More and more people are considering renting out their property as a way of generating extra income. With an abundance of potential tenants that are desperately seeking to secure rental accommodation, you are pretty much guaranteed a regular returns from your property.
Many areas of the UK are in desperate need of rental properties, with London currently have the fiercest competition amongst potential tenants. In fact it’s not just big cities like London that are experiencing this problem. Only a few weeks ago I spoke with an estate agents in Buckingham who told me that they currently have a waiting list of tenants and are really struggling to meet the demand. Unfortunately many of these tenants are currently unable to get onto the housing ladder as the average house price in the Buckingham area is £298,000. [info citied from RightMove]
However although becoming a landlord may sound simple, in fact there are many considerations that need to be borne in mind before putting your property up For Let.
Check With Your Mortgage Provider
Before you list your property for rent, one of the first things that you need to do is inform your mortgage provider. Part of the terms and conditions of your mortgage agreement is to let your lender know if somebody else will be living in your home, and your current product may not be suitable for a rental property, especially if the arrangement will be on a long term basis. You may have to switch to a different product or even a different provider before renting out your home.
Landlords have specific liabilities with regard to tax, and you must comply with these requirements to stay within the law. Any income from renting your property must be added to other monies that you have earned over the year and you will have to complete a Self-Assessment tax return. There are, however, some expenses which can be offset to reduce the amount of tax you pay. You may also have to pay Capital Gains Tax on any profit if you sell your rental property, although again there are certain expenses which can be offset against the total.
You will need to decide whether you are prepared to rent out your property on a long or short-term basis. While some landlords prefer the security of a long lease, many tenants are more interested in renting a property for 12 months or less.
A landlord must ensure that they have comprehensive insurance cover for their property that will protect them should anything go wrong. A good policy will provide buildings cover as well as protection against accidental damage and protection from loss of rent, and will help to guard you from being out of pocket in the event of a problem.
It is a landlord’s responsibility to ensure that any gas or electrical appliances in their property are safe to use. Part of these obligations involves having a yearly gas safety inspection and the provision of a Gas Safety Certificate to tenants, as well as ensuring that their home is equipped with smoke and carbon monoxide detectors.
Addressing Outstanding Works
If there are outstanding works in your property which need carrying out, for example repairs to part of the building’s structure or appliances, it is part of the landlord’s responsibility to ensure that these are done as quickly as possible. Landlords must ensure that any exterior problems are dealt with and that all utilities equipment is in good working order.
A landlord should always prepare an inventory detailing the contents and condition of their property before a tenant moves in to protect themselves from damages. This should be signed at the start of a tenancy by both landlord and tenant and then checked at the end so that any losses can be addressed.