How To Compile a Property Rental Inventory

admin    Landlords     letting agreement inventory, letting rental inventory, property inventory checklist, property rental inventory, property rentals

A detailed letting inventory is an extremely important document that will benefit both Landlord and Tenant; however it is more likely to be an aid to the landlord. Taking an inventory of property both at the beginning and the end of a tenancy would show the exact condition of the property rental should there ever be a dispute between the tenant and landlord. Although having an accurate and detailed property inventory is vital, it does not have to be burdensome.

Take a walk through your rental property and/or rental properties, and write down a detailed description of everything you come across, both interior and exterior, from fixtures, flooring, appliances, furniture (if applicable), the walls, windows and everything in between.  Once you’ve put together a complete comprehensive list, this list will act as your Property Inventory checklist that can be used with each tenant and at each rental property.

Now you have a tool that will enable you to report a before and after snapshot for each tenancy agreement.

At the beginning of the tenancy agreement you’ll do a walk through with your tenant taking precise notes of each item and condition of all letting inventory on your checklist.  Let the tenant make notes and point out obvious marks or flaws on the doorways, scrapes on the walls or missing fixtures.  This document, compared to the one you’ll also make as the tenant exits the tenancy will be helpful should there be a dispute at the end of tenancy.

At the conclusion of the tenancy agreement is when you as Landlord will want to take notes of any damage, missing items and obvious misuse of the unit.   The property rental Inventory will serve as a comparison for the general overall cleanliness, state of repair and condition of the rental property prior to and at the end of tenancy agreement.  You will also be able to use this tool for making note of utility meter readings (if applicable) should you require payment for used utilities.

For long term rental agreements you might also want to include an interim report.  As with any item, there’s a wear and tear element that must be considered and should not be construed as negligent.  All things will eventually wear out, break down or just generally need to be updated.  If you look at all aspects of the condition of the building, and the way in which your tenant has kept up with the normal every day maintenance, you will no doubt get a true feel for what has been misused and what has just come to the end of its usefulness.

Keeping your property inventory accurate and up to date will save you a great deal of time and headaches in the long run.

Both parties will have to agree with the reports and once everyone is in agreement, the document should be signed.  As this signed property rental inventory has now become a legal document, it can be used when deciding if a security deposit is eligible for return or could be entered as evidence in a court proceeding if it ever became necessary.

Calculating Tax Owed On Rental Income

admin    Landlords     calculating tax on property rentals, property rental, property rental tax, tax on property rentals

As with any sort of income producing venture, there is always the expectation that you will be required to claim this income in order to pay taxes on the rental property.  A residential letting is considered to be running your own business, whether you have one rental property or several, they are all considered to be a single business.

Property rentals can be calculated in two ways, according to the HM Revenue & Customs. If you are only renting out a furnished part of your own home to a lodger, you could be eligible under the “Rent a Room” Scheme, in which £4,250 per year or below (£2,125 if you are renting together) of your total receipts is considered the tax-free portion.  You would then pay tax on the amount over £4,250.  The down side to this particular scheme is that you may not claim expenses for this rental income.

The second more popular way of calculating tax owed on rental properties is the “Residential Lettings” version which is basically taking the total of your income, subtracting the total of your eligible expenses to come up with your Net Profit.  One of the advantages to this scheme is the fact that if you have several rental properties, you can offset a loss from one property against the profit of other rental properties.  Not to mention that being able to claim expenses will usually bring your taxable income down considerably.

How much tax you will pay is dependent on the total amount of taxable income from all sources.  Therefore, if you also have a job outside of the property rentals, you will be required to add the incomes together.

It will however be up to you as to which scheme works best for your situation.
This is just a basic guide to figuring out how to calculate the tax, but as with any tax matters, there are many exceptions, allowances and changes to the taxation rules, so it is always advisable to check out the rulings with HM Revenue & Customs in order for you to make an informed decision with no surprises down the road.

No matter how you decide to run your property rental business, remember that as a business owner you are responsible for keeping accurate and detailed records for each of your property rentals.  HM Revenue & Customs can ask to see your records along with any supporting documentation at any time, and for up to six years.

