you. The size of the reduction depends on the non-dependant's age, the type and amount of his income. The more non-dependant adults you live with, the lesser you will receive from the Housing Executive. These reductions will not be applied if you are receiving care from the person, or when you are blind.

Getting empty property insurance

23/01/2017

House insurance covers homeowners from financial losses due to potential threats to their properties. Threats can present themselves in the case of fire, water flooding or burglary. Referred to as insurable risks, they are popular in the UK. The homeowner is compensated for any damages caused by the insured risks. Most insurance policies cover houses that are occupied. There are very few empty property insurance policies.

Insurance companies assume that the homeowner will be at home or within reach when the damage occurs. This is because most damages are caused by humans who are either negligent or have malicious intentions. The insurance companies assume that the homeowner will be available to prevent some of the damages. Homeowners are not expected to be careless simply because their properties are insured. They must participate in risk aversion. Risk aversion keeps the companies from spending money on things that could be avoided.

The maximum amount of time that most insurance companies can allow a house to be empty is thirty days. Any damages occurring after this period of time cannot be compensated for. The policy that limits the insured’s movements can be very inconveniencing to homeowners who travel a lot. People who travel for business or holidays stand a risk of losing their properties if they stay out for more than the stipulated amount of time. The problem with empty house insurance is not limited to those travelling. Sellers sometimes have to put their properties in the market for a long time before getting a buyer. Conveyance may also take longer than the period allowed by the insurance policy. This puts the seller at risk of losing a property that is damaged while still on the market or during conveyancing.

Empty properties in the UK

Over 700 000 houses in the UK are empty. This is a large number considering the fact that the UK is still experiencing problems with housing. Chances of having a squatter take advantage of a house are high. The squatter can misuse the property and cause massive financial losses to the owner of the building. Some insurance firms have come to terms with the need for homeowners to stay out of homes for a long time. Some of these companies have extended the periods of absence to sixty days, while other others ninety days. However, many homeowners still consider this extension inadequate.

Terms of Empty Property Insurance

There are terms that homeowners must fulfil for the period of coverage to be extended under the existing policy. The owners must regularly visit the property. This helps ward off squatters and vandals. The homeowner must also add extra security to the property. He must seal letter boxes to prevent theft of mail. Entrance to the house must be protected with alarm systems and secure doors and windows. Any valuable must be removed from the home and kept in a different storage place. The homeowner must also switch off all utilities. Water leakage is one of the leading causes of flooding in properties. Therefore, pipes should not be left running. Electricity has to be switched off to prevent fires.

Empty property give you an assurance of safety in case of a unpredictable loss. There are however terms that you will have to agree and follow. If you stay away from your home or are travelling a lot, this could very well be a good time to see if your insurance provider can offer you empty property insurance.

The comparison between landlord’s responsibilities and tenants responsibilities

20/01/2017

The well-being of a tenanted property is dependent on how well maintained it is. Poor maintenance leads to the quick dilapidation of buildings. Most residents believe that house maintenance is a sole responsibility of landlords. This notion can never be further from the truth. Landlords have a role to play in the overall well-being of property. Their involvement in house maintenance is limited to major responsibilities that housing laws and regulations do not allow tenants to be involved in. Day to day maintenance of the property is tenants responsibilities. Tenants should not delegate this duty to landlords. It is the routine maintenance of a property that increases its longevity.

Primary tenant responsibilities include frequent cleaning of the premises. It is absurd to expect a landlord to clean a building. Most tenanted properties do not have residential owners. Some landlords live very far from their properties. The owners sometimes take years to visit the property. The landlords hire real estate agents to help with rent collection. The landlords cannot come to the building every other day just to clean it. The tenants must clean their premises. They may hire someone else to clean the property but must still take financial responsibility for the cleaning.

The most interior decoration is the responsibility of the landlord. A tenant is not allowed to paint a house, add a ceiling or install a fireplace. However, he must ensure that electric gadgets and the plumbing system of a house are in order. He can repair appliances, install doorbells and replace a fuse. A tenant is not allowed to replace the main fuse without the consent of the landlord or the real estate agent who is in charge of the building.

