This Easter – Prepare Your Home For Rent
Although a mystifying number of property owners still see fit to show their homes and rooms to prospective renters with last night’s dinner plates in the sink and dirty laundry on the floor, most of us know the power of persuasion that a few candles and a thorough de-cluttering can have.
The market may currently be tilted in favour of landlords, with members of the Association of Residential Letting Agents (Arla) reporting more prospective tenants on their books than properties to show them, but if the landlord has made little effort to make the place inviting, prospective tenants will look elsewhere. It’s particularly the case at a time when tenants are seeking to stay for longer periods, with Arla calculating that the current average tenancy is now 19.2 months.
Dressing your rental properties won’t just achieve the best rent; it will see the properties let out more quickly, too. Developers know how to sell a lifestyle by dressing a property. Private landlords also need to learn a few tricks.
Being well presented doesn’t just mean the condition of the property but the way it is dressed. We recommend one painted or wallpapered ‘accent’ wall in the reception and maybe master bedroom to give an interior design look. It’s not expensive but it makes the flat stand out.
Beds should be made and dressed with coloured cushions and throws, tables laid, towels put in the bathrooms, and all mirrors and pictures hung on the walls. Tenants are discerning and the difference between a dressed and a poorly furnished property is enormous and will affect the rental value. For landlords, it’s a small investment and the return always outweighs the cost. That difference can be as much as 20 per cent.
A survey found that a two-bed flat in Hampstead whose rental value has risen from £425 to £570 a week as a result of it being dressed. Another two-bed flat in South Kensington let, undressed, for £1,100 a week. When it sold, the new owner dressed it with new bed linen, kitchen accessories such as kettles and toasters, and pictures on the walls. The new rent was £1,400. In new developments, tenants will always go for the property that is better dressed, even if it’s on a much lower floor without the views.
Dressing to let can be tricky if your property is occupied, so you either need to wait until a void period, then style it just how you want it, or you need amenable tenants. Telling them that if they keep the property clean and tidy they will be less inconvenienced by work to smarten it up should help.
Getting a lettings agent to do the viewings without you is fine – tenants can often be intimidated if the owner is present anyway and forget to ask pertinent questions.
Always remember to open windows to air the flat before viewers arrive, switching on the lights and heating, hiding piles of free post and letting the landlord know if the windows need cleaning or the grass cutting.
As more than 80 per cent of applicants start their search online, having good high-resolution photos that sell the best aspects of the property and floor plans are also crucial. Make sure your property doesn’t go live on portals without them and that the flat is kept in a viewable state.
Ensure you get all feedback from viewings, positive or negative, and act on it accordingly.
Landlords with higher-value properties may recruit an expert eye to make aesthetic improvements, including interior designers who will choose the furniture. In most cases, the tenant will have the option of renting the furniture as part of the tenancy agreement.
Landlords will pay designers around £15,000 to spruce up central/west London flats that rent out for £1,000 a week, she adds.
Some landlords throw in freebies – gym membership or Wi-Fi – to tempt tenants. Marketing a property is about incentivising potential renters and staying ahead of the competition. Securing a tenant and maximising income is down to how a property feels the moment you walk through the door.
There are four main deterrents for potential tenants, are evidence of pets, children, tobacco smells and chip pans. The most important thing is to make it feel like a home. Declutter and depersonalise the property so anyone can imagine themselves living there.
Financial responsibilities if you rent out a property
You might be a professional buy-to-let landlord, or you might rent out your home as an ‘accidental landlord’ because you need to move out of your home to trade up or rent somewhere larger. Whatever your situation, make sure you’re aware of your financial responsibilities.
Inform your mortgage lender
You need to let your lender know that someone other than you will be living there. Depending on how long the arrangement is for, you might need to switch to a different mortgage. If you’re choosing a property to rent out, read our guide on Buy-to-let property investments.
Tax implications
As a landlord you need to know your Income Tax and Capital Gains Tax liabilities.
Income Tax
From April 2017, individuals who rent their properties online, through websites such as Airbnb, will not have to pay any tax on the first £1,000 they make through this service. Rental income is added to any other income you earn during the year.
For example, from employment or savings You must declare this income on a Self-Assessment tax return each year. However, you can claim certain expenses to offset against your rental income and reduce your tax bill. This includes, for example, mortgage interest payments, if you have a buy-to-let mortgage, letting agent fees and maintenance costs.
Buy-to-let landlords can offset their mortgage interest payments and some of their costs against their income.
From April 2017, the higher and additional rates of relief will be phased out. They will be restricted to 20% for all landlords by April 2020.
Capital Gains Tax
If you are selling a property that isn’t your main home – including a rental property – it’s likely that you will have to pay Capital Gains Tax on any gain (profit).
You can offset expenses of a capital nature such as replacement windows against capital gains when the property is sold.
As this might be many years later it’s important to keep records and evidence of any such expenditure.
Then when you come to sell check with a financial adviser or accountant what you can claim back.
Register your tenants’ deposits with a Tenancy Deposit Scheme
These schemes are used to protect the tenants’ deposits. In England and Wales you must by law put the deposits in a suitable scheme within 30 days of the date of the start of the tenancy agreement.
Tax rules for holiday lettings
The tax rules for full-or part-time holiday lets differ from those for private renting.
Your legal responsibilities as a landlord
You have many legal responsibilities to comply with as a landlord, including:
- Drawing up a legal tenancy agreement, Safety of gas and electrical appliances that you supply
- Fire safety of furniture and furnishings that you supply
- Providing an Energy Performance Certificate for the property
- Protecting your tenants’ deposits in a government-approved scheme
- Checking your tenants have the right to rent your property if it’s in England
A new registration and licensing scheme has been introduced in Wales. It aims to raise awareness of the respective rights and responsibilities of landlords, agents and tenants.
If a landlord wants to manage the property themselves, they must prove that they’re ‘fit and proper’ to hold a licence.
They must then take (and pass) approved training.
Alternatively, they’ll be able to appoint a licensed agent to manage the property on their behalf.
Private landlords must register with Rent Smart Wales. They must also register their properties.