Buy-to-let has become has become an important part of business in the UK, with small-scale property investors looking to see their savings deliver some extra income and an asset that increases in value over time. However, there are many things to consider, including mortgages, tenants, insurance, and safety. Read on to find out how to make the best of your buy-to-let investment and avoid paying hefty fines when it comes to compliance with regulations.
Gas & Electrical safety
When it comes to gas and electrical safety, it is important to keep up to date and comply with regulation. Gas appliances require an annual inspection carried out by a registered gas engineer – contact HSE Gas Safety to arrange this. Failure to comply with these regulations may lead to prosecution and fines up to £25,000. As a landlord, it is also important you supply your tenants a written report on the condition of each appliance, and keep records of the safety checks and issue a copy of them to new and existing tenants. When it comes to electrical safety, a qualified electrician must carry out a safety check to ensure that the electricity supply and all appliances are legal. As a minimum, landlords should have an annual electrical safety inspection carried out to ensure they are abiding by the laws set out.
Buy-to-let mortgages are the backbone of these investments, essentially enabling buy-to-let properties to be available to not only the super-rich. With these mortgages, it is important to understand that they do not behave in the same way as owner occupied mortgages, as they pose a greater financial risk, and therefore attract greater premiums from lenders. Buy-to-let mortgages also tend to come with larger fees than typical home mortgages, but these can be claimed back against tax. It is therefore advisable to talk to an accountant if you need help with this.
Tenancy agreements and referencing
Though less of a problem for landlords looking to let with an estate agent, referencing and tenancy agreements for private landlords can be cumbersome. Tenancy agreements should clearly set out the rights and responsibilities of landlords and tenants, the rent payable, what is/isn’t allowed in the property and, often as a separate document, a detailed inventory of the property. Something else to consider is the type of let: an Assured Shorthold Tenancy is the most common in the private sector, and as a landlord, you must adhere to the Tenancy Deposit Protection Scheme.
When it comes to referencing, you must make sure your tenants have a good credit record and have no CCJ’s, debts or previous rent arrears to their name. This is essential to know as a landlord, as it is a very good indication as to whether you are letting to a reliable and responsible tenant. Of course, this does not necessarily assure that your tenants will pay the rent, and it is, therefore, advisable to take out rent guarantee insurance to be assured rent will be paid.
Though buy-to-let regulations may seem complex, they are a vital aspect of the buy-to-let process to ensure buyers and tenants have a fair and transparent relationship. This is a great investment option for those who have enough money to put down a big deposit for a mortgage or buy the property outright and is a very safe option compared to stocks and shares. Speak to us at The Spaces Collective if you have any questions regarding regulations.