Accidental landlord advice…..

Accidental landlords become landlords as a result of circumstance, rather than design. There are many reasons that someone might become an accidental landlord.

They may have inherited a property, or had to relocate for work reasons. Whatever the circumstances, the owner would have decided that their best option is to let the property rather than to sell it.

Statistics confirm that 30% of UK landlords are accidental landlords. Naturally, accidental landlords tend to be inexperienced when it comes to letting and unsure about their obligations.

  • Inform your insurer

You must notify your insurance company that the property is now being used as a rental property, your insurance policy will most likely be invalidated. That could be a very expensive mistake.

In addition, we advise that you look at taking out public liability insurance to protect you against any incident which takes place in or around your property.

  • Talk to your mortgage provider

As well as your insurer, you should also talk to your mortgage provider to let them know that you intend to rent your property. In some cases they would allow you to stick with the current mortgage deal for a year or two with a view of switching in the future if becomes necessary.

  • Know your legal obligations

By law, there are several legal obligations which all landlords must adhere to. These include things like ensuring any deposits are placed in a government backed tenancy deposit scheme, and ensuring that the property you’re letting is safe.

Check out the rules of becoming a landlord

  • Organise a professional tenancy agreement

It is essential that you write a clear and legally binding tenancy agreement. This is the contract between you, as the landlord, and your tenants which lays out the terms and conditions of the tenancy duration, rent, late fees, obligations, responsibilities, repairs, inspections etc.

  • Make sure to arrange the inventory

Before letting your property, it is a good idea to take a full inventory or ask an inventory clerk to prepare it for you. Inventory must be signed by the tenants, that`s when your tenants become legally liable for damages and missing items.

It is best to take photos or videos of the property itself and any items you are including as part of the tenancy in detail.

  • Switch responsibility for utilities payments

Ensure that all the utilities gas, water, electricity, broadband etc. are transferred onto the name of your tenants and make sure you state their responsibility for payment of utilities in your tenancy agreement.

Know your rights and your tenants` rights

You need to make sure that you’ve protected yourself when it comes to evicting a tenant. Check our guide for damage to property and rent arrears. 

  • Be aware of your tax liabilities

– Tax returns

All the rent you receive from your tenant(s) is classed as income by HMRC, check out our guide for interest relief system for landlords and tax digital for landlords.

– Capital gains tax

When you sell a property which you have previously rented out for a profit – you will be liable for capital gains tax. You pay capital gains tax on any gains you have made over the initial purchase price of the property.

– Deductions

You should also be aware that there are several tax deductions which you are entitled to claim as a landlord. These are expenses which you can deduct from your taxable rental income. For example: letting fees, property management fees, repairs and maintenance etc.

If you have any questions regarding advice on accidental landlords please contact Pelin Martin on

+0208 994 7327

pm@bluecrystallondon.co.uk

Lets talk about your property

“I need a property manager” The Quiz

Take today’s quiz and find out if you will have to admit, in the end: yes, I need a property manager.

If it happens, and your property is in Central or West London, we’d be glad to help.

But first of all, take the quiz and find out if the answer is: “Yes, I need a property manager”.

 Question no.1: Is Your Rental Property Close to Your Home?

If you answered “NO“, add +1 point.

The more distance you have between you and your rental investment, the harder it will be to manage. If you reside in France and your rental property is in London, it will be harder for you to find tenants to handle tenant issues to quickly respond to emergencies, to take care of maintenance and repairs and even to make sure rent is collected on time.

The time it takes you to get to the property and the cost of getting there will also add up. In situations such as these, hiring a good property manager can make sense and actually save you money.

Read more: Renting out your home if you live abroad.  

Question no.2: How Many Properties Do You Own?

If you answered “More than 2“, add +1 point.

As the number of properties you own increases, so do your responsibilities. The more tenants you have, the more work involved, complaints, and vacancies you will have to deal with. In addition, if your investments are spread across multiple properties, you will spend even more time managing the cash flow of each individual property, as well as physically commuting from property to property to handle issues.

Question no.3: How Much Experience Do You Have with Managing a Property?

