How did you know your partner was the one? When you started finishing each other sentences? When they still gave you a hug despite your awful winter cold? Or when you had the serious discussion about taking the plunge, and moving in together?
Many people find themselves taking not one, but two momentous steps the day they move in with a partner - not only are they sharing a home with the one they love, but they also start a business and become a landlord!
Remember that you are now running a business
Although it might be difficult to think of it in this light, remember that your blossoming property business is exactly that – a business. Your property is now a business asset, your tenants are your customers and the monthly rent is a taxable income. You are obliged to abide by all of the relevant legislation and have an obligation for the safety and well-being of your tenants.
Failure to comply with legislation can result in some really hefty fines, even imprisonment in some cases, so being unaware is not a valid excuse. You can keep up to date with all the (regularly changing) rules and regulations here on the landlord University, or my joining a landlord association, such as the National Landlord Association, and attending local update meetings.
Consider your property as an asset
Whilst your home will always have emotional memories attached, once it becomes a business asset do try to step back from the property if possible. No matter how great a tenant you find, it is highly unlikely that they will live in your home in the exact same way you did, and you may find it hard to accept if you see the home that you took such pride in kept in a messy/grubby state.
However, should the worst happen, take a deep breath and remember that you are able to sort out any issue left behind by tricky tenants, and find new ones who will love your property like you do!
Understand your health and safety responsibilities
Gas safety certificate: Not only is this a key legal requirement when letting a property, but also gives you a view of the health of your gas appliances. You must organise to have an annual check carried out by a Gas Safe Registered engineer and provide this report to your tenant within 28 days of the check being carried out.
Smoke/heat detectors: Install one on each floor of the property. Check they work at the start of every new tenancy and during every property inspection.
CO alarms: Install if you have any solid fuel burning appliances (wood, coal, oil, pellets etc – one in each room that has an appliance. Check that they work at the start of every new tenancy and during every property inspection.
Legionella: Undertake a water temperature test, check that cold water in the property is below 20°C your water system is likely to be clear. If it between 20°C and above 45°C take a series of water samples and have them tested.
Electrical safety: Scottish landlords must carry out an electrical maintenance check every five years. Optional five-year testing, and annual PAT testing advisable for English and Welsh landlords
Plan for the tax man
Every love story has a bad guy, and in the case of many landlords, that bad guy is the tax man. Although it rolls around every year, tax is still a surprise for many of us, especially now it is getting more complex!
Section 24 has revolutionised landlord tax, and it is something you must be familiar with. Up until the changes came into force, landlords were entitled to deduct the full cost of their mortgage interest payments on their rental properties before they were liable to pay tax. As of April last year, mortgage, loan and overdraft income costs are not considered in calculating taxable rental income. The changes are being phased in gradually over four years, with 25% of finance costs currently being restricted. As of April 2019, 50% of the costs will be restricted. By 2020, 100% of these costs will be restricted.
Additionally, if you chose to take the ultimate plunge and buy a property as a couple but keep one or both of your original homes as a rental option, don’t forget that your next purchase will be subject to the additional 3% stamp duty fee.
Understand your market
It has been a funny old time in the property market. Brexit confusion and a snap general election has created two years of uncertainty within the sales market, and it is only starting to settle.
With so much fluctuation, more people have been looking to the private rental market for a mid-term solution. This has led to a huge variety of new tenants breaking into the market. Understanding the potential of your property, and who it would appeal to most will help you market your property to these tenants.
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