The information you will need to keep record of is:

–         All of the rental income you received along with dates you rented the property

–         All income received for services provided to tenants

–         All business expenses

–         Bank statements and any invoices, receipts or rent books

Having a rental income property can be a very rewarding and enjoyable experience – you just need to be prepared and do your research ahead of time.

IMPORTANT INFORMATION

Figures in this article were correct on the date of publishing – these figures are subject to change so they should not wholly be relied upon. Accurate and up to date information relating to tax calculation can be found by visiting the official HMRC website.

Tenancy Deposit Schemes – Basic Guidelines

admin    Landlords, Tenants     landlord responsibilities, letting agreement, Rental deposits, Tenancy deposit, Tenancy Deposit Scheme

Ever since the Government introduced The Housing Act 2004 to protect the tenancy deposits under the Tenancy Deposit Protection Scheme, there have been 3 companies awarded the rights to run two types of Tenancy Deposit Protection Schemes.  Both of these schemes apply to residential property being rented in England or Wales, no matter whether the landlord and/or managing agent operates overseas.  Theses schemes do not apply to commercial property, when rent would be greater than £25,000 or if the landlord is also a resident of the property.

Both types of Tenancy Deposit Protection Schemes are generally supported by some sort of call centre and some would have a way of performing on-line registration or paying for the deposit.  A deposit has been set out as any amount of money paid in addition to rent as security and would include fees for cleaning and amount added to the rent monthly as long as the tenancy deposit is not used for making repairs or paying expenses.

The Custodial Tenancy Deposit Scheme is a deposit held by the scheme in a separate account where the fees were funded by the accruing interest of the Tenancy Deposit or by the government if the interest rate was too low to generate enough interest.   Within this scheme there are two ways in which the deposit is handled.
Several tenants could each give a deposit and it would be designated as Room A, Room B, etc, or there can be one deposit representing all of the tenants.  A main tenant would be chosen for correspondence purposes, however if tenants chose to vacate at separate intervals, this plan would be extremely difficult to control as the deposit must be repaid in full.

The Insurance Based Tenancy Deposit Scheme is differentiated by the deposit being held by the landlord and/or managing agent and is secured by the landlord paying fees and an insurance premium to a Scheme administrator.  It would be the administrator’s duty to ensure enough insurance was in place in order to assure full repayment of the Tenancy Deposit.  Within this type of schemes there are two approved – one being “The Tenancy Deposit Scheme” which can be used by all landlords, however, since April 6, 2009 this scheme can only be used by regulated agents.  The second scheme is the “MyDeposits” (previously known as Tenancy Deposit
Solutions Ltd.) and is aimed more for the landlords.  It consists of a onetime fee plus additional fee for each tenancy deposit, as well as an annual renewal fee.

The penalties can be quite severe for landlords who don’t comply with the Housing Act, so understanding the necessary information is vital to all parties.   At the end of the tenancy agreement both parties will need to come to an agreement as to the amount of the tenancy deposit due as a return to the
tenant.  If both parties are in agreement, the tenancy deposit is required to be returned within 10 days.

If however there is a disagreement over the amount, the desired course
of action would be to go through the Alternative Dispute Resolution (ADR), rather than having to resort to the courts.

The Tenancy Deposit Schemes have been put into place to protect all parties, and it is the responsibility of both parties to understand what is required of them prior to entering into any sort of tenancy agreement.    As with any legal document you should always try to obtain legal advice prior to making a decision on which Tenancy Deposit Scheme you wish to venture into, as well as the tenancy agreement.

Mastering The Art of Conducting Rental Viewings

admin    Landlords    

You have the perfect rental property. You know it’s going to move quickly of the market. You price it competitively, you write up a beautiful ad description –nothing. No signed leases. What happened?

The problem may be with your viewings, not your property rental. When potential tenants come into your unit, they are looking for a home, not a rental. This is the most vital piece of information a landlord can take out of
this entire article – make it your home.

Before your potential tenant arrives, ask yourself these questions, and answer them honestly, to get your house from “for rent” to “let.”

1)     Would I want to live here in the rental property?

