Landlords! Here’s What You Need to Know About Right to Rent

An agency can handle these checks and legislation for you.

One of your responsibilities as a private landlord is to check if prospective tenants have the ‘right to rent’ in the UK. It stems from the Immigration Act of 2014, a measure designed to make it difficult for illegal migrants to remain here undetected.

The 2015 Immigration Bill builds on this, granting increased eviction powers for authorities and criminal penalties for non-compliance.

Landlords! Here's What You Need to Know About Right to Rent Aspen Woolf

As a landlord, these ‘right to rent’ responsibilities can only add extra weight to an already stressful workload. In addition, some tenants make it difficult to obtain their personal information or simply produce fake documents.

This is why we recommend making your investment through a professional lettings agent such as Aspen Woolf. We’ll take care of these requirements on your behalf, using a team of legal specialists to verify documents and even take liability if financial penalties do arise.

By doing so, this will help secure your investment and maximise its potential earnings.

 

Official Legislation

Landlords! Here's What You Need to Know About Right to Rent Aspen Woolf

Details of the ruling can be found under Section 22 of the Immigration Act 2014, which declares that landlords: “must not authorise an adult to occupy premises under a residential tenancy agreement if the adult is disqualified as a result of their immigration status.”

To comply with these requirements, you must view original immigration documents, make copies and keep them for 12 months after the tenancy expires. If these documents are held by the Home Office, a landlord’s checking service can be accessed online here.

If you’ve made these checks and discover your current tenant is living in the UK illegally, you must report this as soon as possible. Once this has been done, the process falls out of your hands and you’re under no obligation to force an eviction.

However, if you don’t make sufficient effort to report a tenant without the right to rent, you may face a civil penalty up to £3,000.

Although there are various stipulations to adhere to, the legislation does not apply to the under 18s or those not renting the property as their main home. If you’re unsure of anything, additional details can be found on the official government website here.

 

Managed Lets

Landlords! Here's What You Need to Know About Right to Rent Aspen Woolf

One useful aspect of the legislation is that an external agency can carry out these ‘right to rent’ checks on your behalf.

Aspen Woolf can recommend fully licensed companies to do so and can draw up a written agreement which passes responsibility onto them. We can also recommend the correct due diligence platform that will perform detailed background checks and credit reports on all potential tenants before they move in.

This is of great help to landlords who don’t always appreciate the extra hassle that comes with some independent buy-to-let investments. If you need any further information regarding our ‘right to rent’ compliance, please feel free to get in touch today.

As a landlord, you may be interested in whether Build-to-Rent is the future of property investment.

Is it Worth Furnishing Your Residential Rental Properties?

It's up to you as the landlord to decide how far to go if furnishing your rental property but many tenants may expect there to be a bed.

As a landlord, furnishing your rental property or leaving it empty is entirely up to you. It all depends on your budget, how much rental income is desired and the kind of tenant you’re looking to attract.

There’s also the middle ground to consider. This is where you provide basic furnishings such as a bed, sofa, oven and washing machine, but require the tenant to supplement this with their own belongings.

 

What Counts as a Furnished Property?

Is it Worth Furnishing Your Residential Rental Properties? Aspen Woolf

There’s no legal definition for a furnished property in the UK, but tenants will expect some or all of the following items to be provided:

  • Bedroom: bed, chest of drawers, wardrobe
  • Living Room: sofa, armchairs, television
  • Dining Area: table, chairs
  • Kitchen: fridge, freezer, oven, microwave
  • Utility appliances: washing machine, dryer, dishwasher

Of course, it’s also advised to spruce up the property as best you can. Ensure flooring is solid with carpets or wood installed to the proper standards. Curtains and blinds are another expected feature, as well as attractive paint jobs or wallpaper. Another recommendation is to provide access to a Wi-Fi internet connection.

As a side note, consider your legal responsibilities as a landlord when furnishing the property – these can be found on the government website here. Landlord contents insurance is also highly recommended.

 

Furnished Rental Properties

Is it Worth Furnishing Your Residential Rental Properties? Aspen Woolf

Kitting out the property is likely to attract more enquiries. Modern renters don’t tend to have their own furniture so will be actively searching out furnished homes, especially in the case of students or young professionals.

If you’re worried about the added expense, consider it as an investment. Tenants may come and go, but your furnishings will always be there. In addition, you’ll now be able to charge higher rents to offset these initial costs.

