Tag: Property

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5 Tips on Settling Into Your New Home

1. Get Unpacked Early, Even The Niggly Bits! 

We’ve all been there – you get your new keys and move all the boxes and large items into your new house or apartment. And once the big bits are in place, the sofa’s positioned, and the TV’s on, all you want to do is call it a day and order your first takeaway in your new home. Next thing you know, it’s three months later. And you’re still rummaging through half-empty boxes in search of the tin opener or that half-burnt-out Yankee candle – which you know would go perfectly on the bathroom windowsill. 

The best way to feel settled into a new place is to give everything a home and put it in its place as soon as possible. This way you can get in after a long day and won’t be met with chaos and mess. Instead, you’ll feel comfortable being in an organised and tidy space. 

Don’t worry about giving all of your items their forever homes straight away. Put them away now and reorganise another day.

2. Style Your New Space 

The next step is to add a touch of personality to your space. This might mean mixing it up and replacing some items you brought with you from your previous home. As you probably know or will learn, each property has its own personality, and it’s good to decorate in line with this. You might find yourself playing around with different positionings of items or decorations as you discover the space more. Don’t be afraid to recycle or donate old furniture in favour of new items. And it can always be worthwhile perusing local charity shops and pre-loved stores for some upcycled items. 

When it comes to more permanent decorations (e.g. painting or picture nails), most landlords won’t allow this. However, it can be worth speaking to them to see if any compromises can be made. 

3. Get To Know Your Neighbours 

Whether you’re moving into a new apartment or a house, a great way to settle in is to get to know your new neighbours. It may sound old-fashioned, but it’s worth getting to know people you’ll be seeing regularly and who know the area. Getting to know your neighbours and establishing a point of contact can also be helpful to both parties should any future issues arise. 

So, if you haven’t already – go ahead! Post a card, crack open a bottle of red and have a dinner party with your new BFFs.  

 4. Get To Know The Area

As mentioned, getting to know your new area can also play a big part in helping you settle into your new home. Aside from introducing yourself to your new neighbours, it’s good to try out the local watering holes and eateries. Not only can these be great spots for you to meet more people, but finding your new favourite local can help you start setting roots and feel more at home. 

Social media can also be a great way to learn more about your local community. Looking for a community group to join can help you learn about new events and activities in the area and point you in the direction of some new clubs/classes for your favourite hobbies. Or even help you discover a new one!  

5. Get Involved In The Local Community 

Once you have researched the local community and any events or activities it holds, go ahead and attend one. Maybe the local pub holds a weekly quiz? A party in the park? Or maybe you’ve found an art class that you’ve always wanted to do, but never got around to. Whether it’s a club, a gym or a local event, getting involved and familiarising yourself with the area and people within it will help make you feel at home. 

If you’re living in Bristol or looking to move to the area, then make sure to follow us on Instagram to keep up-to-date on events, offers and all things Bristol!

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A Guide to Property Tax for Landlords

Property tax…lets talk about it…

Most people purchase a buy-to-let property because they want to make an investment. While the return is likely to be good, either through the money you make in rent or when you sell the property later, it’s important to know that you will need to pay tax at every stage of your investment. This will be when you pay for the property, when you rent out the property, and when you decide to sell it. In this guide, we’ll look at the different types of property tax landlords pay and what can be done to minimise the amount.

What Property tax do Landlords Pay?

Unless they are a first time buyer, or the property is below a certain value, everyone is liable to pay a tax, known as stamp duty when purchasing a house. If the property isn’t your primary residence, you are also liable to taxation on the rental profits as part of your income tax, as well as any increase in the value of the property over the time that you own it, which is called capital gains tax.

In England and Northern Ireland, you don’t pay any tax on the first £125,000 of the purchase price of your primary residence. In Scotland the limit is £145,000, and in Wales it is £180,000. However, if you’re purchasing a buy-to-let property in England, you have to pay a 3% tax rate on top if it costs more than £40,000, which rises to 4% in Scotland and Wales.

Income Tax on Rented Property

When you rent your property out to a tenant, you must pay property tax on any profit you make from the rental income that isn’t covered by your personal allowance. The current personal allowance, which will stay the same until the 2025-26 tax year, is £12,570.