I know this sounds subjective; after all, it’s your house right? Stand outside
of your home for a minute and picture your house from an outsider’s perspective. Is the exterior clean? Are there cracks in the cement or driveway?
Is the lawn kept nicely or are there weeds scattered throughout? These are the
first impressions a home will give to anyone interested in letting your property. Make sure the home is presentable on the outside, to get the tenant past your front door.

2)     Is the rental home clean?

I know – you’re renting it, it doesn’t have to be perfect, right? Wrong. Tenants are looking for the perfect place to rest their feet at night and you need to help them get that mental image. If your rental flat is a family place, consider having a neat stack of children’s books (yes, even if you don’t have children) on the coffee table. Try setting the rental home up to match a magazine shoot. Style is everything to potential clients, and they need to see that the home can work for what they need. Keep the lines clean, normal size furniture, and remove all clutter (I know you love your teaspoon collection on the walls, but limit them to say 30 instead of the full 200.)

3)     Is it dated?

Check the light fixtures and appliances in the rental home. Chances are if they’re from the last decade, it may be worth your time to upgrade them – especially if you are planning to charge utilities. Simple things like a new light fixture in the bedrooms can do wonders for the overall feel of the house, and at a relatively low cost to change them, it’s something almost every new landlord
can do.

Once your rental home is set up for viewings, make sure to make the potential tenants feel invited and welcome. Smile, laugh and socialize with them, make them feel as though you’ve known them for years. Your rental home isn’t the only thing they’re signing up for, they’re also signing up for you as their landlord.

Tenancy Agreements — Know Your Rights

admin    Landlords, Real Estate, Tenants     landlord responsibilities, letting agreement, tenancy agreements, tenant rights

When first moving into a new flat or rental unit, the excitement can be over-whelming. While this is always a good sign, it is always important to know and remember your rights as a tenant, should you need to exercise them in the event of a problem during the letting period. Likewise, as a landlord it is equally important to know and understand what the rights of both you and your tenants, should there be an issue down the road.

Insurance is the first right both the tenant and the landlord share equally. On the landlord side, maintaining adequate insurance on the rental property is the utmost important way to secure your investment, in the event of an accident. This means, while the tenant is living there, should a fire, flood arson etc. happen, your physical home is covered. Always check with an insurance agent about proper coverage for your unit. A tenant should always secure insurance on a rental property prior to moving in, for the same reasons. Should there be an accident or incident in the home, many times a landlords insurance will not cover your own private property (think you bed,television, computer or kitchen appliances.)

Rental upkeep is yet another common right both landlords and tenants share equally. In the event of repairs being needed on the rental unit, it is the landlords responsibility to make sure they are made in an orderly and prompt fashion. In order to notify the owner of such needed repairs, they are expected to provide accurate and current contact information to the tenant.

As a property owner, you have the right to ensure your property is being treated properly (not damaged or used for malicious purposes) and as such, you are entitled to enter the property after giving the tenant 24 hours notice.

In regards to monetary amounts, a landlord must put the rental deposit in trust immediately after approving the lease (see rental deposits for more information) and ensure the amount is returned promptly within 30 days of the lease being terminated. In the event of needed repairs, property owners need to justify withholding any monies from the tenant. Likewise, a landlord also has the right to collect any past due rent or arrears from the tenant. A landlord may visit their tenant at any time to request the amounts in full.

Subject to not receiving any compensation, a landlord also has the right to remove any tenant from their property (only following proper legal actions.)

Knowing and respecting tenancy rights is both a landlord and tenants responsibility meant to be shared equally. Knowing these rights can save hours of frustration down the road, should a problem arise.

Types Of Letting Agreements

admin    Tenants     letting agreement, property rental, rental home, rental property

There are two basic letting agreements regarding letting a flat or house.  Both agreements are legally binding and should be determined by how long the unit is needed for.  No matter which letting agreement is settled on, both parties should investigate all legal documents needing to be signed to protect themselves should a problem arise.

One of the letting agreements is called, Assured Shorthold. This agreement has to be for a minimum of six months without an increase in the rental amount during this time. At no time can a landlord evict a tenant before the end of the binding letting agreement, unless there is a court order and just cause.   After the term has expired, the tenant can be asked to leave.