The same tenant responsibility of repair and maintenance applies to the bathroom. A landlord installs sinks, toilets and bathtubs. The type of a bathtub or toilet installed in the bathroom is at the discretion of the landlord. However, a tenant can ask his landlord to install a particular kind of toilet appliance. The much a tenant can do in the bathroom on his own is replace toilet seats, change stoppers and chains for baths and sinks, and replace baths, sinks and drainers. He can only replace those that are damaged through wear and tear and not those that are not poorly fixed. If an appliance if not fixed well, the tenant must ask the landlord or his agent to fix or replace it.

Tenants must pay rent to their landlords or a real estate agent. Rents are regularly paid, usually after every month. The rent is the cost of living in a freeholder’s property. The amount of rent payable is typically fixed and non-negotiable. However, prospective tenants, especially those of residential homes can negotiate for lower rents. Failure to pay rents is punishable. Residents usually sign a document indicating the dates of rent payment. If a tenant fails to pay rent after this day, disciplinary measures can be taken. The defaulting tenant may have to pay a fine or be asked to vacate the premises.

Understanding the problems with property to rent with pets

19/01/2017

Pets bring out the humanity in a man. They are loving, funny and make homes comfortable and fun. Unfortunately, most rental properties do not allow tenants to own pets. This is sad considering that the freeholders who come up with these rules are themselves pet owners. At the moment, over 50% of adults in the UK have pets. All these people cannot be freeholders with a total say in their properties. They can also not be rendered homeless just because they have pets. Provisions must be made to set aside for property to rent with pets.

The Problem

The problems that arise with pet ownership are the reasons for freeholders’ fear of having pets in their properties. Pets may be fun and exciting but are as dumb and needy as toddlers. Ownership of a pet does not necessarily mean that the owner will take good care of it. Pets must regularly be fed, or they will wander off to other people’s properties. The inherently aggressive pets such as dogs can harm other people. Some people keep huge snakes as pets. There are reports of snakes going berserk and hurting not only neighbours but also their owners. Damages caused by pets to people and property can result into litigations that the landlord too will find himself. Landlords fear being dragged into negligence of their tenants. That is one of the reasons why they are reluctant to allow tenants to own pets.

Pets may also cause damage to the freeholder’s property. Untrained dogs tend to litter homes and spoil carpets and other building structures. Pet owners can also wreck windows and ceilings when playing with pets. It is the responsibility of the landlord to replace windows, ceilings and other fixtures on his property. A landlord would not want to incur financial costs caused by the recklessness of a pet owner. This is another reason landlords do not allow tenants to own pets.

Tenants with pets

Rental properties are not permanent residences. No matter how much a tenant likes a flat, since he is not the owner, he will eventually have to move out. If the tenant had a pet, chances are high new residents will feel the residual effects of pet ownership. A new tenant can move into a house just to find that it is full of fleas. Fleas and bedbugs are bothersome and difficult to eradicate. Once a property is known to have bedbugs or fleas, people will shy away from renting it. This will cause the landlord heavy loses both due to lack of tenants and because of the exorbitant cost of eradicating these bugs.

The demerits of owning pets are not an absolute contraindication for not letting a property to pet owners. Landlords have figured out ways of letting people own pets without themselves bearing the burden of pet ownership. Some landlords have increased rent deposits so as to cover for costs of managing deleterious effects of pet ownership. Others have given allowance for certain kinds of pets and not others. You will find landlords who allow tenants to own cats and dogs but not snakes and racoons.

If you are a landlord and want to let your tenants have their pets, you have to understand and make terms regarding the problems you might encounter. If you are a tenant you have to find a apartment that is advertised to allow pets and follow the rules and be a responsible pet owner. 

