New landlord advice

[Mindy]

I was asked the other day by a new property investor about renting out his house. His situation is that he lives in a wonderful area but the property he lives in is rented to him his landlord will not sell to him as the house forms part of a country estate. A property came on to the market close by and because my friend likes the area so much he has bought it done it up and now it i ready to go. In the long term my friend will live in this house if his landlord decides not to rent out his house any more.

The house has been done up to a good standard and will be rented out unfurnished.

I think that it is a good idea to rent out unfurnished if you can for two reasons 1) No matter how careful your tenant is the furnishing will become damaged and worn and 2) I think that you are more likely to get a long term tenant if they have gone to the trouble of moving all their things there.

New landlord concerns
The Garden, the new landlord asked me about the garden and what he should do about it, its already neat and well stocked. He mentioned that he already has a gardener to keep his own garden tidy. I suggested that he advertised the house as having a gardener, most people will be glad to have the garden kept tidy and if by chance the new tenant is a fanatical gardener you can cancel the gardener and save money. The cost of the gardener can be added to the rent and can be deducted from any profits made.
Tax
Sorry this is UK advise it may be different in other countries.
What is deductable for tax purposes?
The mortgage payment (interest only) which will be your monthly mortgage payment on an interest only loan or most of your mortgage payment if you are paying off some of the mortgage debt each month.
Letting fees, so if you have rented out through a letting agent their fees are deductable.
Maintenance and repair, some building work is deductable but check with your accountant. And fees say for a gardener will be deductable.
Insurance fees. So buildings insurance can be deducted too.
If you are renting out a furnished property you are also allowed deteriation costs to the funishings which is 10% on the rental income.

The new landlord wants to rent out his house privately , well more profit and he is close on hand to deal with any issues. My advise would be to try and rent it out privately but also put it on with local agents too, infact advertise it anywhere ad everywhere. You can always ask the agent to find a tenant only service.

Think outside the box too, my friend also has plenty of grazing around his house, he has his own horse and would not mind having a tenant with a horse too again menton this when advertising you might just find that perfect tenant.

[ShadoCat]

My experience is in the US so it may or may not apply to the UK.

Run a credit report for any prospective tenant. In the US there are agencies that specialize in this. This is especially important in areas that have laws that favor the tenant (California and New Jersey come to mind).

Have the tenant provide their ID (Drivers License, in the US) when they apply and match it with their application. Check for the spelling of their name.

There are those who game the system. They specialize in not paying rent and using the laws to delay eviction by up to 2 years. The credit report, will spot most of them (this is why the ID is important since most will "misspell" their name on the application to avoid being found in the system.

References are generally useless. Renters can find a buddy to answer as anyone they wish. Also, landlords will often give a glowing report for a trouble tenant, just to get them out of their hair.

Clearly define tenant and landlord responsibilities in the contract. These include date rent is by (first of the month), Date up to which late payments will be accepted (tenth of the month), late fee, and eviction policy (eviction begins on the eleventh of the month).

Depending on the area, I reword some of those. Rent due on the 10th with a 10% reduction if they pay by the 1st is the same thing with nicer wording.

If you have a gardener, make sure they have Workman's Comp (or the local equivalent) since you do not want to get sued. Do *not* give rent credit if the tenant does the gardening since then they are your employee and you are libel for their actions.

If you don't mind short term tenants, advertise with realtors to provide "bridge housing" for the times when someone sells their house but their own purchase develops problems.

In the US, get home maintenance insurance. They will come out and charge $40-$60 per visit and cover all other costs for repairs that they cover. Then have in your rental agreement that the renter is responsible for any repairs with a cost equal to or less than $40-$60 (same as your deducible). This helps avoid the 3am "my toilet is backed up" calls.

[stevekelly]

Thanks for your advice.

[landlordinsurance]

Please keep in mind that insurance is not tax deductible in the UK. All insurance policies include tax but it is Insurance Premium Tax (IPT) currently at 5% and not the usual 17.5% VAT.

[Mindy]

I thought that buildings insurance was tax deductable, I have only rented out apartments where the buildings insurance is usually included in the maintenance and service charge

[landlordinsurance]

Sorry Mindy - didn't take in what was being said and got my answer horribly wrong

You are completely right. Insurance is tax deductible.

Went off on a bit of a tangent with the whole IPT and VAT issue as quite a lot of people think insurance has VAT when it doesn't but obviously this is completely irrelevant to this topic - sorry.

[ShadoCat]

I don't know if it is different in the UK but in the US, if you run the apartment as a business, you can deduct just about every penny you spend on it.

[elvenrunelord]

I'm not so sure that's a hot idea. Even if your tenet agrees to this in a contract, You are required by law to keep your homes in a livable state. If the toilet clogs you this is automatically assuming its the tenets fault when it might be another issue. As a renter i will not be held responsible for cost of repairs to a house i rent in this situation, and if I am not mistaken in most areas of the USA, the law is on the tenets side of this. If you want insurance, that is your right, and your responsibility as a landlord to pay it and the deductible on the policy, not the renters.

[ShadoCat]

This doesn't work in all areas. If there are few renters for the number of houses available, then people will simply rent other houses. However, I don't buy in those areas.

If there is a huge pool of renters looking at a small pool of available houses, you can do this. Having a policy like this does require a good property manager who will inspect the houses frequently.


This really only works for up scale apartments or houses. I wouldn't normally do this for blue collar apartments or Section 8 housing. Though, in many cases, I expect the guys in blue collar housing would then fix their own plumbing (I would).

[mabel normand]

As a former 'blue-collar person' I would expect the landlord to fix my plumbing. Not only would I not perform for free services I ordinarily charge for -- just because i live there -- but no way am I assuming the liability for anything else that goes wrong in your rickety old building just because I was the last guy to touch the potty.