Should I use a Company when Investing in Property? By James Bailey

The question I am most often asked as a tax consultant is probably “Should I use a
company when investing in property?” This question needs some background and
does not make good written sense to stand on its own. Unfortunately, there is no
simple answer because so much depends on your circumstances and your plans for the
future.
Rates of Tax
Let’s start with the basics. A company pays corporation tax at 19% on its profits up to
£300,000. Above that level, the rate of tax goes up on a sliding scale, but the
maximum a company will pay on all its profits is 30%.This sounds excellent when
compared to income tax at 22% up to income of £33,300 per year and 40% above
that, but the problem is that the money is still in the company, and there will be
further tax to pay when it is taken out for the shareholders’ use.
“The Corporate Veil”
This is an expression used by the courts to describe the relationship between a
company and its shareholders, though for some reason it always reminds me of exotic
dancers!
The point is that a company is a separate legal person from its shareholders and its
employees, it pays its own tax on its profits and gains, it can be sued for its debts, and
it is the legal owner of the money it makes. If the shareholders want to take money out
of the company, getting it through the corporate veil will usually create a tax charge.
Getting the Cash Out
Broadly, there are five ways you can extract cash from your company. Starting with
the most obvious, they are:
􀂃 Wages, salaries, and bonuses
􀂃 Dividends
􀂃 Benefits in kind
􀂃 Loans
􀂃 Liquidations or share sales
Wages, salaries, and bonuses
Generally speaking, this is the most expensive way to extract cash from a company,
because both you and the company will have to pay National Insurance Contributions.
For 2006/07, yours will be at 11% up to a salary of £33,540, and 1% thereafter. The
company will pay employer’s contributions of 12.8%, with no upper limit.
If the company is your only source of employment, however, don’t forget that no
National Insurance is due on wages of less than £97 per week. In these circumstances,
it makes sense to pay yourself (and any other shareholder or family member who
genuinely works for the business) this much per week. Because the company can
claim the cost of your salary as an expense against its profits chargeable to
corporation tax, there will be a saving of just over £958 (£97 times 52 weeks =
£5,044. £5,044 reduction in company’s profit (taxed at 19%) saves £958.36p) as a
result of paying a salary just below the NIC threshold. The income tax payable on the
salary is neither here nor there, because if you were trading as an individual you
would still have had to pay that.
Dividends
If a company “distributes” its profits to shareholders by paying dividends, it cannot
get a deduction from its taxable profits for doing so, so the sums are rather different.
Because dividends are paid out of profits already charged to corporation tax, they
come with a “tax credit” that can be offset against any income tax due from the
shareholder who receives the dividend. The arithmetic is complicated, but basically
what happens is:
If the company pays a dividend in cash (say, £900), you have to add one ninth (£100)
to it to arrive at the taxable amount, so in this case you are treated as receiving £1,000
of taxable income, which includes a “tax credit” of £100.
If you do not pay tax at the higher rate, the tax credit is enough to cover the income
tax due, so you do not need to pay any further tax.
If you are a higher rate taxpayer, you will pay income tax at the “dividend rate” of
32.5% on your dividend of £1,000, giving a tax bill of £325. From this you can deduct
the tax credit of £100, so you have to pay a further £225 in income tax.
It’s much simpler to look at it this way – a higher rate taxpayer will pay income tax of
£225 on a dividend of £900 cash – that’s 25%.
Benefits in kind (cars, holidays, TVs, etc)
These used to be a good way to extract value from your company, because generally
speaking, no National Insurance Contributions were due on benefits that were not in
the form of cash, but the company could still deduct the cost from its profits.
Unfortunately, the rules are now much tighter, and as a general rule, the company will
have to pay NIC on the value of any benefits in kind it provides, so there is no real
point in serious “BIK” planning.
There are a few benefits that are tax free, and thus worth considering. Some common
examples are:
􀂃 Childcare (up to £55 per week, and subject to various conditions)
􀂃 Car parking at the workplace
􀂃 Mobile phones (only one per employee, thanks to this year’s Budget!)
􀂃 Staff parties up to a cost of £150 per head per year
Loans
There is some quite complex planning that can be done here.
First of all, when setting up a company, it is often wise to lend it the money it needs to
get started, rather than putting this in by subscribing for shares, because the company
can repay that loan in the future with no income tax charge on the lender.
The other side of the coin is if the company lends money to you. Generally speaking
this is unwise, because the company itself has to pay a form of “deposit” to the
taxman, of 25% of the amount loaned – this is repayable when the loan is repaid.
If the company lends more than £5,000 to you, you will be charged to income tax on
the difference between the interest on the loan you pay to the company, and the
“official rate” of interest (currently 5%) – so if you have an interest free loan of
£5,001 for a year, you will pay income tax on £250, meaning £100 tax for a higher
rate taxpayer.
That may sound rather a good deal, but beware – there are Company Law problems to
consider.
More sophisticated planning involves the company lending money and then writing
off the loan – but this is an area where you must have specialist advice to avoid
getting into serious trouble with both the taxman and Company Law.
Sales and Liquidations
If you sell your company to someone else, you are selling them the shares in the
company. If you liquidate your company, the shares cease to exist, and you become
the owner of the company’s assets.
In either case, you will realise a capital gain, based on the difference between the cost
of your shares and the price you get for them, or the value of the company’s assets in
the case of liquidation.
Capital gains are taxed as if they were income, but there are some reliefs that will
reduce the taxable amount. The first £8,800 of your capital gains for the tax year
2006/07 is exempt from tax – this “annual exempt amount” increases each year.
There is also “taper relief”, depending on how long you have owned your shares, and
on whether the company was a “trading company” or not.
In the case of a trading company, the capital gain is reduced by half if you have
owned the shares for one year and by 75% if you have owned the shares for two
years.
Putting this together with the “annual exempt amount” means that you could realise a
gain of £35,200 on your shares in a trading company, and if you had owned them for
two years you would pay no tax - £35,200 reduced by 75% is £8,800.
For other companies, taper relief does not start until you have owned the shares for
three years, and then it only reduces the gain by 5% for each year, until it reaches its
maximum reduction of 40% after you have owned your shares for ten years.
The definition of a “trading company” is a strict one, and unfortunately, a property
investment company is not a “trading company”. Property development companies
(which buy or build properties for resale), or property management companies (which
do not own property, but deal with the collection of rents, repairs, finding tenants, and
so on) can be trading companies, however, so there are planning possibilities for
them.
So, should I use a company or not?
There is no simple answer, and I hope this article has helped explain why, but here are
two general guidelines:
􀂃 If you do not expect to be paying income tax at the higher rate, there is
probably little tax advantage in using a company – the difference between
19% corporation tax and 22% income tax will probably not justify the cost of
running the company.
􀂃 If you expect to pay tax at the higher rate, and you intend to reinvest some of
your profits to grow your business rather than taking them all for your
personal use, you may well be better off by using a company – the 19% rate of
corporation tax is a real advantage if the profits are to be retained in the
company rather than taken out using one of the methods described above.
About the Author
James Bailey (CTA) is author of the newly released guide – ‘How to
Use Companies to Slash Your Property Taxes’, which is available
through the Property Tax Portal.
To learn more about his guide click here.

