Rental Property, Letting Agents and Tax

Rental Property, Letting Agents and Tax

November, 2020

Have you considered the pros and cons of engaging a letting agent to manage your rental property for you? You might be running a single rental property or several as part of a portfolio. Or perhaps you're an accidental landlord. You might have inherited a property or come by an additional house or flat by some other means, and decided to rent it out.

Whatever level you're at, or even just getting started, getting it right can pay dividends. Consider your responsibilities as a landlord and your tax liability as someone earning an income from your property. And consider what getting it wrong could mean. No one wants to pay too much tax right? And with changes to the tax liabilities for buy to let mortgages earlier this year, there are pitfalls that warrant taking advice from a specialist accountant.

But the other area for consideration is the day-to-day management of your property. And that's where a professional letting agent can help. 

 

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So what are the benefits of using a letting agent?

1. Compliance

There are over 170 pieces of legislation that landlords must comply with. Both landlords and their tenants have protections under law and must comply with various regulations including the Deregulation 2015 Act, Gas Safety Certificates, Energy Performance Certificate, Right to Rent Checks, ECIR, etc.

2. Tenancy Agreements

Over time legislation changes, and keeping tenancy agreements up to date means that should a landlord have a problem tenant they will have some protections.

The NRLA reports that it is not uncommon to review tenancy agreements only to find that it is not robust enough to stand up in court when a landlord encounters a problem tenant.

3. Letting Success

Quite simply, letting agents understand the local market, can match pre-referenced tenants to your property, and can help you sort out any issues that you may encounter along the way. They can also market your property where it will be found by the right people. And that all means that your property will be let to the right tenants.

4. Time

This is the age-old argument. "Why should I pay someone else to do it when I can do it myself?" But are you simply saving your time, or investing in a resource that can add value to your business, while freeing up your time to do the things that you want to do. 

There are other good reasons; proximity to your rental property, availability to your tenant when they need help, and expert knowledge of regulations, and how to manage your responsibilities.

5. Cost

What would it cost you in time, costs like marketing and advertising, and legal costs to take a property from vacant to let? Quite a lot probably. So the "why should I pay someone else to do it" approach seems like a false economy. The average rental per month is now £985. And if you consider that the average fully managed agent fee is 10%, so that's £98.50 per month. Given the benefits and professional expertise that comes with it, is that money well spent, or is it better for your business to continue to manage everything yourself?

And finally...letting agent vs DIY

Remember that as a landlord you will need to give your tenant, under current legislation, six months' notice if you want them to vacate your property. And if they're a problem tenant that can feel like a lifetime. So finding and, vetting and keeping the right tenant and looking after them from the outset means that you are much more likely to have a trouble-free experience with your buy to let business. And the knowledge, expertise, and experience of a letting agent can help you achieve that goal.

 

Here at James Leigh Property Management, we pride ourselves on providing exemplary service as a letting agent, working with you to ensure that your experience as a landlord is successful and productive. To find out more about our services, get in touch.