So you think you want to be a landlord? Ask Anna!
After our last article on the basics of property investment, we were overwhelmed with questions about being a landlord.
You also shared the experiences, both positive and negative, that you had already had with property investment. To better prepare you for the challenges of property investment in the future, we contacted Anna Langford at complete, our preferred lettings and management partner, to answer some of your queries and get some top tips on being master (or mistress) of the house.
Hi Anna, I have a property but I’m apprehensive about leasing it out to strangers. How do you avoid bad tenants?
Good tenants are the rule and bad ones the exception, but the best way to make sure you get the most reliable tenants is by getting references, using a strong deposit system and keeping up a tight inspection record. At complete, we use a third-party referencing company before accepting any tenant, which includes credit and ex-landlord checks. We take a deposit of six weeks rent before tenants move in, which is held in the custodial Deposit Protection Scheme.
Once the tenants have moved in, we undertake an independent check-in and check-out inventory to ensure any damage is accurately recorded. We also do yearly property inspections to ensure that tenants are taking good care of the property. Of course, all our tenancy agreements have clauses preventing the tenants from nuisance or anti-social behavior, which we take a zero tolerance approach towards.
Hi Anna, what is a ‘rental guarantee’ and how does it work?
Rental Guarantee Insurance is a service that is offered once a tenant passes their reference checks. This optional service covers lost rent and legal costs in the rare event that the tenant defaults on their rent and legal action needs to be taken against them. It’s a nice safety net for landlords to have, but in our experience it’s very rare to have to make a claim. If you do have problems with tenants not paying rent or other tenancy breaches, then it’s best to deal with these quickly and seek professional advice on your options.
Hi Anna, I don’t want to be out of pocket for too long. How long will it take to lease my property?
The average time to rent a property varies depending on market conditions. Going through a lettings agent or property management company ensures that your property has maximum market exposure and attracts the best tenants. For example, here at complete we provide professional photographs for advertisements, exclusive online advertising, premium listings on prominent property internet portals, newspaper adverts, signage and networking with local agencies.
Hi Anna, how does property tax work? Do I only pay tax when reselling or do I pay tax on rent as well?
Both UK and overseas residents are liable for tax on profit generated from rental income on investment properties. However, most people are entitled to a tax free allowance and running costs can be offset against any tax liability. When selling, both UK and overseas residents will be liable to Capital Gains Tax as of April 2015.
If you need further tax information, which is a specialist area, we are able to refer you to our recommended Tax Advisor – our clients benefit from a 20% discount on their fees.
We hope this Q&A session has helped alleviate some concerns over investing in property and has provided some sound advice for those who want to want to avoid the ‘bad tenant’ horror stories. We highly recommend that you use a lettings and management company to take away the burdens of property investment and ensure that the leasing of your nestegg runs smoothly.
Did you find this article helpful? Let us know if you have any more questions we can answer for you or better yet, get in contact with Anna and the complete team either by email at [email protected] or by phone on 0203 551 9900.
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