Energy Performance Certificates in Let Property

Wales requires an Energy Performance Certificate (EPC) to be supplied to the
purchaser as part of the Home Information Pack (HIP). This requirement will be
applied to let property during the course of 2008, both residential and commercial.
The provisions are part of The Energy Performance of Buildings (Certificates and
Inspections)(England and Wales) Regulations 2007 SI 2007/991. This can be found
in full at http://www.opsi.gov.uk/si/si2007/uksi_20070991_en_1.
The requirement is set out in regulation 5 which demands that a prospective tenant
be provided with an EPC at the earliest opportunity and certainly prior to entering
into any contract to rent out the property. The regulation goes on to state that
the certificate must be provided at the earlier of the prospective tenant being
provided with written details about the building or the prospective tenant viewing
the building. If the prospective tenant consents the certificate can be provided
electronically.
Commercial properties with a useful floor area of more than 1,000 sq metres which
are occupied by public authorities or institutions providing public services are also
required to produce a Display Energy Certificate which must be prominently
displayed in the premises. This is unlikely to be an issue for readers of this update.
EPCs are provided by accredited energy inspectors as they are for HIPs. Note that
a domestic energy inspector cannot provide a commercial EPC and vice versa.
Energy Inspectors will need to undergo training and assessment by one of a number
of government-approved organisations and will then need to pay an annual
subscription to maintain their status. Qualified surveyors do not automatically
qualify as energy inspectors but they will be able to qualify more easily.
Note that the only requirement for let property is to provide an EPC and that no
other part of the HIPS regulations applies to rental property.
EPCs remain valid for 10 years or until another certificate is produced for the same
property. Therefore agents and landlords must make sure they always have the
most recent certificate on file.
The regulations come into force for commercial premises with a useable floor area
in excess of 500 sq metres on 6 April 2008 and for all other premises, including
residential properties, on 6 October 2008. There have been suggestions that these
provisions may be delayed but this will most likely only be done for the April date
and there is unlikely to be any delay over introduction of EPCs for residential lets.
The upshot is that from October 2008 agents will need to get EPCs for properties
that they are marketing to new tenants. There will be no need to get EPCs for
current tenancies or renewals to the same tenants. The EPC will then need to be
renewed every ten years.
In terms of the practical position there will be a large number of EPCs required as
the regulations come into force and this will then tail off after a few months as
many properties coming onto the market will have their own EPCs already from
previous sale or rental. Agents will need to consider the best way to deal with the
initial spike and then how they will handle matters long-term. Most agents will be
best to contact their HIPs provider (if they have a sales arm) or make an
arrangement with an energy inspector in their area. Larger agents, who anticipate
a significant volume of work may be better to consider employing an energy
inspector ‘in-house’ on a short-term contract to cover the initial rush and then
contract the work out once this has been dealt with.
Dr David Smith is a trainee solicitor with PainSmith Solicitors, a niche practice
specialising in residential landlord and tenant law. He can be contacted on 01420
565310 or by email at david@painsmith.co.uk. If you wish to subscribe to the
free legal updates service then you should send an email to email updatesubscribe@
painsmith.co.uk.
PainSmith Solicitors Legal Updates are provided for information only and are not legal advice. If you do
have a legal problem, you should talk to a lawyer or adviser before making a decision about what to do.
You may wish to use the CLS/CDS Directory (www.justask.org.uk/public/en/directory) to locate an
adviser. The information provided here is written for people resident in, or affected by, the laws of
England and Wales only. You should note that date given in the update and be aware that the