Inexperienced landlords may not be aware of the tax benefits of furnishing your property. Although the ‘wear and tear’ tax has been reformed, the new relief system still enables residential landlords to deduct costs on replacing furnishings, appliances and kitchenware.

 

Unfurnished Rental Properties

Is it Worth Furnishing Your Residential Rental Properties? Aspen Woolf

Unfurnished homes may attract less interest overall, but much depends on the expected tenants. For example, families – whose reliance on the rental sector has rocketed over the past decade – are likely to possess their own furniture anyway. Rents will be generally cheaper also, meaning more enquiries from lower earners are likely to come in. Families, on the upside, tend to stay in the same property for much longer. Ensuring your rental income remains stable for the foreseeable future.

Landlord’s want the least hassle possible and unfurnished properties offer that. There’s no removal fees to contend with (now or in the future), less concern over general deterioration and no insurance requirements.

However, remember that some basic amenities will still be expected by potential tenants. These will include sufficient heating, electric and gas supply, along with flooring, curtains and perhaps a washing machine, oven, refrigerator, etc. You can add to this ‘inventory’ as time goes by as your budget increases.

Whichever option you decide upon is entirely up to you and much depends on your finances and rent expectations. However, investing in a managed let via an estate agents provides the best of both worlds. You’ll receive a fully furnished property with all the potential hassle taken care of.

Whether you’re a first time property investor or already have a portfolio, you might be interested in whether Build-to-Rent is the future.
You can find out about managed let opportunities available throughout the UK over on our Investments page.

Buy-To-Let Investors Face Surcharge

What tax changes means for you

The latest budget from the Chancellor of the Exchequer was watched with increased interest by those heavily invested in the property market. After last year’s announcements regarding stamp duty hikes and tax relief cuts, George Osborne had his work cut out to re-enamour himself and his government with landlords up and down the country.

While Mr Osborne did indeed offer some investors a huge boost by significantly slashing Capital Gains Tax, landlords were left more than just a little miffed by the inclusion of a surcharge that will be levied against the sale of residential property.

Buy-To-Let Investors Face Surcharge Aspen Woolf

Image Credit: Alan Cleaver via Flickr

The changes

The cut in capital gains is a hearty eight per cent and has been welcomed by many. For those who operate on the basic rate of tax for capital gains, this means a reduction from 18 per cent down to 10 percent, while those in the higher bracket will only have to pay 20 per cent as opposed to the pre-budget 28 per cent.

The kicker for landlords, however, is that any gains that have been made from residential property will not be eligible for these reduced rates. When it comes to selling their investments, landlords will have to pay the old rates of Capital Gains Tax – something that is being seen as essentially an eight per cent surcharge. Not only that, carried interest will be charged at the old rate as well.

From the government’s point of view, the move was introduced in order to persuade investors to move away from property and to place their money into companies instead, but landlords are understandably dismayed by this decision.

 

When gains are not what they should be

The new rates will leave anyone selling a residential property with a bitter taste in their mouth as they think of what might have been. For example, at present, if someone who pays the basic rate of tax were to cash in a £10,000 gain on their property (one that is above the tax-free threshold of £11,100) they would be left £8,200 after tax had been deducted. Those on the higher or additional-rate would be left with £7,200.

The new rate, however, would have given landlords who pay the basic rate of tax a return of £9,000, and £8,000 for anyone who falls into the higher or additional-rate. Even the chancellor couldn’t deny that the rate of taxation is one of the ‘highest in the developed world’.

Buy-To-Let Investors Face Surcharge Aspen Woolf

Image Credit: Images Money via Flickr

 

Perceived losses will likely be passed on

It is important to remember, however, that there has essentially been no change to what landlords will have to pay when they decide to sell up. This is not an increase; it is simply a benefit that has not been extended to those who choose to invest in the residential property market.

It is perfectly understandable that landlords will feel victimised by this latest piece of news from Her Majesty’s Treasury, but the fear is that the real losers will be first-time buyers and tenants, as landlords and sellers look to redeem the surcharge levied against them by raising house prices when they come to sell.

If you found this post interesting, you might also enjoy The Rise of Commercial Property Investments In The UK and Everything You Need To Know About Student Property Investment In The UK.

Can You Really Make Money with Buy-To-Let Investments?

With so much hype surrounding the whole buy-to-let market at present, it can be easy to dismiss the whole investment vehicle as being too good to be true. However, is that really the case? While reports in the media concentrate on the ultra successes, what about everyone else? Can anyone make money through buy-to-let?

