Property Know

Let’s start off where we left off last time, as you know tax can be very taxing, bad joke I know. Making money from your property? – Part 2. Today we shall try and get through HMO’s, letting agents and student lets.

On the 6th of April 2006 it became mandatory that landlords acquired an HMO license if the accommodation they were letting fit into a certain criteria. A HMO License is a House in multiple occupation license, this change was under the Housing Act 2004 and it applies to any letting property which is

“•    An entire house or flat which is let to three or more tenants who form two or more households and who share a kitchen, bathroom or toilet.  a house which has been converted entirely into bedsits or other non-self-contained accommodation and which is let to three or more tenants who form two or more households and who share kitchen, bathroom or toilet facilities
•    a converted house which contains one or more flats which are not wholly self contained  (ie the flat does not contain within it a kitchen, bathroom and toilet) and which is occupied by three or more tenants who form two or more households
•    a building which is converted entirely into self-contained flats if the conversion did not meet the standards of the 1991 Building Regulations and more than one-third of the flats are let on short-term tenancies
•    in order to be an HMO the property must be used as the tenants’ only or main residence and it should be used solely or mainly to house tenants. Properties let to students and migrant workers will be treated as their only or main residence and the same will apply to properties which are used as domestic refuges
A HMO license is there to make sure that properties are suitable for occupation by the specified number of people. The licenses themselves are given by local authorities and they will want to check there are enough toilets, bathroom, cooking facilities and that the property is properly managed.”  -UK Government Communities website

Student lets is a very popular first step into the buy to let world. These past years it has proven that these can be very good investments. Most of the time students are not as fussy when its comes to quality finishing’s, this means that if a landlord is intending to let to students they will not have to spend as much for the quality finishing’s and save a lot of start-up capital. But location and size is extremely important if your property is to succeed in the student market. Properties generally have to fairly close to campus and of decent size. Students like living together and bigger houses with 4-5 bedrooms are in high demand and go just as fast as small houses and flats. Another way to save money is the huge amount of advertising the universities and the local student unions do for student accommodation. As a landlord you will be able to advertise your property as a student let without even stepping foot into a estate agent or letting agent’s door step.

Letting Agents is like the easy mode for being a landlord. Letting agents take a lot of the hassle of being a landlord away at a price. Letting agents will usually help find a property to let. They will also do all the work when it comes to tenants and do all the required financial and tenant checks with all the appropriate references, prepare watertight tenancy agreements and draw up an inventory of the letting property contents. Usually lettings agents will charge a percentage of the rent as a finding fee and also an administration fee. Depending on the price, some letting agents will even collect the rent, arrange for repairs but not pay for them and carry out regular inspections on the property. They can be a good first choice if you are inexperienced and need a helping hand when it comes to your first rental property or just find that you can not handle everything that comes with being a landlord and just want someone to take the stress away from you. If you do decide to go with a letting agent make sure that they are a member of the Association of Residential Letting Agents (ARLA). That’s all for now on buy to let, hope to see you all soon.