"Top Tips for Renting Out Your Property at Home and Abroad"

"Top Tips for Renting Out Your Property at Home and Abroad"
This article has been contributed by Henry Davis of International Property.ie
International Property.ie is run and managed by Henry Davis MBA. He has been developing
Liverpool property since 1989, as well as property in Manchester, London and Eastern Europe
Make life easy.
1. Make life easy, if buying an overseas property for letting, choose square or rectangular shaped
rooms. Irregular or unusual shaped rooms make a room look smaller and cluttered.
A key selling point for tenants is an en-suite and a decent sized living room is important even if the
bedrooms are a bit on the small size.
Choose the right overseas letting agent.
2. Choosing the right letting agent is vital for a quick rental. Establish which agent generates the
most enquiries from potential tenants in the local area if you are targeting the local long term lets
market.
Consider an agent with a high street location who may be getting the highest footfall or the agent
with a strong online marketing presence. Also look at the local papers in your overseas location
and establish which agents are advertising on a regular basis as they will have a constant stream
of tenants.
If targeting the holiday lets market, then your letting agent should have a user friendly website with
lots of quality pictures to promote your property.
Interior design is important.
3. Furniture and a slick sophisticated professional interior designed look is the key to securing
higher rent and an immediate let. The right look will rent your property faster and also attract better
quality tenants who will care about your property.
It’s surprising how many landlords spend hundreds of thousands buying a property to-let only to
skimp on furnishing and fittings. Consider employing an interior designer or a interior design-lead
furniture supplier who can offer a ‘’wow’’ factor. Pay particular attention to the three piece suite
selection.
This is a key signature piece and the emphasis should to be on a high quality ‘’comfy’’ large suite.
Stay away from overly contemporary furniture especially sofas with small narrow overly firm
cushions with low backs, they look trendy, but can be very uncomfortable.
Once the property is furnished, take high quality pictures or consider a professional photographer
who can make your property look truly amazing. These photos are an important selling tool and will
set your property apart from the competition.
Parking.
4. Parking spaces make your property more rentable; especially in major cities and they can also
be a great investment. However in some holiday resorts they may not be so important so be careful
not to pay over the odds for a space that may never be used.
Too many overseas investor owners may reduce your rental returns.
5. If you are buying an overseas apartment, do not buy in a larger site exclusively sold to investors
especially in developments with twenty five plus units.
When large amounts of properties become available for rent at the same time this will create a
temporary over-supply, reduce your rent and increase the time required to find tenants.
If they are all sold to investors there will be no owner occupiers to take an interest and play an
active role in the management company as all the owners will be based overseas. This is
becoming an increasing problem for Irish investors who have purchased in Spain.
Be involved with your management company.
6. Take an active role in your management company. A well run Management Company ensures
the common areas are clean and will ensure the building itself is well maintained and cared-for.
This makes your property more desirable to perspective tenants.
If the managing agent is not performing well, be ruthless and seek to have them removed as soon
as possible. Many owners play no active role in the running of their management company and this
will impact on the level and standards of services provided by the managing agent.
Internet Marketing.
7. If targeting the holiday lets market, many potential tenants may be coming from different parts of
the world. Ideally you need a basic, but user friendly website for your property with lots of large
high quality pictures.
The website should be listed on holiday let websites and you need to establish which sites are the
most popular. Research online to find the most popular sites which will give you the best chance of
a fast let. Search engines play a key role and you need to choose holiday let listing websites
appearing high on well known search engines.
You can search the typical key words perspective tenants might input. The search engine results of
your own test search will establish which letting sites have a strong online presence as the
websites you find online using keywords prospective tenants may use are the same sites your
tenants will come across in their search for a holiday let.
Keep in regular contact with your overseas agent.
8. Keep in regular contact with your letting agent, ask about the number of viewings, if the property
is slow to rent it is vital to ask for feedback to establish any problem quickly, preferably within days
of the first few viewings.
If your property is slow to rent, act fast, lower the price or have a meeting with the agent to discuss
any problems.
Don’t be greedy.
9. Don’t be greedy. Many landlords overprice trying to hold out for months greedily dreaming of a
higher rent. This is a pointless exercise defeating itself based on the fact the property usually
remains empty for months while the owner seeks an unrealistic rental figure.
If you’re renting in a more competitive market, then price point your property below the competition.
This may hurt initially, but if you have to do it later, financially, it will hurt even more, if after many
months you have to reduce the rent anyway, start lower, be realistic, don’t be greedy and get your
property rented immediately.
Make sure the rent is paid on time!
10. Only accept payments on a standing order basis, if it’s a long term rent as the hassle factor
with cheque or cash just isn’t worth the trouble.
Check your bank account every month and if tenants are late with a payment, advise them strongly
in writing you’re unhappy about it, in effect try to make an issue of their lateness and ask them not
to repeat.
Ask for six weeks deposit instead of the usual four as tenants often withhold the last months rent
as a way of returning their deposit. This way there is some cash available if the property is
damaged.
Henry Davis develops commercial & residential property in Britain.
Website: www.internationalproperty.ie Tel: 0870 234 4000