As well as covering profit made from rent money paid by your tenants, rental income also includes money made from sources such as utility costs, cleaning fees for communal spaces, and parking fees. If you own more than one property you can combine all rental receipts and expenses together, which allows you to claim one property’s expenses against another’s income. The exception to this is any property owned overseas, which will usually be reported separately as foreign income.

As with self-employed people, landlords are entitled to certain tax relief measures in the form of allowable expenses, for example paying letting agent fees. The following expenses can be deducted from a rental income, as long as they were incurred wholly and exclusively from the rental of a property:

  • Insurance, including landlord insurance
  • Property maintenance and repair bills
  • Council tax and water rates
  • Utilities such as gas and electricity
  • Letting agent fees
  • Accountant’s fees
  • Legal fees for lets less than one year old 
  • Legal fees for renewing a lease less than 50 years old
  • Household costs (eg. phone calls, stationary, fees for advertising a property)
  • Vehicle running costs for trips related solely for your rental business

The following expenses cannot be included:

  • The full amount of mortgage repayments on the property
  • Home improvement costs
  • Clothing
  • Personal expenses
  • Private phone calls unrelated to your rental business

Make sure you keep copies of receipts for all of the expenses that you claim. HMRC has the right to demand to see proof of expenses for up to six years after you claim them, so ensure you keep them safe or scan them and store them digitally.

Landlord Mortgage Interest Tax Relief Explained

It used to be the case that landlords used to be able to deduct the interest they paid on mortgage repayments as part of their tax relief. However, since April 2020 this is no longer the case. Instead, landlords receive a tax-credit, which is based on 20% of their mortgage interest payments. This is less generous for higher or additional rate payers than the old system, as the credit only refunds the tax at the basic 20% rate, rather than the top rate of tax that they pay. It may also force some landlords into a higher tax bracket as they need to declare the income that was used to pay the mortgage when filling out their tax return. 

Selling a Property: Capital Gains Tax

When you sell a property that isn’t your primary residence, any increase in value over the time that you have owned it is liable to capital gains tax. The gain is defined as the difference between the purchase price and the sale price and is not the amount of equity you are left with after the sale.

For example, if you bought a flat for £137,000 and sold it six years later for £215,000, you pay tax on the £78,000 difference between the two figures. This means that if you are remortgaging or borrowing more to buy another property, you must leave enough equity in the property to cover the capital gains tax bill in case you need to unexpectedly sell it.

Capital gains tax includes an annual tax-free allowance, just as income tax does, which is currently £12,300. You are also allowed to deduct the costs of selling or improving your property from your gain. These allowances include:

  • Estate agent’s fees
  • Solicitor’s fees
  • Survey costs
  • Stamp duty
  • Costs of improvement works and major renovations

Rates of capital gains tax depend on the tax bracket you are in. For higher or additional rate payers it is charged at 28%. For basic rate payers, your taxable capital gains are added to your taxable income, minus your personal allowance. If the total amount falls into the basic rate income tax band you pay 18% capital gains tax, and any amount above the basic rate will be taxed at 28%.

A capital gains tax return must be submitted, and any tax owed must be paid within 60 days of the sale on the property being completed. 

Letting a Room in Your House Tax-Free

The rent-a-room scheme allows live-in landlords to receive up to £7,500 a year from a lodger before they have to begin paying tax. The landlord doesn’t need to own the property to qualify, but they must have their landlord’s permission to sub-let.

If you do own the property, you must have permission from your mortgage provider to let out a room. If your lodger pays less than £7,500, you are automatically exempt from property tax and don’t need to do anything other than keep a record of the income. If you receive more you need to complete a tax return, as is usual for other methods of renting out a property. It may be worth employing the services of an accountant to see which choice will leave you with the most money.

Becoming a landlord can feel overwhelming and confusing due to the sheer amount of details you are required to understand. At Hopewell, our expert letting agents can walk you through the process and give you all the information you need. Get in touch with us today to get started and fo further information on property tax.

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8 Property Management Tips for First Time HMO Landlords

HMO Landlord

Houses of Multiple Occupancy (HMOs) can be a lucrative source of income, and buy-to-let landlords can earn three times as much money letting out separate rooms in a shared house compared to letting a whole property to one family. However, HMOs are heavily regulated compared to other types of rental properties and failing to comply with the rules can lead to a big fine. 