If you answered “None, yet“, add +1 point.

If you want to invest in property, but don’t know the first thing about property management, hiring an experienced property manager can be the right choice for you. Learning as you go can become very expensive.

Hiring the wrong repairman or taking too long to fill a vacancy can quickly eat into your potential income.

You need to be aware of regulations you are expected to follow, heating needs to be fixed on time, these are important details to successfully manage your property.

It is also important to note that hiring a bad property manager can also destroy your investment.

This is why it is so important to do your research and thoroughly screen a property manager if you decide hiring one is right for you.

Question no.4: Can You Afford to Hire a Property Manager?

If you answered “Yes“, add +1 point.

Check first that you can afford a property manager. A Property Manager will charge a fee, on average, between 5% and 8% of the monthly gross income for the property. If you have more than one property that needs to be managed, the fee would be lower than average.

Question no.5: Do You Have Time to Manage Your Property?

If you answered “NO“, add +1 point.

If you have a full-time job while you are investing in property and simply cannot give your property the attention it needs, the success of your investment could depend on hiring a good property manager.

Also, realize that time is money and managing a property requires time. If you feel like the daily obligations of property management are taking away time that could be better spent making more money at your other job, or looking for other investments, hiring an outside manager may be the right move for you.

Question no.6: Are You Willing to Give Up Control?

If you answered “Yes“, add +1 point.

Property managers can be in charge of everything from collecting rent to liaising with your accountant. You need to be ready to give someone control over your investment. Do they have experience and passion for your investment?

Question no.7: Are You Willing to Take on The Liability of a Property Manager?

If you answered “Yes“, add +1 point.

Property managers can make decisions on your behalf, but they can also make mistakes on your behalf.

Question no.8: Do You Have a High Vacancy Rate or Problems With Your Cash Flow?

If you answered “Yes“, add +1 point.

Good property managers are experts at finding and weeding out the bad tenants quickly and will have a network of reliable, cost-effective repairmen to handle emergencies. Most professional property managers will also understand the law placed on landlords, thereby reducing future risks.

Question no.9: What is Your Tolerance for Dealing With Tenants?

If you answered “Low“, add +1 point.

Is the stress of dealing with evictions, complaints and maintenance issues taking a toll on you? Property managers are experts in handling landlord-tenant conflict. They have an understanding of the law and can serve as the middle-man. In addition, if the tenant knows they are dealing with a third-party, they will act more professional as well.

You do not have to hire a property manager just because you are new to property investing, have many units or are having trouble filling vacancies. You need to make that decision yourself and decide what works best for you.

However, if you scored more than 4 in this test, your most likely answer is Yes, I need a property manager”.

If your property is in Central or West Central London, please do not hesitate to contact us on +0208 994 7327 – pm@bluecrystallondon.co.uk 

Would you like to network with people interested in property like you? Check the West London Property Networking!

What to do if your tenant damages your property?…..

If your tenant damages any of the contents of your property, you can deduct an amount from the deposit or even take legal action. Check out our services that includes fixing and replacing items at tenanted properties.

Damage to a rental property

Your tenant should report to you any damage to furniture or fittings immediately. You should then both agree how any replacement or repair is to be arranged and how payment will be made.

If your tenant doesn’t tell you about the damage and replaces or repairs an item without your agreement, then you should be able to identify this when you come to check the inventory.

The assured shorthold tenancy agreement (AST) should also outline the repairs obligations of both parties.

You would then be entitled to deduct an amount from the deposit, or take legal action against your tenant for compensation.

Wear and tear in a rental property

Remember, over a period of time, most household furniture and contents deteriorate as a result of normal use.

For example, floor coverings will become worn and paint work will get tired and scuffed.

This is known as ‘wear and tear’, and your tenant would not be liable for the replacement or upkeep of these items.

If the extent of the wear and tear means that it causes a hazard, for example, springs in an armchair begin to stick through the upholstery then you should replace or repair such items.

If you have supplied an appliance such as a cooker or washing machine that was working at the beginning of the tenancy, you have a responsibility to repair or replace it if it breaks down, unless this is as a result of the tenants’ negligence.