7 Steps to Cutting your Property Tax

Here are 7 legitimate steps to help you start cutting your bills...
1). Buy a property in the most tax-efficient manner! 
Consider buying property jointly with your partner to potentially use both your Capital Gains and Income tax allowances. Even better, renting out your existing property might help you to benefit from a whole raft of capital gains allowances!
2). Choose a property investment strategy that saves you tax! 
If you buy property to 'renovate and sell', then you will be taxed differently than if you only 'buy and let' property.
For instance, if you buy and sell property, your gains may be taxed as Income rather then Capital Gains. This means that you need to establish how and which taxes (Income Tax and/ or Capital Gains Tax) will be applied to your property investments.
Once you know how tax will be assessed on your investments, then - and only then - can you establish a tax minimising strategy.
3). Offset ALL costs against income! 
Offset as many costs against your rental income as possible, to genuinely reduce your bill! Many people are not aware of the numerous costs that can be offset against your property income.
For instance maintenance insurance policies on white goods, gas boilers and plumbing cover, which insure your property against any leaks or problems, can all be offset against rental income.
4). Plan for the future and benefit your family! 
In 2020 the average house is predicted to cost £330,643. This will create an Inheritance Tax bill of £32,257.20 for the property alone, if allowances continue to stand still. It also means that the inheritor may be forced to sell the family home in order to pay the tax!
Many people are using trusts and gifting options to reduce their potential liabilities to this tax.
5). Get a good accountant and cut his costs too! 
Poor tax planning and accounts management means bigger accountancy bills - sooner or later! By learning about Property Tax early on in your investment career, you can not only reduce your tax bill, but also by presenting better accounts, you will cut your accountancy bill too.
What is more, the better informed you are about tax - the better questions you can put to your accountant, and the better answers you'll receive.
6). Don't forget to tell the taxman!
Make sure you tell the taxman that you are receiving income from property! If you don't tell him now, then when he catches up with you, you probably won't be able to afford to pay him, after he fines you!
7). Investigate tax sooner rather than later!
Lastly, many tax benefits require the investor to plan for tax ahead of investing. Hence, the sooner you tackle the issue of Property Tax, the more you'll be able to cut your tax bills and liabilities.

