Here are some key matters to pay attention to when managing your property portfolio in 2018
From making sure you're on top of your tax affairs and becoming well-versed in the latest rules and regulations to paying attention to safety and energy efficiency, here are eight resolutions that will stand you in good stead.
1 Get your tax affairs in order
The year’s first deadline is 31 January, the date by which landlords must be registered for self-assessment and pay the tax they owe.
“It’s difficult to keep track of the changes that occur each year, but the main ones for landlords to consider as allowable expenses are repair costs to your rental property, the wear-and-tear allowance, insurance premiums for your rental, service charge/ground rents if applicable and accounting and mortgage arrangement fees. If you use an agent, even their fees are considered a reasonable expense,” says Paul Whish, head of lettings at estate agent Currell.
2 Get on top of new legislation
There are more than 160 pieces of legislation currently relevant to the rental market, “so landlords should get professional guidance from a regulated agent who is a member of a redress scheme,” says Alex Harrington, group lettings managing director at Dexters.
Up-to-date right-to-rent checks, gutter clearance, gas safety, boiler servicing and roof checks are among a landlord’s many responsibilities. “Also check incentives such as the Green Deal, which some landlords can take advantage of to get a new boiler or loft insulation,” says Marc von Grundherr, lettings director at Benham & Reeves.
3 Check your Energy Performance Certificate (EPC)
EPCs were introduced in 2007 and last 10 years, “so now is the time to dig it out and book in a new one if necessary,” says von Grundherr. Also note that from April 2018, rental properties must have a minimum EPC rating of E. Anything lower will render the property unlettable.
“Don’t panic if you have an existing tenancy, but be aware of it when you look for new tenants. Fines for any breach are high,” says Mr Whish. “Get an expert opinion on how to increase the property’s energy rating. The cost of improvement versus the inability to rent is a no brainer. There is long term value too as a tenant who finds the running costs more affordable will most likely stay longer,” he adds.
4 Think about electrical safety
It’s not yet mandatory (apart from in Scotland) to conduct an Electrical Installation Condition Report (EICR) before the tenancy begins, “but there is an obligation to make sure the property is safe and it is likely to become a legal requirement in the near future. I would always recommend that landlords get an EICR,” says Suzanne Diamond, head of lettings at Humberts.
5 Plan the next year’s maintenance and improvement
By regularly redecorating their property every couple of years, whether a tenant requests it or not, landlords will hopefully avoid a far bigger overhaul – which will incur an unwelcome void period. Tenants expect high standards of accommodation now and tired properties mean longer empty periods and lower rents.
“Good, clean and modern properties rent quickly and new kitchens and bathrooms are a must. Dated properties tend to stick,” says Amit Soni, head of lettings at Glentree estate agency in North London.
6 Top up your slush fund
Set aside a portion of the rent each month to cover emergencies such as having to buy new furniture just as a big tax bill is due. Mr von Grundherr, who is also a landlord, puts 5pc in a separate savings account.
“I wouldn’t be surprised if there is a proposed requirement for landlords to prove they are in possession of a maintenance fund,” comments Lynsey Schipper, head of lettings at Lurot Brand. “It’s not just a good idea but a necessity. A landlord, as a result of over-exposed financial circumstances, cannot ignore a tenant with a broken boiler.”
7 Review your lending
Plan ahead if you are looking to refinance – particularly if you have four or more mortgage properties. The Prudential Regulation Authority (PRA) has changed how lenders can underwrite such “portfolio” landlords.
“Lenders must adhere to a series of recommendations, including a review of personal or alternative sources of income and a detailed review of the whole portfolio,” says Dexters’ Mr Harrington.
8 Check when your insurance deals are up
You never know when something may go wrong, so make sure you are covered.
“Landlords should always have a robust landlord insurance policy including public liability cover – and don’t forget to insure your white goods and hard furnishings,” advises Mr von Grundherr.
“If there is some sort of disaster, the tenant does not have contents insurance and the property is uninhabitable, think about the loss of income while you wrangle over who pays for what.”