Becoming a landlord can provide an extra source of income and can prove fruitful in the long term particularly if you acquire the right property. It does, however, need to be properly managed. You have obligations to your tenants as well as an obligation to provide various information to your local council and HMRC. Here are some the do’s and don’ts of becoming a first-time landlord.
DO advise the council and HMRC
When you become a landlord, you must complete a landlord’s registration with your local council. This is usually valid for 3 years and requires you to provide some basic information and pay a minimal registration fee. If you don’t do this you are breaking the law and could be heavily fined. Make sure that you declare any income to HMRC by way of an annual tax return. You can no longer offset all of your costs against income but there are some tax breaks. Check the gov.uk website for further information.
DO speak to a mortgage broker
When renting out a property or buying a property to let you need a different kind of mortgage. There are many different buy-to-let mortgage products available so it is wise to seek professional advice. If you are renting a property that you inherited or renting wasn’t intended then you may be eligible for a consumer mortgage. This type of mortgage is for accidental rental scenarios. They are regulated in the same way as a residential mortgage, provider the borrowing with additional protection.
DO upgrade and decorate in line with your achievable rent levels
When choosing a kitchen or decorating, it is important to do so in line with rent levels for the area. It may be tempting to have a top of the range kitchen installed or use Farrow and Ball paint throughout. Unless you are going to achieve far higher rent levels doing so, be realistic with your choices.
DON’T ignore maintenance issues
If your letting agents or tenants advise you of an issue that has arisen, don’t ignore it. There are some things which you are legally obligated to remedy in any case but many landlords choose to leave maintenance issues rather than having them fixed. Whilst having works done could cost money, it could cost you even more in the long run if left unattended. Remember that your property is an investment. Take care of that investment and you could reap the rewards in the long run.
DON’T treat your tenants poorly
This is very much connected to the point noted earlier about maintaining your asset. Landlords don’t always have the best of reputations and the way they treat tenants is the primary reason for this. Many will think nothing of in-gathering huge rents but leaving their tenants living in terrible conditions. Mould, water ingress, and damp are some of the biggest issues that tenants face. Always remember that whilst it is your property, it is your tenants’ home.