If you’ve read my blog before then you’ve seen me mention the other house on a fair few occasions. But for new readers let me just explain:
Back in 2014, we bought a second property – it was my family home and it had been empty since Taid died two years before. I was determined to keep the house in the family so with some help from family we bought it.
After going through the process of buying the property and the baptism of fire that was become a landlord here’s some advice:
1) Tenancy agreement – a tenancy agreement is essential to protect both you as the landlord and the tenant. A clear tenancy agreement detailing who is responsible for what avoids confusion over who pays the bills! Also, the bank insists on a tenancy agreement to be in place as part of the mortgage.
2) Get a good financial adviser – mortgage applications can be tricky especially when it comes to buy to let mortgages. We have a unique situation where we are renting out to a family member so the mortgage market instantly constricts. Not all banks will lend in that circumstance because of risk.
3) Insurance – be clear to get insurance. As a landlord you must ensure that you have at least buildings insurance. There is no point for the tenant to have buildings insurance as they don’t (normally) have an insurable interest in the property. It’s the landlord who has the insurable interest in the property and as such, buildings insurance is essential. Cheap landlord insurance can be found in numerous places including HomeLet insurance. Oh and the tenant should also be advised to get contents insurance.
4) Register with Rent Smart Wales – if you’re a landlord in Wales then you will need to register with Rent Smart Wales. I have yet to do this (I have until October as I was an existing landlord when the rules came in) but I’ve been told it’s really easy to register but that you are required to take a little test/exam in order to comply with the rules. More info can be found on their website.
5) Budget – if you acquire a property that requires some work like we did, plan it out and budget. Don’t do what we did and go in guns a-blazin! You’ll turn around in two years time where on earth did all that money go?!
6) Tax – yes people, rental income is taxable income so you will need to register with HMRC and declare your income to them. Please note that there can be complex rules when claiming for expenses especially with the upcoming changes to interest relief. It may be worth getting in touch with an accountant or tax adviser. I can recommend Griffith, Williams & Co if you’re looking for one.
I certainly wasn’t prepared to be a landlord but l I hope that was enough to give you some food for thought. Oh and I almost forgot to mention that HomeLet are launching the second edition of their ebook series that offers advice to landlords. Be sure to keep an eye out for that in August.
Are you a landlord or thinking of becoming a landlord?
(in collaboration with HomeLet)