Calculating capital gains tax on rental property

16/01/2017

Rental properties are subjected to tax like any other commercial enterprises. If you had a rental house and moved out of it, you may choose to rent it out or to sell it. The law is very considerate for homeowners. Owners of flats are assumed to be of moderate financial incomes and are therefore not pushed to the wall by tax and revenue authorities. Those who move out from flats are given a relief period during which they can either rent out their flats or sell it. If they rent out their apartments, they will not be subjected to capital gains tax on rental property.

If they sell the flat, the profit they make may or may not be subjected to taxation. Tax relief is granted to those who sell their properties within a certain period of time since moving out. The period is commonly referred to as the “private residence relief final period exemption”. Sale of property after this time period is believed to be premeditated and is subject to taxation by the HM Revenue & Customs (HMRC). The period of tax relief was 36 months before 6 April 2014. It has been changed drastically since then. The time period remains the same for people who are disabled and those who move into residential homes for care.

How are gains on the sale of a rental flat calculated?

Gains on sale of a rental flat is calculated based on several factors. Most of these factors are reliefs that reduce the amount of tax that is charged on the sale of the property. They are reliefs that are granted by the HM Revenue & Customs to the seller of the rental flat. These reliefs include the private residence relief and rental relief. Private residence relief is a tax relief granted to those who move from rental flats to private homes. It is a token of appreciation for growth from flat ownership to residential property ownership. Rental reliefs are given to those who rent out their flats before selling it out.

The reliefs are included in the calculation of the net profit on the sale of property. Profit on sale is basically the difference between the amount f money lost in the purchase of the property and that gained from the sale of the property. Reliefs and expenses must be put into consideration when calculating net profit. The expenses that are expected in property sales include legal fees, stamp duty, and the cost of renovating the property.

Calculation of private residence relief is a bit complicated. Remember that the legally stipulated relief period is 18 months. To get private residence relief, you must add the number of months you lived on a property to 18 months. You then divide this sum by the total number of months you owned the property. The numerator and denominator of this equation may seem to be the same but are in most cases very different. An individual who lives in a property for two years and sells it after three years of moving out will have owned the property for 60 months but only lived in it for 24 months. The numerator is 24 added to the 18 month relief period. That is 42 months. The denominator will be the 60 month period of ownership. This is basically how net profit on property sale is calculated. 

The process of Becoming a Landlord

03/01/2017

A decision to become a landlord is sometimes hard to make. Letting out property involves a lot of obligation to the law and to the tenants. The property must meet certain standards for it to be considered residential. The prospective landlord must know how financially demanding the tenancy will be. All these make people who are otherwise eligible to be landlords, to fear taking on tenancy. Becoming a Landlord is easy if you are prepared for what is lying ahead.

Maintaining Profitability

The first thing you must figure out is the profitability of tenancy. Not everyone who rents his property makes profits. Rented houses are business venture like any other. Managing them involves a lot of cash flow, both in and out of the business. Property maintenance can be quite expensive. The landlord must fix lights, seal leaking roofs and repair broken pipes. The landlord may also have to pay duties and fees to estate agents, and other local government authorities who oversee real estate development. Prohibitive cost of managing properties is one of the reasons why many people fear becoming tenants.

Consider laws before choosing rates

To make profit out of tenancy, you must ensure that the amount of rent paid is more than the cost of maintaining a property. You can charge more if the property is expensive to maintain. Remember that there are government regulations that govern rates of rents. You should ensure that the rent you charge are in tandem with government regulations. High capacity properties make more revenue and profit than smaller properties. The problem with the large properties is that they may not be fully rented out. You may have to reduce rents to attract tenants into the property.

Maintenance and repairs

The quality of your property also determines how profitable it will be. Tenants usually prefer properties which meet certain standards. Water supply and drainage must be highly efficient. The interior of the units must be stylish and modern. The rooms should be painted in colors that prospective tenants find appealing. Every fixture and equipment in the property should be in good working condition. A property that meets market standards attracts more tenants. A landlord can then charge high rents and make more revenue.

