Buy To Let S2Z

Becoming a Landlord

Safety
Safety enforcement is the responsibility of a number of agencies operating locally including the Local Authority, Environmental Health Officers, Fire Officers, Trading Standards and the Health & Safety Executive.

Search
A local authority search is an examination of local planning records to uncover details of any upcoming developments near the property which could affect its future value or existing restrictions on the site.

Secured loan
If you should default on your mortgage, the lender can ultimately repossess your property to recover their money. The loan is hence said to be "secured" on the property.

Self-certification mortgages
Where no proof is available, prospective borrowers are sometimes allowed to vouch for their own income. Self-employed applicants who lack the two years' record of accounts that lenders would normally require most commonly use this process, known as self-certification. Many lenders charge a small premium on self-certificate business to reflect the extra risk involved.

Smoke Alarms
Install mains operated, inter-connected smoke detectors/alarms on each floor of all properties built since June 1992. Although regulations regarding older properties do not exist, it is advisable to fit at least battery operated smoke alarms and, in all types of property regardless of age, carry out regular checks to ensure the smoke alarms are in full working order.

Standard Variable Rate (SVR)
A mortgage lender's main interest rate. Fixed-rate and discount loans usually switch to SVR when the special offer period expires. Conversely, tracker mortgages switch to a fixed percentage above Bank Of England Base rate (or LIBOR)

Status
A shorthand term for the borrower's credit record and employment situation. See "Non-Status Loan".

Survey
An expert examination of the property you are considering buying, aimed at discovering any structural flaws or repairs needed which you may have failed to notice yourself. Tax
You must inform the Inland Revenue of your rental income. Provided your total income for the year is greater than your personal tax allowance, you may have to pay tax on your rental 'profits' - income minus any allowable deductions, such as mortgage interest payments. Your rental income must be declared on a 'Letting Income Schedule' within your Self-Assessment Tax Return. If a Tax Return Form is not issued automatically you must notify the Inland Revenue of any liability.

Tenant damage
Some policies cover these risks but others don't - check carefully but if you are not sure, talk directly to your insurers or to a good insurance broker. NB: You may also want to take out personal insurance too. This could include critical illness, accident, sickness and unemployment or even 'key man' protection.

Tenancy
There are many factors you need to take into account when planning how your tenancy will work. For example, the precise type of tenancy you create will depend on considerations like: the type of accommodation and the number of tenants, whether the property is fully furnished or unfurnished, whether any services, such as meals or cleaning, are provided. It is important that you and your tenants understand what you are committing yourselves to because your tenancy agreement is a legally binding contract. It should describe both your own and your tenant's legal and contractual responsibilities and obligations. Tenancy agreements can be made up of two types of content. These are 'express terms' - these refer to specific details relating to the circumstances of a particular tenancy (i.e. your name and address, start date, end date, rent payable and payment frequency, rent deposit, provision of services like laundry and meals, and length of notice required). 'Implied terms' - these are rights given by law or arrangements established by custom and practice (i.e. for the landlord these include utility installation and appliance safety, and basic repairs; and for the tenant they include taking proper care of the accommodation). A tenancy agreement can give you and your tenant more than your statutory rights, but cannot provide less than those statutory rights. If the tenancy agreement gives your tenant less than their statutory rights then that section will be unenforceable. Also, you won't be able to avoid your legal responsibilities by simply leaving them out of the tenancy agreement. When you have more than one tenant living in the property, you may want to write the agreement in such a way that tenants are 'jointly and severally' liable. This means that all tenants are jointly responsible for the payment of all rents and tenant liabilities within the tenancy and for any breach of the agreement. When drawing up your tenancy agreement it is important to seek professional advice. Also, don't forget to make sure your tenant is given - and signs - a copy of the agreement.

Term
The period of time over which your mortgage will run. Typically 25 Years or to expected retirement date if that comes first.

Tracker
Tracker mortgages link your interest rate to a benchmark, such as Bank of England base rate. The rate you pay moves up and down in line with the benchmark selected.

Traditionally
Traditionally, property has always proved to be a sound investment and recent years have seen a huge growth in the number of new Buy-to-Let investors joining the property investment marketplace. However, whether you have a single Buy-to-Let property or several, the financial disciplines involved are the same. You still have to be open and honest in your dealings with your mortgage lender, your insurer and with the Inland Revenue.

Underpayment
A mortgage repayment smaller than the regular agreed sum. Some flexible mortgages have this feature, which can be useful for people with irregular income.

Your Checklist
Ensure an Annual Gas Safety Check is carried out on all your gas appliances, fittings and flues provided for tenants' use. Safety checks must take place within 12 months of the appliance/flue being installed and at intervals of not more than 12 months from the previous check. These checks must be carried out by a CORGI (Council for Registered Gas Installers) registered contractor. You must keep records of these checks for a minimum of two years and ensure a copy of the check record/certificate is provided to each tenant within 28 days of the check being completed and to any new tenant before they move in. Appliances owned by tenants are not covered by these regulations.

Ensure regular safety checks are carried out on all wiring and electrical appliances. You have a duty to ensure that all electrical installations and new and second-hand appliances supplied are safe to use. This includes cookers, washing machines, fridges, freezers and immersion heaters, as well as smaller items like kettles, toasters, irons and TV sets. The electrical safety authority - the National Inspection Council for Electrical Installation Consulting - believes the safest course of action is to have regular installation and appliance inspections and testing carried out by a competent electrician, particularly at the start of a tenancy and on re-letting. Ask a qualified electrician about Portable appliance Testing. As the landlord, you should carry out your own periodic visual checks on installations and appliances by looking for obvious signs of damage, such as scorch marks on sockets, bent pin plugs and frayed cables. (See Building Regulations - Electrical Safety).