Knowing what’s involved

One of the biggest dangers for those who are new to buy-to-let investments is the misconception that they can make easy money. While it is undoubtedly true that there is still plenty of money to be made in the UK property market, believing that it is easy is a sure fire way to become quickly disappointed and disillusioned.

You need to be serious about your investment and willing to put both time and effort into making it work – it isn’t simply a case of buying somewhere and then kicking back. Unfortunately, there’s a lot more to it than that. So, if you’re ready, let’s take a look at what’s involved.

Selecting the right type of property for your investment

First of all, you have to assess your own situation before you can take the plunge into the buy-to-let market. What do you want from your investment? Do you want capital growth that will possibly be used as a retirement nest egg later in life? Or would you prefer to receive a regular monthly income from the property?

Making this decision is essential, as the days of receiving both from a property investment have been waning ever since the financial crisis hit back in 2007. It’s not impossible, but it certainly has become a lot more difficult to find a property that delivers both, so you need to make the right choice for your circumstances before you buy.

Can You Really Make Money with Buy-To-Let Investments? Aspen Woolf

Image Credit: Pixabay

Know your numbers

First time property investors can easily get sucked into things like aesthetics when choosing a property to invest in, but it really all comes down to one thing – numbers. Overpaying for a property simply because you fall in love with a feature is not good business, so you need to be aware of this if you want to make real money from the property market.

Knowing what your budget is also means calculating your monthly living expenses and working out whether or not you can cover any unexpected costs that may occur. For example, could you cover the mortgage should the property be left empty for a couple of months? If the answer is no, you might want to reconsider your position before you put down that deposit.

Can You Really Make Money with Buy-To-Let Investments? Aspen Woolf

Image Credit: Pixabay

To manage or not?

Another consideration is how hands on you want to be when it comes to managing the property. Many people opt for having a management company to look after their buy-to-let investment rather than have the hassle of phone calls at inconvenient hours about a broken boiler or having to chase tenants for unpaid rent. However, this privilege costs money, and it could eat into your profits fairly quickly if you are operating on tight margins.

It’s another thing to think about as it can really make all the difference between making money, breaking even or, heaven forbid, having to put your own money in to cover the shortfall yourself.

Conclusion

Can you really make money with buy-to-let? Definitely, but it won’t be as easy as you may think and only serious investors should take the plunge. However, that being said, if you are willing to put in the effort necessary to make it work, the rewards can be fantastic. Providing you have done your research, know your limitations and have a keen eye for a bargain, there are still plenty of decent opportunities out there.

And remember, those opportunities can be found anywhere, from the next street along, to the next county, or maybe even in another country altogether. Keep an open mind and be prepared to put a little effort in and your dreams of being the next buy-to-let baron might just come true!

If you enjoyed this blog post then perhaps you might like to read “5 Ways To Spot An Up-And-Coming Area

Will The Buy-To-Let Market Still Be Successful in 2016?

set of keys

No one can deny the success that countless landlords up and down the country have had with their buy-to-let property portfolios in recent years. In fact, a recent report from property experts Savills stated that landlords have raked in an astonishing £180 billion since 2009 in capital gains alone!

Low interest rates have seen the property market open up to those who may have otherwise been unable to choose this field as a viable investment opportunity. Couple this with the ever-increasing demand that has fuelled both house prices and rental charges to rise and it’s easy to see why property investment has become so popular over the last decade or so.

Will The Buy-To-Let Market Still Be Successful in 2016? Aspen Woolf

Image credit: Didier Jansen via Flickr

However, good things rarely last forever, and many people are now wondering for just how long the buy-to-let market will remain successful. It would seem that the future does indeed still look bright for those who have already taken the leap and created a property portfolio. But, for those who are considering entering into what many now see as a saturated market, there are one or two considerations they would be wise to pay close attention to before they invest:

Changes in taxation

George Osborne announced in his July budget that there would be changes made to the amount of tax relief that will be available to landlords from 2017. The move, which will be phased in over a four-year period, will see the relief capped at 20% as opposed to the current ruling that allows you to deduct all financial costs related to your property from your taxable income.

Will The Buy-To-Let Market Still Be Successful in 2016? Aspen Woolf

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Stamp duty is set to change for purchases of buy-to-let property as well as second homes too. This is due to come into force in April 2016, and estate agents and solicitors are already seeing an increase in activity as prospective landlords hurry to beat the deadline that will cause the duty on such properties to rise by 3% across the board.

Another measure introduced is the removal of the 10% charge for wear and tear for those renting out furnished properties. This was always seen as a great way to build a sink fund for landlords as they could claim the full amount even if they hadn’t made any repairs on the property in that 12-month period.

