Advice on Starting out

[ba72]

Dear Landlords,

I am a possible beginner to renting and I have a couple of questions, I hope you can help,

(1)

I am thinking of investing about £140,000 in central scotland . I think I could maybe get 2, two bedroom flats for this give or take £5000. I have been juggeling around this idea for a while now and not sure what to do.

Is it a good advantage that I can pay theses 2 flats practicaly outright and that I dont need to worry about something called yeild I see a lot of posts talking about. and that I still also have a safe very well paid job.

(2)

If I done the above what is the situation on tax, do I have to pay any on the monies I might take in. if so what percent would I pay on the rents assuming I did not have mortgages, And also do many landlords not declare it.

(3) Do you as landlords need to have certain standards as to safetey, ie do you need to have regular checks on gas appliances, do you need to have fire extinguishers ect, ect.

Any advice would be much appreciated

[plym77]

Hi!

Re TAX:

You pay tax based on your net rental profits - ie. your rental income, less allowable expenses.

The rate of tax depends on your other earnings, but assuming you have some form of income you would normally pay either 22% or 40%.

You would need to prepare an annual self assessment tax return which is based on a tax year (each ends 5 April) and must be submitted by 31 January following the end of the tax year. If you are not unready under self assessment (ie. preparing a tax return each year) you must alert the tax office of your requirement for a tax return by 6 October followinf the end of the tax year in which you begin your rental business - ie. if you start to receive rent 1 March 2006, you would need to report by 6/10/06. If you started to receive rent 1 May 2006, report by 6/10/07 - I would suggest that you do it sooner rather than later though as self assessment can have a nasty sting in its tail in the first year due to something known as 'Payments on Account' and it is possible that you could end up paying up twice the tax that you thought you would in the first year.

The only other thing I would mention at this stage is that if you have mortgages elsewhere (ie. on your main home) then it would be better that this was related to your buy to let property as obviously there is a deduction for interest against your rental income.

I hope this helps for now

Sherena

(Plym 77)

Once you start on the 'rental rollercoaster', should you require assistance with a tax return, please do feel free to email me for a quote.

[Webb]

Answer to question 3 of your couple of questions.

Assuming similar regs. apply in Scotland you would certainly need a gas certificate to be renewed annually. I renew mine concurrent with an annual service agreement for all gas appliances.

You need to check the current situation regarding electrical certificates, smoke alarms, fire blankets etc. etc.

Read past entries on this forum; many repeat the same advice for newcomers. Read up to date books and guides on letting. CAB may help.

Read up law and regs. on gov websites, e.g.ODPM.gov, but Scotland may be different.

Err on safety and provide a fit and tidy home for your tenants.

[Chris@Leaseguard]

If the properties are in Scotland you need to register as a Private Landlord with your local council to ensure that you are in their eyes 'fit & proper'. This does cost money (of course) but I recommend that you look at your council's website as a first port of call.

You maybe obliged to have the gas & electrical checks done regularly as a condition of your landlords buildings insurance. Contact us if you need a quotation.

www.leaseguard.co.uk