The second letting agreement is called, Assured Tenancy. This agreement is a more secure rental when needing housing for a longer period of time.  The landlord can not evict the tenant before the expiry of the letting agreement unless there is eviction grounds filed with a court.  If a tenant receives a notice to vacate the property, it is advised to seek legal advice immediately.  Whether the flat or house is left unoccupied by the tenant before the end of the agreement, the tenant is still liable for the rent.  There is an option of subletting the flat to another occupant, however, the landlord must approve of this change in occupancy, therefore ending the agreement.

If a tenant is not sure which letting agreement is best suited for them, it is best to investigate each agreement before signing it.  If there are going to be joint or multiple occupants in one flat or house, and the agreement states, jointly or severally liable, than all tenants are responsible for the rent and any damage charges if one or all the tenants vacate the flat or house.

Once the flat has been agreed on, a tenant should agree with an inventory and schedule of condition with the landlord.  This letting agreement can be done by either party and should be signed by both parties at the beginning and end of each let cycle. An inventory and schedule of contents states the contents in the house or flat along with the cleanliness, decoration and damage, if any, of the unit.  This assures the tenant will not be charged or be held responsible for existing damage.  It also assures the landlord the state of the flat is in good working order.

Knowing what each letting agreement entails are imperative before signing any legal document.  Moving can be a stressful situation on its own, let alone, having the added stress of having to leave the flat or house at an unwanted time.

How to take Photos That Sell Your Property

admin    Landlords, Real Estate     landlord responsibilities, preparing rental properties, property rental, rental home, rental property, rental unit

Taking pictures of your property rental in preparation for letting out your property may seem like a no brainer. However, the truth of the matter is, unless your photos are done in such a manner that highlights the attributes and focuses on the positives, you may actually cause your property some “damage” in terms of the tenant’s opinion on the property.

Before you begin taking photographs of the rental unit, it is important to consider the type of family or tenants that would probably want to let the unit. The type of property rental will obviously influence the type of tenant but keep in mind the general surroundings and the location of the property too. If your property rental for instance were in a more mature area, with plenty of activities for the elderly population, your ideal tenant would be a senior citizen.
Likewise, a property rental near a school district would probably consider having a family let out the home.

Once your family has been determined, it is important to zone in on areas of the home they would probably spend the most time. A photograph of the outside of the home is one of the easiest ways to sell or hinder the appearance of the property rental.

Aim for a day that is sunny (ideally in springtime with new buds and flowers)
when the sky is clear. Pictures with dreary appearances, often give off an
unsettling image to tenants despite it only being the weather. Make sure the
garbage is clear, the lawn is tidy and the drive is free of dirt or weeds.

Photograph the rental home centrally, making sure to get a clear shot of any detailing or unique benefits the property has (for instance, bay window projections you may wish to photograph the property rental just off centre to show depth) As you make your way through the rental home, focus on areas the tenant will spend the most time. Places like front foyers, living spaces, bathrooms and kitchens are sure-fire ways to capture attention. Again, make sure the rooms are tidy, well kept, and if furnished, organised. A messy room gives a bad impression. Note any imperfections in the room that you may want to angle away from (for instance a scuff in the floor) that a tenant could live with, but may not want to see in a photo.

Try to keep your photographs lit with the room lighting, ideally taking shots from the entrance to the room. This angle will generally give potential tenants a better idea of the room layout, and a more honest perspective as to the sizing of the rooms too.

After you’ve taken your pictures, ask a friend or two to look at them. Generally, having another perspective of your “showing material” will give you a more honest outlook on the rental property or point out any flaw you may have overseen – saving you the frustration of tenants passing over your rental
property, instead of asking to see it.

Getting The Right Rental Value for your Rental property

admin    Landlords     Landlord property protection, landlord responsibilities, property rental, property rental pricing

Understanding the proper pricing is the most important way to ensure your property lets quickly.

In order to price your rental property competitively, without selling yourself short, it is important to understand the key components to pricing your rental property prior to listing your home for rent. Looking into the various types of homes currently on the market is an easy starting point and will most likely give you a better understanding as to what type of competition you have, as well as the current pricing schedule set out by the various competition.

