August Landlord Update

Lou Fletcher from Piccolo Sales and Lettings in Salisbury and Wilton provides the August Landlord update. Here, she provides some advice for those looking to become a landlord for the first time.

Buy To Let Beginner? Get It Right First Time With Our Expert Tips For New Landlords

Have you wondered about becoming a landlord but aren’t sure whether it’s still worth it or even your kind of thing? Well, you’re in the right place!

For anyone with a genuine passion for property, being a landlord is a very natural fit to supplement your income, build financial freedom and nurture your inner designer and entrepreneur.

The Buy to Let landscape has shifted significantly in recent years. Changes in taxation, stamp duty, tenancy legislation and energy efficiency standards have put more responsibility on landlords, but buying to let remains a sound long-term investment strategy.

So here are our tips for being a Landlord for the first time:

BRUSH UP ON BUY TO LET FINANCE AND TAX

Budgeting correctly is essential for any successful business, so here’s a quick rundown of lending criteria, stamp duty costs and tax allowances for landlords. Please note –  recommend that you seek independent tax and legal advice as mortgage advisers are not qualified to offer tax advice.

• Buy to Let mortgages are primarily calculated on the sales value of a property along with the projected rental income. This is rather than on your personal income (although you’ll generally need to earn around £25,000 per year to qualify).
• You can usually borrow a maximum of 75% of a property’s value. Subject to the monthly rental income being at least 125% of the monthly mortgage payments.
• Lenders tend to charge higher arrangement fees for Buy to Let mortgages than standard residential loans.
• As well as the usual Stamp Duty liability, investment property is subject to the second homes Stamp Duty supplement on the total purchase price (3% in England, 4% in Scotland and Wales).
• New tax rules mean you pay tax on the entire rental income with a tax credit available of 20% of your annual mortgage interest payments (this change affects higher rate taxpayers the most, and also puts some lower rate taxpayers into the higher bracket).
• You can also claim back the cost of letting agent and management fees, insurance, repairs, maintenance, accountant’s fees, utility bills, council tax and certain legal fees.

Knowing the basics of Buy to Let mortgages, buying costs, and tax will help you assess the viability of any investment property accurately and swiftly.

LEARN ABOUT LANDLORD LEGISLATION

The rules and regulations covering lettings are famously ever-changing, with around 150 pieces of legislation to get to grips with. There are also some best practices you should follow to minimise the potential for disputes.

Here’s a small taster of things to remember:

• ID checks to confirm your tenants are legally allowed to rent your property, along with professional referencing
• Take out buildings, public liability and landlords contents insurance as a minimum
• A proper tenancy agreement signed by everyone who’ll be living at the property
• A detailed inventory, including photographs, to be signed by your tenants
• Protecting security deposits in a government-approved scheme and registered on time
• Regular mid-tenancy inspections to monitor the way your property is cared for and to spot any problems
• Keeping certificates for gas, electricity and energy efficiency up to date.
• Checking the government’s website for policy changes to stay on the right side of the law.

This might seem like a lot – ok, it is a lot! But, with an experienced managing agent by your side, you can leave all that to them while you concentrate on the fun stuff, like growing your portfolio.

THINK ABOUT YOUR BUY TO LET STRATEGY

There are various ways to be a landlord, but the number one rule to keep your Buy to Lets occupied and in demand for years is to tailor them to your market.

• Start by asking local letting agents which homes they need more of, then consider the following:
• Singles, couples, students, professional sharers and families with children have different requirements and expectations around location, accommodation and specification.
• Landlords with older homes and low EPC (Energy Performance Certificate) ratings could sell up to avoid the costs of improvements, creating opportunities for new business models.
• Renovating means you’ll need extra cash upfront, but you could increase your yield and equity fast, like James Baker and Dan Anson-Hart, who The Telegraph recently featured.
• Buying new might mean paying a higher purchase price, but you’ll get better insulation, modern fittings, lower running costs and less maintenance in return.
• HMOs (houses in multiple occupation), serviced accommodation and holiday lets can be significantly more profitable, but they’re also more work, and lenders usually require landlords to have previous experience.

If you’d like to know what tenants want from a rental home in the Wilton & Salisbury area, drop Piccolo Sales and Lettings a line at info@piccoloproperty.co.uk or call us on 01722 580059.

BECOME A LOCAL LEGEND

As a landlord, you’re free to invest in property anywhere, but there are many advantages to growing a portfolio close to where you live, including:

• Swooping on properties the minute they hit the market
• Creating lasting relationships with local estate agents and being first in line when new properties become available
• Having your ear to the ground about upcoming properties from your neighbours or local businesses
• Building an expert knowledge of the local rental market and knowing which streets rent best to which type of tenant
• Feeling connected to your portfolio and being able to visit tenants, meet contractors or inspect your property more easily

Perhaps the biggest day-to-day advantage of keeping your portfolio close together is that, even if you buy every property through a different estate agent, you can keep all your rental homes with the same local managing agent.

Are you thinking of becoming a landlord in the Wilton or Salisbury area?

For some expert advice on the local rental market and the best type of property to invest in contact Piccolo Sales and Lettings. You can call on 01722 580059 or email via info@piccoloproperty.co.uk. They would love to help you find your first Buy to Let and to be part of your landlord journey.

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