Learn the rules of tenancy

A prospective landlord must be aware of legal implications of tenancy. Rules of tenancy are many and complicated. A landlord is usually required to give his tenants various documents before letting the property. This includes Energy Performance Certificate (EPC), Gas Safety Certificate, and a copy of the government guide to property renting.

The landlord must also know the type of tenancy he is getting into. Most tenancies in the UK are Assured Short-hold Tenancies (AST). The landlord of AST must protect tenants’ deposit in an approved deposit scheme. Failure to protect tenancies can result into fines or even make termination of tenancies difficult. A tenants deposit must be refunded in full at the end of tenancy unless the tenant breeches terms of agreement of the tenancy. A landlord must also ensure that his property meets safety standards of the Housing, Health and Safety Rating System (HHSRS) before letting the property.

How to go about renting out your home

28/12/2016

Getting a home buyer is never easy. Many people want homes but lack the capacity to pay for them. They prefer to rent. Brexit has not made things any easier for home buyers. The real estate property market has been very volatile since the UK decided to chuck out of European Union. Selling a house may be even harder if your house does not meet the standards that the market needs. Renting a home does not necessarily mean that the owner does not have a ready market. Sometimes you want to travel for long, or maybe you have another house in which you want to move to. Reasons for renting out your home are many and divergent.

If you want to rent your house, you must carefully scrutinise the property market. Your house needs to be left in trusted hands. The rent you get must match you are the value of the house. You need to talk to real estate agent to know the current trend in house renting. Real estate agents could be could intermediaries between you and the prospective tenant. They can help you look for a reliable tenant and to manage the tenant once the house is rented. If you are in doubt, talk to your friends or relatives who are in real estate business. You might find them easier to trust.

It is of absolute importance to inform your mortgage lender of your intentions to lend. Mortgage lenders have a stake in the value of your property. The proportion of the loan that you have not paid on a property is equal to their share in your property. Their names may not be included in by the Land Registry in the ownership of property, but they are legally allowed to claim a share of your property. Everything you do to the ownership of your property affects them. If you fail to tell them that you are renting, you will most likely be breaking terms and conditions of your mortgage. You will then be required to pay them for any liability arising from your failure to offer full information on changes in property ownership. When you inform the lenders of your intentions, you will be given consent for lease that will allow you to rent.

You do not want to rent a property with all your delicate but worthy belongings inside. It is important to remove all your valuable properties from the house before you rent it. Beds, couches, cupboards and other personal assets should not be in the house upon renting. You may also consider upgrading the house before you rent it. Make sure that it is in good shape. The reason why many people take extended periods of time of time to find a tenant is that they rent houses that are in despicable conditions. Repair lightings, ceilings and windows. Feel free to install newer modern fittings.

Your insurance firm should know of your intention to rent. Insurance policies for leased properties are different from those of freehold properties. A change from freehold ownership to rented property changes the nature of insurance cover. To keep your property insured, you may have to obtain rented property insurance.

How to go about buying property with tenants

28/11/2016

Many laws govern the sale of tenanted properties. A buyer should know of laws surrounding the sale of a tenanted property. If he does not know of these laws, then he must hire a professional who can help with buying property with tenants while adhering to the prevailing laws. Breach of a law of tenancy can cost the buyer massive financial losses of even a time in prison.

A buyer may wish to retain current tenants of the property once he buys the property. He may also either want the retained tenants to sign new agreements, or to continue their tenancy under the pre-existing agreements. Otherwise, he may wish to have them vacate the property upon purchase. Some special laws and regulations guide possession of a tenanted property. There are also other sets of legislation that can give a buyer an edge towards manipulating the property to his advantage.

What should you know as a buyer?

It is important for the buyer to know the type of tenants that are occupying the property. Type of tenancy determines the procedure for purchasing a property. Laws guiding tenant eviction are found in Section 6 and Section 21. These sections serve different purposes. Section 21 can be served alongside Section 8 to effect quick termination of tenancy.