Different factors can allow for a higher rental price, all of which should be considered.

1)     Rental Property Type

Is your home a simple one bedroom flat, or is it an elaborate 5 bedroom home backed onto a ravine? Is the garden fenced in or was it open for all to see? The type of home is important when establishing your base point in rent for many reasons. If you have maintained or upgraded many different parts of the lot, you would be able to charge a higher price tag than those who have no gardens to offer. If your rental property has also been fixed with outdoor lighting, pool, hot tub or the like, although it may not increase the rental price substantially, it can increase it a small increment. Take a good look around your neighborhood at other rentals to see what they offer in comparison and gauge your rental property accordingly.

2)     Upgrades

Is your home fit with skylights or dishwashers? How about an extra seating area for house guests? These additional features aside from the basic list of household basics are the perfect areas to increase your rental price—with just cause. One of the main reasons people are willing to pay a little extra is for the extras included in the price. If you have upgraded your kitchen to a state-of-the-art masterpiece, you may be able
to increase the rent. Likewise, if your bathroom is fit with a claw-foot tub and floor warmer tiles, you can expect potential tenants to understand an increase in price.

3)     Services included

Are you offering full garden care with the price of your rental? Do you take care of additional expenses like garbage removal or offer security thro

ughout the building? These wonderful additions can help you increase the value of your rental easily, as people are willing to pay for the rewards of living somewhere with great service.

Taking the time to consider how your rental property differs from the standard rental unit, in both good and negative ways can help you truly understand what a fair market rental price should be. Overall, you should always price similarly to those in your current area (for the same sized unit of course) without under pricing. People have a tendency to avoid high-priced units and likewise, many people believe—if it sounds too good to be true, it normally is—don’t be this rental property or you may find yourself stuck for trying to get it let out.

Understanding Property Rental Credit Checks and Property Rental References

admin    Landlords, Tenants     letting links, letting rental, property rental, property rental credit check, property rental reference

Whether you’re a tenant or a landlord, you’ve probably heard the terms property rental credit checks and property rental references before—but if you don’t know how they should be used, or why you should ask for them—it’s just another piece of paper to add into the mix. So before you run off and get property rental credit checks and property rental references gathered up, let’s take a second to understand how they’re used – and how you can secure the best possible outcome for your checks and references, regardless of if you’re a tenant or a landlord.

A property rental credit check is essentially a piece of confirmation you are, who you say you are. A landlord will often order a property rental credit check to make sure that the tenant applying for the flat is being completely honest about who they are, as well as checking to make sure the tenant is financially fit to rent the property in question.

A property rental credit report will normally consist of various items, but mainly act as a safe guard to proprietors. The report will generally contain information about
previous bankruptcies, insolvencies, bad credit, no credit or any other outstanding financial concerns. Depending on the provider, information such as employment history and current rental arrangements may also be disclosed. The report will put any comments the current landlord may have about the tenant in question (late payments, unruly behavior etc.) as well as the duration of the letting. Some landlords however, may decline the opportunity to have any information disclosed about the tenant – should this be the case, the report will show that they have spoken with the landlord, but commentary was refused.

Property Rental References on the other hand, are a tenants way of showcasing their true “personality” via other people. The types of property rental references required varies greatly depending on the landlord, however, generally speaking a landlord likes to have 2 personal references as well as a professional reference (these may differ depending on your current rental agreement.) The landlord will normally ask for these references before signing the lease, as to confirm what the tenant is claiming – is actually true. There are situations where a landlord may put restrictions on family references, purely because of biased opinions. A family member will normally leave a glowing recommendation for a not-so-stellar family member, where as a friend (despite being a personal reference) may give tips or hints as to the potential tenants true character.

Always make sure to check your own credit history prior to applying for a lease, as you are responsible for your reports accuracy. Note any discrepancies as well as any “problematic” areas you may find. Although you may not be able to remove them, you may be able to determine your best possible explanation ahead of time, instead of being caught without any notice. Landlords do not always expect a perfect property rental credit check, but they would like to see stability, security and the capacity to live in the unit in question. Although they may seem like a burden, property rental credit checks and property rental references actually make the letting process easier for everyone involved.