If you are considering buying to let special considerations apply to your purchase and additional legal responsibilities will be placed upon you as a Landlord. Whilst this is not an extensive list the following are some of the key factors you will need to consider:
- Mortgage Conditions – there is likely to be additional conditions placed upon you by your lender for example they will restrict:
- the type of letting (usually only an assured shorthold tenancy),
- to whom you can let to (often not a family member or those on DSS or with diplomatic immunity); and
- in some cases you may only let through a professional managing agent. Please read your mortgage offer carefully.
- If you employ a managing agent to let your property you will need to enter into a contract with them. This usually provides for a payment of 10-15% of the rental income to be paid to the agent depending on the level of service provided. Look out for hidden charges – especially those which catch you if you relet the property at the end of the term to the same tenant or sell to them. They may be higher than what you would consider if you negotiated from scratch. Again check the conditions of your agreement carefully.
- If you are letting privately you may need to draw up your own tenancy agreement – for most residential property this will be in the form of an assured shorthold tenancy agreement (we can prepare this for charge of £195 plus VAT)
- As a Landlord you will be responsible for carrying out repairs on the property. If you fail to do this a tenant may withhold rent or hit you with a disrepair claim. There is a limited responsbility on the tenant to look after the property.
- You must ensure all gas and appliances are checked at least annually to comply with the current safety requirements. Changes may be required if the property contains “hidden flues” to comply with current regulations (see http://www.ker.co.uk/residential-news/177-gas-safety-certificates-changes-for-residential-landlords.html )
- In addition all furniture and furnishing must meet fire safety regulations.
- Rent deposits need to be held in one of three approved schemes https://www.gov.uk/tenancy-deposit-protection/overview.
- If your property is leasehold you will need to comply with your lease – normally notify the landlord that you are subletting (and pay their notice fee). Some leases require you to obtain the landlord’s consent before letting.
- Tax – you will need to consider Income Tax (on the rental income) and Capital Gains Tax (on the profit made on the property when you sell it). Although we do not provide tax advice we would recommend you speak to an accountant before your purchase the property to ensure that you acquire it in the most tax efficient way.
- House In Multiple Occupation (HMO) – special rules and / or licencing may be required from the local authority for example you may have to install additional saftey equipment and apply for a licence at additional cost.
- Local Regulations – special rules may apply in areas where there are large concerntractions of tenants – typcially in student areas. The local authority may have introduced selective licencing schemes and therefore further regulations will apply similar to HMOs.
There is more information on your general landlord and tenant obligations in the DETR Guide “Assured and assured shorthold tenancies”
General tax advice can be obtained from the Inland Revenue in their Property Income Manual (PIM).
For further help and assistance in buying a buy to let property call Mark Sadler @ kenneth elliott + rowe solicitors on 01708 757575 or email: firstname.lastname@example.org