- think of your investment as medium to long-termn
- do your sums carefullyn
- research the local marketn
- consider decorating to a high standard to attract tenants quickly
- purchase anything with serious maintenance problems
- think that friends and relatives can look after the letting for you – you’re probably better off with a full management service
- cut corners with tenancy agreements and other legal documentation
Bear in mind that investing in a buy to let property is not the same as buying your own home. Therefore, you may wish to get an agent to advise you of the local market for rented property. You need to find first what type of property is in higher demand and where, such as properties close to schools or transport links.
You need to be aware that letting property can be very time consuming and inconvenient. Tenants have rights and will expect a quick solution if the central heating breaks down over the weekend or bank holiday. Also, would you want to advertise the property and show around prospective tenants yourself. There is always the option of hiring a letting agent to deal with all of this for you.
A tenancy agreement will ensure that the legal position for both sides is clear.
Rental income tax
Income tax will be payable on the net of rents received less allowable expenses. Currently allowable expenses include mortgage interest, repairs, agent’s letting fees, and an allowance for furnishings. The Summer Budget changes will impact on the allowable expenses for landlords, particularly the amount of mortgage interest allowed.
If you live in Croydon, Kent and London we, at Adiva Accountants in Croydon, can help you structure your investment appropriately.