If you’re moving out of Leamington Spa, letting your property rather than selling it might be a good move.
Rents have been increasing due to the combination of higher borrowing costs and a property shortage in the area. With its amazing location, close to the M40, Warwick hospital, Warwick University and direct links to Birmingham and London, the CV31, CV32, CV33, CV34 areas of Leamington Spa and Warwick will remain popular with buyers and renters alike, meaning it is worth holding onto property here in the long term.
Maybe you’re considering investing in a buy-to-let property in Leamington Spa. Or you have inherited a property or acquired one after relocating or moving in with a partner? Whatever your reason for letting a home, it’s worth getting your head around the key details that every successful landlord needs to know first.
1. Is it worth becoming a landlord?
Although it can be lucrative, it’s worth considering in more detail whether it’s the right option for you and will the financial rewards will make all the work worthwhile.
Calculate all the costs involved and work out your estimated rental yield to see how much profit you can make. The costs can include: Stamp duty, Buy-to-let mortgage repayments and fees, maintenance and refurbishment, Letting agent fees, Solicitor fees, Landlord insurance and account for any void periods.
If you are buying a second property, there will be a stamp duty surcharge on top of the stamp duty rate, which is based on the property’s price.
When calculating your projected net profits, ensure you are familiar with the tax relief you are eligible for. While landlords were once able to deduct mortgage expenses from their tax bills, this has been phased out. The easy way is to ask your accountant for advice.
2. Being a landlord means running a business
You must take a professional approach to becoming a landlord. You don’t need to give up your day job, but it does mean getting organised and understanding the role.
With a business venture, you can’t have too much sentimental attachment to the property and furnishings. You need a professional relationship with your tenants too. Be a good communicator, responsive and helpful but remember that they are your tenants, not your friends.
3. Can you let out the property?
If you have a mortgage on the property, ask your lender if you can let the property. You may need to shift your mortgage to a different product which could come with higher interest rates. Tell your buildings and contents insurance company and check for any conditions in your lease if your property is leasehold.
4. Decide whether to rent furnished or unfurnished
This is about matching the target audience for your property with the house you are providing.
Families looking at houses tend to prefer unfurnished. Young professionals in their first home are more likely to want part furnished, at least. If you opt for furnished, it makes sense to match it to your tenant’s needs – look for solid, neutral, hard-wearing items and reasonable quality appliances that will last.
5. Know your responsibilities as a landlord
As a landlord, there are many regulations that you must comply with by law, such as safety checks. You must understand your responsibilities to protect your tenants’ health and safety and avoid fines or court proceedings for non-compliance.
There are now over 170 Acts & Regulations to comply with; of which these are some of the primary responsibilities to be aware of.
Gas appliance (safety) regulations
Electrical safety standards in the private rented sector
Regulatory reform (fire safety) order
House health homes (fitness for human habitation) act
Energy performance of building regulations
Immigration act & Immigration restrictions
Housing Act 2004
Landlord licencing for Leamington Spa
6. Organise a landlord insurance policy
A normal residential home insurance policy won’t cut it for landlords, so look for a bespoke policy for buildings and contents. With buy-to-let mortgages, your mortgage lender will require you to have buildings insurance in place.
Other products available for landlords might work for you, such as rent guarantee insurance if your tenant fails to pay their rent. Breakdown cover for your heating, system and other issues like plumbing and electrics can also be helpful.
7. Most landlords choose a letting agent
Letting agents offer a ‘tenant find’ service and can take care of the day-to-day management. If you do not have much experience managing properties and dealing with tenants, or you do not have much time to commit, choosing a letting agent to manage on your behalf will generally be the better option by reducing your personal legal exposure.
You must use a letting agent to list rental properties on the main property portals. You can choose between a high street agent or an online one. A respected market leading high street letting agent will have an in-depth knowledge of the local property market and usually have a waiting list of prospective tenants to minimise void periods.
8. Set the right level of rent
If you’re using a letting agent, they will advise you about the right rent to charge. You can get a good idea by checking out details of similar places on the property portals such as Rightmove and Zoopla and using an online rent calculator tool. But there is no substitute for hands-on, day-to-day earned experience and sound personal advice.
9. Finding tenants
Letting agents understand your target market and we know how to attract the type of tenant you’re looking for. Having high-quality photographs and videos to advertise on property portals is essential to secure viewings, while staging the property will help persuade viewers that it is the right property for them.
If you are not using an agent, you must arrange and host the viewings yourself, which is often time-consuming and unrewarding.
10. Sort out your tenancy agreement
A written tenancy agreement must be created, which includes the rights and responsibilities of both the landlord and the tenants. Having a clear list of responsibilities will help if there is any confusion in the future. A letting agent can help you with this.
11. A detailed inventory is a must
A comprehensive inventory will help prevent a dispute at the end of your tenancy. You need to list everything in the home, including furniture, appliances, fixtures and fittings. Plus record the condition of the property and all items, adding photos and videos.
Both you and your tenant must sign the inventory to confirm you are happy with the condition listed. Inventories aren’t just for furnished places – you will need one if you are letting out the property as unfurnished too.
12. Pay your tax
Income Tax: You must register for self-assessment, file a tax return and complete a self-assessment tax return. You must register for self-assessment by the 5 October after the tax year in which you received rental income. Landlords pay income tax on their profit after allowable expenses such as insurance, repairs and maintenance (but not home improvements) and bills. Find out more on the gov.uk website.
Capital Gains Tax: You must also know your liability for paying capital gains tax if you sell the property in the future. Refer to government websites for the current rates.
Contact us
If you are considering letting out property in Leamington Spa, Warwick or Kenilworth, please do talk to us. We’d be happy to take you through the steps involved in becoming a landlord and give you more details about our services.
Call our Leamington Spa branch today on 01926 429 400