One of the types of tenancy is the Assured Shorthold Tenancy. Property in an assured shorthold tenancy is owned by a private landlord. In this kind of tenancy, the flat must be the only home a tenant has, or at least be his main home. The tenant should also have occupied the property on or after February 28 of 1997. The law provides outlets that a landlord can use to recover property from assured shorthold tenants. Section 21 of the Housing Act 1988 gives landlords the right to repossess the property after the tenancy period has expired. The landlord does not have to provide any grounds for repossession.

Repossessing tenanted property

If the owner wishes to repossess the property during the fixed time, then he might resort to section 8 of the Housing Act. For section 8 to be effective, the tenant must have breached one of the items of the contract between him and the landlord. Breach of tenancy gives landlords grounds for repossession. Examples of grounds for repossession include anti-social behaviours in a tenant and rent arrears. These grounds are listed in Schedule 2 of the Act.

The duration of time from serving a notice of eviction to repossession of the property depends on the law you are using to repossess, and the grounds for termination of tenancy. If you are using Section 21, then you must give the tenant at least 2 months notice. If you are serving section 8, then the period will range from 2 weeks to 2 months. The ground you are using to end the tenancy under section 8 determines the amount of time you can give the tenant to vacate the property.

If the tenant refuses to get out of the property after you serve the notice, then you can seek a court order. Some residents may claim that they have not received a notice of eviction. The landlord should use a means of notice delivery that is admissible in court. The best ones include using a Professional Process Server or posting the notice through two different post offices. The post office should give you a Certificate of Posting.

What are the “Buy to let” rules you need to understand?

07/11/2016

Buy to let is a scheme that allows becoming a landlord, even if you are not going to live in that house. Basically, buy to let means purchase of a property with the sole intention to let it to tenants, opposite to buying for your residential purpose.

Location

As in every aspect of the housing market, location is one of the most important aspects to take into consideration. When it comes to buy-to-let, before buying a property, think about the tenants in your target. Students, young couples or family with kids? Students want cheap accommodation near the university, and they are also the ones more likely not to preserve the building in the same pristine condition. Young couples will want something in between a quiet area and vivid nightlife. When it comes to family, there's the neighbourhood, a good school and the noise nuisance to be considered.

Budget

Do you already have the money for this investment or are you planning on taking a mortgage? If you need a mortgage, the lender calculates your affordability different than for a residential mortgage. For example, your primary income source is the rental earnings in a buy to let mortgage. This rental income must reach at least 125% of the monthly payments. A 25% leeway guarantees the lender that you are still able to cover your payments, even in a first period without tenants. Even the down payment is larger when it comes to buy-to-let, from anything starting with 25% up to 40%. Even if the mortgage rates are low, the loan fees will be higher than for a residential mortgage.

Can you be a buy-to-let landlord?

  • If you can afford the financial risk (you might lose a lot of money before making any profit)
  • If you own your own a home already (it is easier to get a buy-to-let mortgage if you already have your house)
  • If you have a good credit score and an annual income of over £25,000
  • If you are under a certain age (for example, under 70 years old, depending on the lender)

Stamp Duty

Starting 1 of April 2016, the Stamp Duty for a property buy-to-let is higher by 3%, comparative with a property bought for a personal residence. This rule might sound discouraging for first-time buyers, because the pocket gets emptier with thousands of pounds, depending on the house value. The new Stamp Duty tax for buy-to-let properties can go either way: stops the blooming market estate, therefore reduces the rental market or give a positive chance to a new buyer for a cheaper house, due to lack of competition. For properties with a value under £40,000, there is no buy-to-let Stamp Duty, but you can rarely find a house for this price.

Tax relief

Starting with 2017, the tax relief on mortgage payments for private landlords, specifically for the buy-to-let scheme, is cut from 40% to 20%, which means as a buy-to-let landlord, your investment will be higher than prior planned.

Buy-to-let to let is still a good investment, with the possibility of future profit, but at the same time, there are risks to consider before getting a mortgage, because if you cannot afford the payments, you will lose the house and the investment up until that point.