In this article we’ll outline the eight most important tips for first time HMO landlords.

1. Get to Grips with the Rules of your Local Housing Authority

Different local housing authorities have different rules when it comes to HMOs, so it’s crucial to know the legislation. A large HMO is classed as a property let to five or more people from two or more households who have shared access to facilities such as a kitchen and bathroom. 

All large HMOs must be licensed in England and Wales, but in some areas Local Housing Authorities (LHA) have introduced additional licensing for certain types of smaller HMOs, so you must check the rules in your area.

2. Obtain an HMO Licence

If a licence is required, you must obtain one before letting any of the rooms in your HMO. Letting a licensable HMO without a license is an offence and can result in very large fines, usually between £10,000 – £30,000. 

When you apply for a license, the LHA will carry out an inspection before granting it. The cost of an HMO license varies a lot, depending on where your HMO is based, but it will usually be over £300 and can be over £1,000 in some areas of London. Once you have it, it will last five years before it needs to be renewed.

3. Get a Mortgage that Allows HMO Use

Not all buy-to-let mortgages are suitable for HMOs, so it’s vital to check with your mortgage provider before applying for a license. Or, if you know you’re planning on letting a property as an HMO, make sure you get a mortgage that allows this first. Some standard buy-to-let mortgages allow HMO use for small properties (three or four tenants), but a large HMO needs a specific mortgage product. 

4. Get the Right Insurance

Houses of multiple occupancy must have specialist insurance cover, so don’t rely on the usual buy-to-let insurance deals and hope that you are covered. HMOs are perceived to be higher risk, so some providers won’t cover them, but there are still plenty of deals available. Make sure your insurance covers the building itself, the contents and any loss of rent if the property is damaged or destroyed. You also need to beware of tenants subletting rooms in your property, as this can render your insurance void.

5. Carry Out Your Duties as a HMO Landlord

The Management of Houses in Multiple Occupation (England) Regulations 2006 lay out the various rules and regulations that HMO landlords must abide by. These stipulate that landlords must:

  • Follow strict fire safety rules specifically for HMOs
  • Provide the landlord’s contact details to the occupiers and display them prominently in the property
  • Maintain a supply of gas and electricity
  • Ensure gas appliances are tested annually and electrical appliances every five years
  • Make sure the property is clean and up to standard before tenants move in
  • Maintain common areas, fixtures, fittings and appliances
  • Provide waste disposal facilities

Landlords must carry out regular inspections of their HMO to ensure that safety and maintenance issues are kept under review. If tenants report faults or issues, landlords must respond promptly.

6. Find the Right Tenants

Having a group of people who gel and create a harmonious household works in your favour as a landlord, as it saves you having to deal with conflicts or issues. Look for tenants who have similar lifestyles and living patterns. For example, a group of lively students who stay up late won’t be a good match for someone who works morning shifts and needs to go to sleep early. 

A group of people who enjoy living together are likely to have fewer disputes and you will have a slower turnover of tenants, which means less periods of time when rooms are empty. If you are happy with your existing tenants it can be a good idea to allow them a say when screening prospective new tenants.

7. Have a Written Tenancy Agreement

It should go without saying that you must have a written tenancy agreement in place with each person living in your property. Having room-only agreements allows you as landlord to have regular access to the property as you retain control over the common parts of the property, which isn’t the case with joint tenancies. Assured shorthold tenancy agreements usually run for 12 months with a six month fixed period during which neither party can end the agreement, unless the rules of the tenancy have been breached. 

8. Keep Detailed Records

Written records should be kept of correspondence and conversations with tenants, as well as all inspections that you do of the property. You should also keep records of any maintenance that is carried out, and the correspondence you have with the tradespeople doing the work. This type of evidence can be very useful if any disputes arise. 

It is also important to have detailed financial records, including all incomings and outgoings related to the property. Whilst it isn’t necessary to operate your HMO as a limited company, it’s a good idea to open a separate business bank account for all finances related to it.

Running an HMO requires planning and careful management, as there are various pitfalls that can lead to large fines. However, if you do your research and know the rules and regulations that apply, carry out your duties properly and choose the right tenants, it can be a lucrative and rewarding way to rent out your property. 

If you need further information, get in touch and one of our expert letting agents will be happy to help.