Contents © LandlordZONE® 2006 all rights reserved

TAXATION OF PRIVATE LANDLORDS

TAXATION OF PRIVATE LANDLORDS

The Tax Position of the Small Private Landlord
· The private rented sector is possibly the only sector of the economy where the tax and
regulatory systems work to prevent the growth of small and medium-sized enterprises
into larger businesses.
· This is the consequence of several discriminatory anomalies which exist within the tax
system in the way that private landlords are treated compared with other businesses.
· The Anomaly of Trading Status
o Property letting is one of the few business activities which is not treated as a
trade for tax purposes.
o Income from property is taxed under Schedule A as investment income,
regardless of whether the income is generated from pure investment or from a
property ownership and management business. Tax is now charged under
Schedule A on annual profits arising from a business carried on for the
exploitation, as a source of rents or other receipts, of any estate, interest or
rights over land in the UK (Finance Act 1998 Schedule 1). The profits of a
Schedule A business are computed in the same way as a trade (Finance Act
1998 Schedule 4).
o However, a Schedule A business is not a trade. It simply adopts Schedule D
Case I rules on the computation of profits. Section 74 of the Income and
Corporatio n Tax Act 1988 states ‘in computing the amount of profit or gain to
be charged under Schedule D Case I, no sum shall be deducted in respect of
any disbursement or expense not being wholly or exclusively laid out or
expended for the purposes of a trade, profession or vocation’.
o The Inland Revenue explained this by saying that “property letting is seen
primarily in the nature of the investment. That is, the return to property
owners derives essentially from the property itself rather than from services
provided”. From this flows the conclusion that property letting is primarily an
investment rather than an entrepreneurial activity.
o Property does not produce a return simply by existing; it must be managed and
worked to produce an income stream. How can those who themselves market
and manage the properties which they own can be said to deriving the return
solely from the investment?
· The Anomaly of Relief on Management Costs
o Because this form of business is not regarded as a trade, a landlord managing
his own property is not able to claim the costs of managing his property and
lettings business against tax. However, he would be able to claim these costs if
he were using the services of a managing agent.
2
· The Anomaly of Capital Gains Tax Rollover Relief
o Unlike other businesses, because they are not regarded as a trade, lettings
businesses are unable to claim rollover relief from capital gains tax when they
sell a capital asset with the intention of reinvesting the funds realised in their
business. Under section 152 of the Taxation of Chargeable Gains Act 1992,
rollover relief applies for ‘consideration which a person carrying on a trade
obtains for the disposal …of his assets used, and only used…for the purposes
of a trade… and is applied by him in acquiring other assets, which, on
acquisition are taken into use and used only for the purposes of a trade….’.
o This severely limits the flexibility, mobility and above all the efficiency of
investment, particularly amongst the smaller investors, since the decision to
sell to reinvest carries with it the same tax penalty as the decision to sell to take
the profit. Landlords continue to hold property which does not perform as well
as alternative property investments because the impact of capital gains tax
renders selling and investing elsewhere a less attractive or even unviable
option.
o It also limits the potential for growth (see Appendix 1 for worked example)
· The Anomaly of Earned Income
o Full- time landlords, whose sole activity is managing their property and their
lettings business, and who have no other source of income, cannot contribute
to personal pension schemes, because the tax relief on contributions is only
permitted on “earned income”, and excludes “investment income” (sections
639(1) and 644 of the Income and Corporation Taxes Act 1988).
o It may be argued that the property holdings offer a more than adequate
substitute for a pension fund. However, this implies that the owner will sell
the portfolio on retiring, thereby preventing the business passing from one
generation to the next. Even if the portfolio is sold, the landlord will still face
a substantial capital gains tax liability on the proceeds.
o Although a landlord is not able to qualify for a private pension scheme, he is
required to pay National Insurance contributions.
· The SIPPS Anomaly
o Some landlords have generated Schedule D income (usually through trading
properties), and have used this to contribute to Self-Investment Personal
Pension Schemes.
o The SIPPS rules allow investment in commercial property, and allow it to be
let, but expressly forbid direct investment in residential property or land
connected with such an investment, except where commercial property
includes a residential element which is either occupied by an employee as part
of the job or is an integral part of the business premises and is occupied by a
person who had no family connection with the owner.
3
o The result has been that professional residential landlords have bought
commercial properties, often shops with flats above them, and have been
compelled to leave the flats vacant, despite their having a residential lettings
business, because of the potentially adverse impact on the pension
arrangements. (This restriction is equally frustrating for small pension fund
investors who are looking principally to invest in the commercial property, and
are frustrated from making the most effective use of their funds because the
flat above a prospective investment is tenanted).
· The Anomaly of VAT
o Residential rented property is an exempt supply for VAT purposes, and so any
payments of VAT made to suppliers of goods or services, for example,
building contractors or managing agents, are irrecoverable. This increases the
cost to a landlord and, when combined with the tight margins under which
many smaller landlords operate, can act as a disincentive to repair.
o The additional cost of VAT on management expenses may discourage those
landlords who lack the skills, the time or the inclination to manage their
lettings from engaging an age nt.
o On the other hand, some very small landlords are able to make use of the
partial exemption rule and the de minimis limit. It is also possible to recover
VAT where service charges are charged separately from rents.
Stamp Duty
· Since the present Government came to power in 1997, stamp duty on property
transactions has quadrupled from 1% to 4%.
· When the rate of stamp duty was set at 1%, investors were prepared to accept the tax
as part of the incidental costs of a transaction. However, the greater cost of the tax
liability once the threshold is crossed is now having an effect on investment decisions.
The rate of return required by the institutions takes no account of the tax leakage. By
reducing the level of funds available for actual investment, the increases in stamp duty
