We’ve asked Google which questions landlords ask the most. To save you the trouble of scouring the internet, here’s the answers…!
1. How is your rental income taxed, and what is deductible?
Firstly, you’ll need to register for self-assessment with HMRC if you’re earning up to £2,500 on your property each year. If you’re making £2,500 to £9,999 per year after allowable expenses (or more than £10,000 before expenses), you’ll need to fill in a tax return (or find an accountant to do it for you!). You need to register by the 5th October of the tax year after you started to make money from your property. Tax years run from April to April.
You can register and fill in your form online and it’s a fairly pain-free experience. The deadline for submitting a tax return is 31st January, but if you’re completing your first return it’s best to complete it early to allow for any required changes or issues accessing your account.
There are some costs associated with running a property that HMRC allows you to deduct from your profits, so you can pay less tax. These are referred to as ‘allowable expenses’, and can include:
- Letting agent fees (e.g. if your annual income is £12,000 and your agent deducted £1,200 in fees, you would only pay tax on the remaining £10,800)
- Legal and accounting fees
- Buildings and contents insurance
- Maintenance and repair costs
- Utility bills
- Cleaning services
- Direct costs such as stationary, phone calls and advertising
Tax relief is also available when you replace domestic items (such as furniture) for the sole use of your tenants, but improvements to the property (such as a new kitchen or carpets) aren’t tax deductible.
Find out more about taxes payable by landlords, here.
2. Do you need landlord insurance?
Romans highly recommends that all landlords take out a fully comprehensive landlord insurance policy. Whilst many landlords feel a tenant’s deposit provides them with much-needed security, you should remember that there are a huge number of faults and damages that can strike a property during the course of a tenancy that simply won’t be covered by just a deposit. Therefore, to make sure you don’t end up left out of pocket, it’s important to have a comprehensive insurance policy in place, which will protect you against many eventualities.
But how does landlord insurance compare against standard home insurance? Whilst you could get a regular home insurance policy, it may not cover more complex damages or scenarios, such as your tenants needing temporary accommodation in the event of serious property damage.
Most landlord policies will include:
- Liability cover – in case a tenant becomes injured whilst living at your property and attempts to sue you
- Alternative accommodation cover – if your property becomes seriously damaged, many landlord policies will pay for tenants to find temporary accommodation
- Standard home insurance aspects – including buildings insurance, cable and underground pipe cover and cover against subsidence etc.
- Cover for unoccupied properties – many policies will cover your property whilst it’s left unoccupied, such as during void periods.
In any case, landlords insurance adds a further dimension of cover, leaving the opportunity for you to be left out of pocket increasingly slim. If you’re not sure which level of cover is best, contact your local lettings team for advice.
3. Who pays Council Tax on a rental property?
In most cases, Council Tax liability falls to the tenant. However, in regards to Houses in Multiple Occupation (HMOs), landlords are liable to pay.
Local councils use a list, called the ‘hierarchy of liability’ to decide who is liable to pay Council Tax on a property. For example, in occupied self-contained flats or houses, the tenant is normally liable for Council Tax. Where there are two or more tenants living together on a joint tenancy they will be jointly and severally liable – this means that, even if one tenant can’t afford to pay their share, the other is responsible for the entire amount.
Single tenants are still able to claim single occupancy allowance on a rented property – they just need to notify their local council office.
At the end of the tenancy or during void periods, however, the liability for Council Tax will revert to the landlord until a new tenant is found. The landlord must also, where possible, provide the details of their new tenants and forwarding details for the outgoing tenants.
4. Smoke and carbon monoxide detectors: who’s responsible?
The responsibility of providing (and, almost as importantly, maintaining) smoke and carbon monoxide detectors can seem a bit of a grey area to many landlords and tenants. However, put simply, it is a legal requirement that all rental properties in England follow the Smoke & Carbon Monoxide Regulations.
These regulations require that you (the landlord) install at least one smoke alarm on every floor of the property where a room is used wholly or partly as living accommodation and a carbon monoxide alarm must be installed in any room containing a solid fuel-burning appliance such as a wood burner, coal fire or biomass. We recommend that you provide a carbon monoxide alarm in any circumstance anyway, as a precaution.
Following the provision of these alarms, the landlord must make sure they are in working order at the start of each new tenancy, whilst tenants are responsible for replacing batteries or reporting faults mid-tenancy. Under our Fully Managed service, Romans’ experienced team of property managers test and maintain your smoke and carbon monoxide alarms at each inspection, providing both you and your tenant with additional peace of mind.
5. Landlord access rights: can a tenant refuse entry?
Although you own the property and have a legal right to enter it, you no longer have the right to simply walk in and out at your leisure. You are required to provide your tenant(s) with a minimum of 24 hours’ notice before popping by, although immediate access may be possible in emergencies. However, you must remember that tenants may refuse entry if you have not given them proper, reasonable or legal notice to enter.
Alongside the right to expect 24 hours’ notice, your tenants also have the right to remain in the property whilst repairs or maintenance are being carried out. The same goes for property viewings – whether you’ve decided to sell your property or simply wish to re-let it, you have the right to conduct viewings with a minimum of 24 hours’ notice, but your tenants have the right to remain within the property whilst you (or your estate agent) show people around.
We appreciate that it can sometimes be tricky to arrange access to your property at a time that is suitable for both you and your tenants. Romans’ highly experienced lettings team are there to support you and negotiate an agreeable visitation time that works for everyone. Alternatively, under our Fully Managed service, our property managers will perform property inspections for you, whilst maintaining a professional and approachable relationship with your tenants.
Thinking of becoming a landlord, or extending your portfolio? Find out how much your rental property is worth with a FREE valuation.
Book your rental valuation, here!