Soon to be new landlord

[dunkgrass]

Hi all

I have just joined this site as I have just had an offer accepted on a property I would like to rent out. I have read through about 3 pages of topics, trying to get my head around what is goimg to be the best route forward, using an agent for everything, part or just dive in and do it myself.

I was going to get an agent but after reading several posts not sure how good thay are likely to be. I do however like the idea of some sort of payment insurance, which I thought I would have to go through an agent to get but reading here it seems I can get that providing I do the correct checks.

What I would I would like to know is there any links on here or could any one suggest some kind of software package or information pack with relevent forms and information that would get me started. Also is it difficult to organise the paper work side of things, last thing I want to do is not be able to get someone whos not payig because of a small error.

Hope some one can help and I have plenty of time to read up on any information as it will be a couple of months at least before hings get completed.

Thanks Steve

[bdh198]

Two good places to start:

1. Join the NLA. You'll get access to a massive network of support (and the joining fee is an allowable expense against your income!) http://www.landlords.org.uk/

2. I found this book very helpful indeed when I started a few years ago: Successful Property Letting by David Lawrenson, http://www.amazon.co.uk/Successful-Property-Letting-Buy---let/dp/0716022753/ref=sr_1_1?ie=UTF8&qid=1320502339&sr=8-1. The 2011 edition is out now and so is up to speed with recent developments.

Good luck

[dunkgrass]

Thanks Solent

I have just ordered the book. will have good read before I join the NLa.

Cheers Steve

[Richlist]

Here's my check list:-

1. Get References.....bank, employer and previous landlord.

2. Take out rent guarantee insurance.....it’s not expensive.

3. Get a home owning guarantor. Carry out reference checks on the guarantor. Give the guarantor a copy of the AST. Make sure the guarantor document is drawn up as a deed.

4. Don't let to people with pets or children......the risk of them giving you problems are big.

5. Don’t let to anyone under 18 (minors). Draw up your own limits….I prefer nobody under 25.

6. Don't let to smokers........you won't get rid of the smell.

7. Don’t do Company lets.

8. Don’t let to anyone on Housing Benefits.

8a. If you do choose to let to applicants on Housing Benefit CHECK that your mortgage & freeholder (if your property is leasehold) allows it.

9. Don't let to anyone who isn't working full time.

10. Inspect properties every 3 months.

11. Only let initially on a 6 month AST.....that way you can both part company after 6 months if you don't get on.

12. Use a reputable Lettings Agent OR one who has been recommended OR do it yourself (only if you know what to do).

13. Meet your tenants personally. Make sure you ask all the right questions and gauge whether they are right for you.

14. Protect the deposit in one of the official schemes.

14a. If you have a dispute with your tenant(s) over deductions from the deposit remember…..you can either go through the DPS adjudication process OR take the tenant to the Small Claims Court for recovery of your losses where you may have a better chance of success.

15. Issue a section 21 notice as soon as the deposit has been protected.

16. Make sure there is a detailed inventory & schedule of condition……signed by both parties.

17. Remember its a business....so avoid emotion & being overly sympathetic to your tenants.

18. Read as much as you can about renting & letting i.e. educate yourself.

19. Don’t let to anyone who doesn’t speak or understand English.

20. Don’t forget that you will need an Energy Performance Certificate (EPC)…….before you market the property.

21. Don’t forget to get an annual Gas Certificate.

22. You are responsible for ensuring anything electrical in the property is safe so consider getting the electrics checked professionally….and any appliances you provide.

23. Try to avoid having your property classified as an HMO……meeting regulations is expensive and time consuming.

24. Make sure all adults living at the property are on the AST & any other documents.

25. Minimize your income tax liability by claiming all the expenses you are entitled to…..most people don’t and therefore pay more tax than they should.

26. If one of the owners is a higher rate tax payer consider splitting the beneficial income other than 50:50 to take advantage of the lower tax payer rate.

27. Keep all capital expenditure receipts/ invoices to minimize CGT liability on disposal.

[Richlist]

How can you possibly buy property at todays prices with mortgages at current levels, astonomic application fees, legal costs and property preparation costs AND still make a profit ?

Hardly anybody I know is buying at the moment .....and many of them have been in the rentals business for years.

Have you found a trick that the rest of us have missed ? OR......is it the case that you are like hundreds of others and can't actually work out if your purchase is going to be profitable ?

Do let us know your secret.......

[Antnkel]

You really are hard on people! There are bargins out there especially with the way house prices are! I'm looking at two different properties at the moment which including ALL expenses would give a good return.

[Richlist]

You really are hard on people! There are bargins out there especially with the way house prices are! I'm looking at two different properties at the moment which including ALL expenses would give a good return.

As the saying goes.....you have to be cruel to be kind sometimes....and this is one of those times. Spending a pile of money on a venture that may do nothing but loose you your shirt & a whole lot more is worth pointing out.

Many people can't actually count, they don't factor in all of the costs, they conveniently forget to include the loss of interest on their deposit, don't allow for tax, voids, bad debt, redecoration, replacements, bad tenants, rising costs etc etc etc. Its easy for anyone to show a profit on paper by leaving off many of the real expenses they will incur.