  • Your tenant should report any damage immediately. You should then both agree how any replacement or repair is to be arranged.
  • If the damage is due to wear and tear, your tenant would not be liable for the replacement or upkeep of these items.
  • You can use the deposit to claim back the costs of damage, but note that the rest should be returned.

Deposits

You can use the deposit to claim back the cost of damage to the property, missing items, cleaning, or unpaid rent.

However, even if you have a valid reason for keeping back part of the deposit, the rest of it should be returned. You should also note that your tenant can ask to be shown receipts or estimates for items that have been deducted from the deposit.

You cannot withhold any of the deposit unless there has been any financial loss suffered. So, for example, if your tenant had a noisy party when the contract stipulated they could not, you could not use that as a reason for withholding a deposit.

If you have any questions regarding your right to withhold your tenant`s deposit, please contact Pelin Martin on

+0208 994 7327

pm@bluecrystallondon.co.uk

Lets talk about your property

What to do when your tenant is in arrears with his rent?

It can be frustrating if you’re owed rent from your tenant. If you’re having trouble ensuring the rent is paid, these guidelines explain how to recover the money owed.

In short

  • If after several days the rent hasn’t been paid, then send your tenant a formal demand by first class mail
  • If after 14 days you still haven’t received outstanding rent, send the tenant’s guarantor a letter informing them that the tenant hasn’t paid that rent
  • If after 21 days you still haven’t received rent send a final letter, confirming your intention to take legal action
  • Send a letter to demand outstanding rent from your tenant

1-Keep record of payments

Keep a record of payments that are due and when they’re to be paid.

This system is particularly helpful if you have more than one tenant in the property, as it will enable your tenants to see who hasn’t paid.

If the tenants are held on a joint tenancy agreement, you should make it clear they must all be equally responsible for the arrears and clear the debts as a single unit.

Also, if you decide to make an application for possession against the tenant based on rent arrears, you will be required to provide a copy of the rent payment transactions under court rules.

2-Write to the tenant

After several days, if the rent hasn’t been paid, and your telephone calls have been unsuccessful, then send your tenant a formal demand by first class mail or hand deliver it.
In the letter, request that the outstanding arrears be paid immediately and ask the tenant to ensure that all future rental payments are made in full and on the due date.
It may also be a good idea to add to the letter that unpaid arrears could result in court action being taken against the tenant.
You should also state that you may make an application to the court for possession of the property should more than two months’ rent remain unpaid.

3-Send a letter to the guarantor

If you still haven’t received outstanding rent 14 days after the rent is due, send another letter telling the tenant that if he doesn’t pay, you’ll take the matter further and seek possession of your property.
If your tenant has provided a guarantor, send the guarantor a letter advising them that the tenant hasn’t paid the rent according to the tenancy agreement.
Normally the arrears will be paid quickly after this letter.

4-Possession of your property

If, after 21 days you haven’t received any rent from your tenant, you should send another letter.
This should be the final step before considering further action to reclaim your property.
If you have previously sent a guarantor letter, you should now send another letter to inform the guarantor that you haven’t received any rent.
You should also confirm your intention to take legal action if the rent isn’t paid.
If your tenant has gone a whole month without paying rent, and another month is due, you can now consider your tenant to be two months in arrears.
This means you have the right, under the Housing Act 1988, to take action to claim possession of your property.
Serving a Section 8 notice will inform your tenant that you intend to take him to court if he doesn’t pay within a further 14 days.
The notice must be in the prescribed form to be valid.

5-Court action

If your tenant doesn’t respond to your demands for rent, you are entitled to take legal action to seek possession of your property.
You may also ask the court to make a judgement against your tenant for the arrears of rent and reasonable costs incurred.
If you do take action and do get judgement against the tenant, you will have six years in which to enforce it.
Some insurance companies supply cover to landlords which will protect you if your tenant doesn’t pay the rent.
For a monthly premium you can ensure that your rent and any costs of evicting your problem tenant are taken care of.

If you have any questions regarding your tenant please contact Pelin Martin on

+0208 994 7327

pm@bluecrystallondon.co.uk

Lets talk about your property