have made it more difficult to achieve the required level of return.
· The purchase of multiple properties as a portfolio, the individual components of which
might all be priced below the stamp duty threshold, is treated as a single transaction,
which exceeds it. Thus if 10 flats, each valued at £50,000, are sold individually, the
stamp duty payable is nil. If the same 10 flats are bought together, for the same price,
the Treasury now receives a windfall gain of £20,000.
· The new stamp duty reliefs which were introduced for registered social landlords in
the 2000 Budget means that it now appears that stamp duty acts directly as a tax on
investment in the private residential rented sector.
4
Incentives to Invest
· Speaking to the Social Market Foundation on 2 August 2001, the Secretary of State,
Stephen Byers MP repeated the Government’s willingness to continue the dialogue
with investors on tax issues to encourage investment.
· The BPF believes that tax reform to remove these anomalies would prove more
effective in encouraging investment than tax breaks.
· The case for a tax-transparent securitised property investment vehicle remains strong.
· Housing Investment Trusts were introduced in 1995. No one has launched one
successfully to date. Few now believe they will ever be used.
· The structure which was put in place did not appeal to investors for several reasons:
o The rules were too complex;
o The valuation limits meant that it was difficult to acquire properties of a
suitable quality;
o The restrictions on capital growth were unacceptable;
o The Stock Exchange insisted on listing them as Investment Trusts, which
meant that they would trade at a discount;
o The loss of relief on Advance Corporation Tax credit meant that there was not
sufficient tax transparency to make them an attractive investment opportunity.
· The Government rejected the case for a tax-transparent securitised vehicle for indirect
property investment following the 2000 Budget. The Housing Green Paper refers to
the Government’s willingness to explore other tax-related measures.
Recent Initiatives
· Capital Allowances on Costs of Conversion of Flats over Shops
o The 2001 Budget introduced 100% capital allowances on spending to create
flats to rent above shops and commercial premises. The scheme is complex
and includes many restrictions on the types of buildings which will qualify.
o The Government does not wish the allowance to be used to create high value
flats, so all applications will be subject to the test of a notional rent limit. The
conversion will only qualify for the allowance if, on the date when expenditure
is first incurred, it can be reasonably expected that the flat would let for less
than a specified figure. These limits are “notional” because the Government
recognises that the market may move between the commencement of a scheme
and the flats actually being let. It is not clear how this will be policed.
o The general response from the industry has been that, while any tax concession
is to be welcomed, it is unlikely to be used widely or make a significant
contribution to increasing the sector.
5
· VAT on Housing
· The 2001 Budget also reduced VAT to 5% for the cost of:
o Renovating sinvle household dwellings that have been empty for 3 years or
more;
o Changing the number of single household dwellings in a building (eg,
converting a house into flats);
o Converting a non-residential property into a single household dwelling or
number of single household dwellings;
o Converting a single household dwelling or house in multiple occupation into a
care home or other qualifying “relevant residential” use (or a care home into a
single household dwelling); and
o Converting a housing in multiple occupation (eg, bedsit accommodation) into a
single household dwelling (or vice- versa).
· Ending of the Extra-Statutory Concession on Improvements
o The Inland Revenue ended its extra-statutory concession whereby a notional
amount may be deducted from expenditure on improvements (which is
regarded as capital expenditure, and therefore non-deductible ), to allow for the
element of cost on repair and maintenance (which as revenue expenditure is
deductible) which is made unnecessary by the improvement from 1 April 2001
onwards.
o The Revenue is now expected to take a much stricter approach towards
interpreting the distinction between improvements and repairs and renewals.
This will problems for all landlords. An essential repair can sometimes be so
extensive that it could be argued as an improvement. Problems might also
arise where the advances in stand ards or technology mean that maintenance to
modern standards appears to be an improvement, for example in replacing
timber framed single-glazed windows with UPVC double-glazing.
Is There A Case For Tax Breaks?
· Tax breaks are essentially devices intended to bridge a financial gap in order to render
an uneconomic activity commercially viable. But would such devices be sustainable
in the long run?
· We do not want artificial tax breaks that distort investment choices and do not tackle
the problems faced by the sector
Housing Green Paper 2000
6
· Concessions of this sort tend to be transient and, during their brief existence, to
stimulate investment which would never have been justified under normal commercial
criteria.
Nick Raynsford, BPF Residential Symposium 1999
· The Government insists that the tax system should be tenure- neutral, so as not to
favour one form of occupation over another.
For further information contact Richard Lambert rlambert@bpf.org.uk
British Property Federation
September 2001
M:\Committees\Residential Property Committee (RPC)\Work Box\RPC_WB(01)0907 WEBSITE TAX POSITION PAPER.doc
7
APPENDIX 1: EXAMPLE OF POTENTIAL FOR CAPITAL GAINS TAX
ROLLOVER ALLOWANCE
An investor buys a property to let in 1990 at purchase price £500,000
Gross rental yield of 8% pa £ 60,000
Income tax payable @ 40% £ 24,000
He holds it for ten years£ then sells because of poor performance £750,000
Gross profit £250,000
Indexation allowances @ 25% of original purchase price - £125,000
Net capital gain £125,000
Capital Gains Tax payable @ 40% £ 50,000
Assume rollover relief were granted up to a maximum of £100£000 in any
one tax year (assuming indexation allowances abolished to reduce net cost
to the Exchequer)
Purchase price of investment 1990 £ 500,000
Sale price 2000 £ 750,000
Capital Gain £ 250,000
Tax liability if taxed @ 40% £ 100,000
Rollover Relief enables landlord to use proceeds from sale to gear up to
double his original investment
New investment project completed value £1,500,000
Gross yield on completion of 12% pa £ 180,000
Tax payable @ 40% £ 72,000
Net increase in taxable revenue (New gross yield - original gross yield) £ 120,000
Net increase in tax payable (New liability - original liability) £ 48,000
Stamp duty on sale of original investment @ 4% £ 30,000
Stamp duty on purchase of new investment @ 4% £ 60,000
Total stamp duty payable £ 90,000
Total tax expenditure £ 100,000
Total tax yield (year 1) £ 162,000
Net increase to Exchequer (year 1) £ 62,000
[(Stamp Duty + Income Tax) – reduction in CGT liability]
Net increase to Exchequer (subsequent years) £ 48,000