Will The Buy-To-Let Market Still Be Successful in 2016? Aspen Woolf

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Property prices

Many analysts believe that the UK property market is bordering on entering a bubble, which inevitably leads to a correction at some point in the not too distant future. That being said, this does not look set to happen any time soon, as the demand for property still remains so high in much of the country.

Rises of 2% in both 2016 and 2017 are expected. This will mark a slowdown, but will still give those in the property market reasonable returns – even if they may not be as strong as they have been in recent years.

Will The Buy-To-Let Market Still Be Successful in 2016? Aspen Woolf

Image credit: Images Money via Flickr

Rental yield

Despite London and the southeast leading the way in terms of capital growth, many of the better rental returns are still to be found further afield. Places such as Glasgow have returned far higher yields, thanks largely to the lower house prices available there.

As with overall house prices, rental yields are expected to continue to rise in 2016, with some analysts stating that they envisage increases of around 4% when compared to the previous years figures.

Will The Buy-To-Let Market Still Be Successful in 2016? Aspen Woolf

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So, the short-term prospects for the buy-to-let market look good at the moment and the previous worries over rising interest rates have also been quashed somewhat, thanks to inflation slipping back into negative territory recently. Nevertheless, canny investors would still be wise to factor in some rises into their calculations in order to give themselves a buffer should these predictions fail to materialise.

If you enjoyed this blog post then perhaps you would like to read “Don’t Miss Out on Attractive Stamp Duty Rates For Buy To Let“?

Feature image credit: Keith Williamson via Flickr.

Don’t Miss Out on Attractive Stamp Duty Rates For Buy-To-Let

George Osborne’s recent announcement that stamp duty on buy-to-let properties and second homes is to rise by 3% in April 2016 looks set to spark a rush of buyers trying to complete before the changes take place. The move, which was put forward by the chancellor in his autumn budget statement recently, has been widely criticised, and many believe that its introduction could see rents rise and new-build developments stalled.

Higher rents, fewer properties

The Institute for Fiscal Studies condemned the move and stated that the “disproportionate” rise will depress the property market in the long term. The IFS, an independent research institute, went on to say that they believed that the move would not only lower house prices, it would also cause problems for future developments as well.

Don't Miss Out on Attractive Stamp Duty Rates For Buy-To-Let Aspen Woolf

Image credit: Chris-Håvard Berge via Flickr

The introduction of higher stamp duty charges will devalue properties as prospective landlords and homeowners will be less willing to pay premium prices when they will also be hit with increased fees. This means that property developers will be less incentivised to build new homes, as their returns will be far lower and the properties more difficult to sell.

Loopholes are already being explored

As many as 50,000 people could try to complete property purchases before the new charges come into force in April next year, and there are also concerns that prospective landlords will get ‘creative’ in order to avoid the charges altogether. Many couples are already considering splitting the ownership of their properties, while others will undoubtedly be looking at the prospect of living in their new property for a short period before placing them on the rental market.

Don't Miss Out on Attractive Stamp Duty Rates For Buy-To-Let Aspen Woolf

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Help for first time buyers

Despite the criticism to the new proposals, the chancellor remains confident that the 3% increase will bring in an additional £1 billion to the Treasury by 2021. It has also been announced that up to £60 million of the funds raised by the proposed stamp duty tax increases will go towards helping those who are struggling to get onto the property ladder.

Areas where second homes are most popular have seen property prices soar out of the reach of ordinary, local people and any additional help from the Treasury will be welcomed by those affected. The Government’s Help to Buy scheme is also to be extended to 2021 in England, an additional 12 months longer than planned.

Don't Miss Out on Attractive Stamp Duty Rates For Buy-To-Let Aspen Woolf

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In the capital, buyers will be able to obtain loans worth up to 40% of the properties’ value providing they can get a 5% deposit together for the purchase. Across the rest of the country, loans of up to 20% of the overall property value will be made available to those who meet the necessary criteria. All of these loans will be kept interest free for five years.
This means an extra £6.9 billion for housing from the Government in total, £2.3 billion of which will be allocated to the starter homes programme. Another £4 billion is to be made available to local authorities and housing associations in the hope that more homes will be built for those who wish to gain access to the property market via shared ownership.

If you enjoyed this blog post then perhaps you would like to read “What Is A Buy To Let Mortgage and Is It Right for Me?

Feature image credit: Birmingham News Room via Flickr.