There are genuine bargains but, of course, not all of them are. I'd bet we could find a whole bunch of reasons why your 2 gems are not really as big a bargain as you think they are....

Good luck.

[weenie]

I bought that book too when I was doing my research and it did give some handy hints.

I also found some useful info from:

http://www.primelocation.com/guides/letting/

http://www.propertywide.co.uk/landlords/letting-agents/tax-tips-for-landlords/

With regards to letting agents, whether for letting services only or full management, one that is affiliated to ARLA or NAEA will provide some comfort. Best thing though as pointed out earlier is recommendation, ie speaking to other landlords if possible to find out who they use (if any).

Good luck!

[Antnkel]

I bet we could find reasons to not buy any property any time it's just a matter of perspective. I never said they were gems but they look very inviting to ME and would make a profit after all exspenses.

And your right you have to be cruel to be kind some times but do you have to be cruel all the time!

[Richlist]

And your right you have to be cruel to be kind some times but do you have to be cruel all the time!

I believe we have identified the problem.......you have an expectation that any bad news will be hidden, not mentioned or just swept under the carpet. You'd rather me not raise or discuss anything negative or ask awkward questions. Why ? Because you don't want me to be cruel.

Its certainly a recipe for buying the wrong property in the wrong location for the wrong price. Perhaps you are in or about to join, the wrong business

[dunkgrass]

Richlist, I really hope your not right. i am new to the idea of renting and am doing so because I have no pension of my own being self employed. I am having a repayment morgage over 20 years so that hopefully when all paid off i will be be generating an small income. Also the property cost is costing me the same as a sold and identical property in May 2003. The old property was run down and in need of alot of work. The new purchase has a new kitchen, bathroom and central heating system. Not alot more needs doing bare cosmetic work. It is located within walking distance of a large hospital. It also has a garage which the old property never had. I know house prices peaked in 2007/8 and have since dropped. Because of the current difficulties with people getting Morgages I was under the impression that rented property was in high demand and with house prices dropping near to 2003 prices surely know is a good time, especially with the low interest rates.

Also thanks Richlist for the checklist, will be a big help and also thanks weenie another 2 good links, looks like of plenty of reading ahead of me.

[Chestnut]

There are more reasons for renting property than making a profit. e.g. spreading capital investments, unable to sell inherited property, etc., etc.

RichList: You have published some splendid checklists recently, thanks.

However I think your point 26 above (splitting income other than 50/50) is more complex than you might infer, particularly for a small portfolio. I have looked into this in past and decided against - it involves Deed changes, and affects Wills, inheritance etc. And it almost certainly requires solicitor (expense!!)

[Richlist]

Because of the current difficulties with people getting Morgages I was under the impression that rented property was in high demand and with house prices dropping near to 2003 prices

High demand is only one reason to buy but, needs to be taken into account together with lots of other inter- related factors. Perhaps property prices have much further to fall yet.

surely know is a good time, especially with the low interest rates.

Interest rates at 0.5% won't last forever unfortunately. Its a shame that with such low rates BTL mortgages are stil 3.00% - 6.00%. When base rates return to 2 or 3 % be prepared for a corresponding increase in mortgage interest charges.

I think you are over simplifying your decisiion to buy.

[Richlist]

There are more reasons for renting property than making a profit. e.g. spreading capital investments, unable to sell inherited property, etc., etc.

Agreed BUT, the OP is specifically buying property to let not inheriting one or has one already that they've been unable to sell.

However I think your point 26 above (splitting income other than 50/50) is more complex than you might infer, particularly for a small portfolio. I have looked into this in past and decided against - it involves Deed changes, and affects Wills, inheritance etc. And it almost certainly requires solicitor (expense!!)

My checklist is a short summary of the points that a new landlord should consider. They can all be expanded and I'm happy to do that if requested.

Splitting beneficial ownership other than 50:50 is staightforward, has been carried out by many thousands of people, is fully acceptable to HMRC, costs approx £200-£300 for the necessary legal work and wont affect CGT liability if handled appropriately. The tax savings will usually far outweigh the costs of putting this into place.

Its important to undestand the differences between legal ownership of a property and the beneficial ownership of that same property.

Obviously not everyones personal circumstances are the same. What is suitale for one may not be suitable for you thats why its worded in such a way as to suggest the reader CONSIDERS the suggestion.

[iinsure365]

Hi Dunkgrass,

You'll need Landlords Insurance to protect against any unexpected problems! There's a FAQ guide on our website at http://www.iinsure365.co.uk/ which may be of us. Alternatively, feel free to speak to one of our advisors on 01273 827090.

Jamie

[Richlist]

Hi Dunkgrass,

You'll need Landlords Insurance to protect against any unexpected problems! There's a FAQ guide on our website at http://www.iinsure365.co.uk/ which may be of us. Alternatively, feel free to speak to one of our advisors on 01273 827090.

Jamie

The OP doesn't 'need' to do anything.

Insurance is an entirely OPTIONAL item.

At worst he might like to consider wether to take landlords insurance......at best he might decide its not required at all.