Houses in Multiple Occupation(HMOs)

Houses in Multiple Occupation(HMOs)
Introduction
1.1 What are Houses in Multiple Occupation (HMO)?
The legal definition of "House in Multiple Occupation" is a "house which is occupied by persons who
do not form a single household".
The introduction of the Housing Act 2004 has not redefined the definition of an HMO but has
made it clearer (so they say).
The Housing Act 2004 now defines an HMO in three key parts, 'house', 'occupied' and 'not a
single household'. Definition of a HMO as defined by sections 254-258 of the Housing Act
2004
1.2 Section 254
(1) “ For the purposes of this Act a building or a part of a building is a ” house in multiple occupation
“ if:
a it meets the conditions in subsection 2 (“the standards test”)
b it meets conditions in subsection 3 (“ the self contained flat test”)
c it meets conditions in subsection 4 (“the converted building test”)
d an HMO declaration is in force in respect of it under section 255
e it is a converted block of flats to which section 257 applies
(2) A building meets the standard test if
a it consists of one or more units of living accommodation not consisting of self contained flats
b the living accommodation is occupied by persons who do not form a single household
(section 258)
c the living accommodation is occupied by those persons as their only or main residence or
they are to be treated as so occupying it (section 259)
d their occupation of the living accommodation constitutes the only use of that dwelling
e rents are payable or other consideration is to be provided in respect of at least one of
those persons’ occupation of the living accommodation
f two or more of the households who occupy the living accommodation share one or more basic
amenities or the living accommodation is lacking in one or more basic amenities
(3) A part of a building meets the self-contained flat test ifa
it consists of self contained flats; and
b paragraphs b –f of subsection 2 apply
(4) A building or a part of a building meets the converted building test if
a it is a converted building
b it contains one or more units of living accommodation that do not consist of a self contained
flat or flats
c the living accommodation is occupied by persons who do not form a single household
d the living accommodation is occupied by those persons as their only or main residence or
they are to be treated as so occupying it

e their occupation of the living accommodation constitutes the only use of that accommodation
f rents are payable or other consideration is to be provided in respect of at least one of those
persons’ occupation of the living accommodation
1.3 Section 257
(1) For the purpose of this section a “converted block of flats” means a building or part of a
building whicha
has been converted into, and
b consists of,
self contained flats
(2) This section applies to a converted block of flats ifa
building work undertaken in connection with the conversation did not comply with the
appropriate building standards and still does not comply with them; and
b less than two thirds of the self contained flats are owner-occupied.
(3) In subsection 2 “appropriate building standards” meansa
in the case of a converted block of flatson
which building work was competed before 1st June 1992 or which is dealt with by regulation 20 of
the Building Regulation 1991 and which would not have been exempt under those Regulations
1.4 Section 258
1.5 HMOs: persons not forming a single household
This section sets out when persons are to be regarded as not forming a single household for the
purposes of section 254
(2) persons are to be regarded as not forming a single household unlessa
they are all members of the same family, or
b their circumstances are circumstances of a description specified for the purposes of this
section in regulations made by the appropriate national authority.
(3) For the purpose of subsection 2(a) a person is a member of the same family as another
person ifa
those persons are married to each other or live together a husband and wife (or an equivalent
relationship in the case of persons of the same sex);
b one of them is a relative of the other, or
c one of them is, or is a relative of, one member of a couple and the other is a relative of t he
other member of the couple
(4) For the purposesa
a 2couple” means two persons who are married to each other or otherwise fall within
subsection (3) (a);
b “relative” means parent, grandparent, child, grandchild, brother, sister, uncle, aunt, n
ephew, niece or cousin;

c a relationship of a half-blood shall be treated as a relationship of the whole blood; and
d the stepchild of a person shall be treated a his child
Occupied means 'lived in' (Silbers v Southwark LBC 1977). Therefore vacant houses cannot
be HMOs under the legal definition.
IN SUMMARY
The new legislations, an HMO is a property that is:
Occupied by 3 or more people, forming 2 or more households, sharing amenities eg.
Bathroom and kitchen,. OR
Converted into self contained flats, but does not meet the requirements of the 1991 Building
Regulations AND al least one third of the flats are privately rented , OR
Occupied by 3 or more people forming 2 or more households in a converted building that is
not entirely self contained. Eg basement flat with shared accommodation.
In a maisonette at ground and first/second floor levels
Do all HMO’s need to be licensed?
NO. Any HMOs that are self contained flats are exempt for licensing ------
However the Housing Act 2004 say that certain types of larger HMOs must be licensed – This
is Mandatory Licensing
Three or more storeys high and are occupied by 5 or more persons who do not form a single
household
Other smaller HMOs may be licensed and this is Additional Licensing
Only two storeys high and occupied by 5 or more persons, who do not form a single
household
Some properties have habitable basements or attics, these would be included when
calculating the number of storeys
1.5.1.1 Adoption
It seems that although there are a set of straight forward rules under the Regulations, the Housing
Act has placed the onus back on to each local council in the country to adopt the principles. Although
there are set criteria (as laid out above) each will have a different approach on the subject. This
therefore leads to controversy on who, what, how Landlords and Agents are to deal with HMO’s.
Licensing your HMO
If the property is let to 5 or more persons sharing, then you will have to License the house and pay a
fee to the Local Authority. This fee will vary from council to council and will last for five years

