The new year always brings with it new opportunities and if you’ve been considering renting out a property then there are some things to consider. The property industry has experienced some up and downs in 2018, with predictions for next year mentioning at least some market uncertainty. This shouldn’t put you off renting a property out, just serve as encouragement to approach it with a little more forethought. Below are the 4 main things to consider if you’re going to rent out a property in 2019.
Tax
Any rent you earn from renting your property will be considered extra income by the HMRC and will need to be declared as such if you’re to avoid running into trouble. If rent is your main source of income, then HMRC will class you as a business and tax you on a different rate than if you were to be making extra income alongside another job. The amount you will be taxed will depend on which tax you will fall into after your rental income is added to your main income, minus the costs you can write off as tax free, called allowable expenses for landlords.
Screening
One of the worst things that can happen to anyone renting their property is getting stuck with unsavoury tenants. Besides unpaid rent, your property could suffer from extensive damage or run into legal troubles if the tenants are particularly unsavoury. This is why screening any prospective tenants must be a priority; ask for bank statements and references, checking them carefully for anything that doesn’t add up. as a landlord, you are legally allowed to ask for a number of documents so it’s up to you to decide which ones are absolutely necessary before any tenants can move in.
Insurance
Following on form the last point, as a landlord you can protect your property and income further by taking out a specific landlord insurance policy that’s tailored to your needs. Landlord insurance is different from building and contents insurance as it can cover some very specific circumstances like loss of income. It’s worth considering, especially if you’re renting for the first time, to provide extra peace of mind as you learn the ropes and get to know estate agents and different types of tenants. To find out more, click here.
Laws
Spend some time familiarising yourself with legislating around housing laws, tenants and landlords’ rights. Whilst you don’t have to become an expert overnight, knowing even some basic laws and rights will help you navigate the often-tricky process of renting as well as dealing with disputes. You want to know enough so that small issues, maybe broken appliances or missed rent, don’t become huge issues that spoil your relationship with your tenants. You always want to be on the side of the law so a little homework now might just save you from issues down the line.
Renting a property can be quite fun and a great way to bring in extra income. As with anything, some preliminary homework and a good insurance policy can help to make the process less stressful, especially if it’s your first time.