Things that Every Landlord Should Anticipatefjpinvestment
There are a large variety of investment products to choose from, but investing in property is a time-tested and secure way in which people can invest their money. London has seen a huge rise in the appearance of buy-to-let landlords over the past 5 years, a whopping 49% increase to be exact, from 1.8 to 2.7 million, even with the introduction of tough new tax laws. In favourable market circumstances, along with prudent property choice and location, property investing can yield rental income (especially with interest only mortgages) and capital appreciation. So, if you haven’t yet invested in property but are seriously thinking about it, here are some things that every landlord should anticipate so you can have an idea of what’s involved.
A business attitude is a must
Buy-to-let property investing, like any business, is about making profit and this should be a central proposition in your thinking process. Keeping detailed records, therefore, such as income and expenses, is crucial just like any other business venture. Keep all the paperwork -receipts, copies of bills, repair work costs, etc. Everything.
Today, there is a large selection to choose from for accountancy and bookkeeping programs. Even simple smartphone apps are quite sophisticated these days and are very useful in helping keep track of all your expenses.
All profits will be taxable. However, landlords and property owners can receive some benefits with several deductions, like interest payments on the mortgage. Further deductions can be made for things like advertising for tenants, insurance premiums, and property taxes.
Be aware of and adhere to strict laws
The laws, rules, and local codes that regulate landlords are quite extensive and you must get to grips with them. They regulate everything from handling deposits, rent pricing, to evictions and many other issues.
There are four primary considerations that relate to: building codes, property in a liveable condition, utilities in good working order, and safety issues like smoke detectors.
It’s best to have an experienced solicitor to look over all the paperwork for you, like the lease terms. This will make sure that you are in compliance with the law. If ever you must evict someone, solicitors can also help with this to make sure you do it properly and not contravene the law.
Special insurance cover
A rental-specific insurance policy will likely be required for landlords; standard cover will not suffice. For a long period of being unoccupied, a different policy may be needed.
Hiring external services
Something else a landlord should anticipate, depending on your property investment strategy, where the properties are located, how much time you have to put into them, etc., you may consider using management services to help. These services will eat up about 10% of the rental income. For this fee, they will take good care of your property and do things like find you tenants and undertake any repair work.
Place the tenant’s deposit into an escrow account
You should not hold onto a tenant’s deposit, so a tenant’s deposit must be protected by placing it into a government-approved Tenancy Deposit Scheme (TDS), which is given back to them after the tenancy has ended if it is shown they have complied with their tenancy agreement.
Prepare for emergencies
From burst pipes, lost keys, to leaking ceilings, a lot can go wrong while tenants are staying in your property. So, remember that, as the landlord, you will be the first person they call in an emergency, and this could be any time of the day or night. Even on Christmas day!
Becoming a landlord comes with responsibilities and the need to be educated about the does and don’ts with renting out property. However, the rewards are potentially also very great. Becoming a landlord of a buy-to-let property also has other rewards other than financial. You get to interact with and build relationships with a large variety of interesting people, and you will find that your people skills will also greatly benefit.