Failure to License the property may result in prosecution a fine of £20,000, and is a criminal offence.
You will not be able to serve notice to quit on tenants and you may have to pay back ALL the rent
collected, back to the date it should have been licensed!!! BE WARNED
This would also give rise to the landlord not being a “Fit and Proper Person”
1.9 What is a Fit and Proper Person?
This is a key condition of obtaining and keeping a license – but what does it mean?
Owners or managers under Mandatory or Selective Licensing Schemes must apply. The Local
Authority must grant a License IF it is satisfied that:
The HMO is reasonably suitable (etc)
The Licence holder would be a fit and proper person.
The criteria in deciding where the person is fit and proper:
The Local Authority must have regard to the statutory criteria set out in Section (66 (2) and have
regard to any other facts or matters which it considers to be relevant
Matters to which the Local Authority must have regard:
Any offence involving fraud, or other dishonesty, or violence or drugs or in Section 3 of the Sex
Offences Act 2003
Practiced unlawful discrimination of the law in connection with the carrying out of any business
Contravened any provision of the law relating to housing or landlord and tenant law – Illegal eviction
etc.
Acted other than in accordance with any code of practice for the management of HMO’s
Associates
The Local Authority may take into account evidence of any of the above conduct by a person
“associated or formerly associated with”, the proposed licence holder or manager “whether on a
personal, work or other basis”, if relevant.
Any “Spent” convictions cannot be taken into account. However, a lack of conviction may not mean
that the incident was not relevant.
Managers:
Assumption: the person having control of the property is the most appropriate person to hold the
licence. i.e.: the person who receives the rents.
The proposed manager, if not the licence holder, and all other persons involved in the management
must also be fit and proper
The Decision
If the Local Authority is not satisfied – IT MUST REFUSE and make an Intermediate Management
Order instead. Any proposed reasons to be given in advance. There are 14 day to make
representations and the Right to appeal to the Residential Property Tribunal (RPT).
1.10 Local HMO Requirements
It is therefore highly recommended that you speak to the individual Environmental Health & Trading
Standards Dept. in your Local Authority first before buying a property for letting as an HMO. If you
already own one make sure that you are up to date with the new requirements.
2. Risk Assessment
Objective
Part 1 of the Housing Act replaces the Housing Fitness Standard set out in the Housing Act 1985 by
the Housing Health and Safety Rating System (HHSRS) as the basis for local authority intervention
to tackle unacceptable housing conditions. The principle behind the HHSRS is that a dwelling should
provide a safe and healthy environment for the occupants and any visitors. This is to be achieved
over time by refocusing the basis for Local Housing Authority (LHA) intervention on the severity of
health and safety hazards in the home, assessed under HHSRS. The 24 broad hazards that can be
assessed under HHSRS have replaced the previous fitness criteria. It is generally accepted that, in
practice, this criteria bears no clear relationship to the hazards in a property.
The HHSRS:
Provides an inspection tool for surveyors. As well as looking at the defects on a dwelling, it enables
their effects on the health and safety of potential vulnerable occupants to be assessed.
This point was not addressed under the previous fitness standard.
Generates hazard scores that provide a basis upon which Local Authority may determine the most
appropriate enforcement action.
Poor management and the presence of unscrupulous landlords can also increase health and safety
risks for tenants even when the HMO is in an acceptable state of repair. Responsible landlords are
less likely to exploit vulnerable or disadvantaged tenants and good management practice such as
regular inspections can also reduce risks. Health and safety issues can also arise because of the
occupancy profiles associated with HMO use. The behavior of tenants with alcohol or drug
dependencies, or mental health problems can increase the risk of death or injury to both themselves
and other tenants, accentuating the need for responsible and responsive management.
The Housing Health and Safety Rating System (HHSRS) will apply to any unit of residential
accommodation and to all landlords, and will be the principal tool in assessing physical conditions in
HMOs under the licensing system.
Licensing will ensure proper enforcement of the HHSRS in the highest risk HMOs. Aside from
physical standards in HMOs, the other main elements of reform will focus on the management
competency and the 'fitness' of those managing or providing HMO accommodation.
2.1
2.2 Housing Health & Safety Rating System (HHSRS)

The Housing Act 2004 has introduced a new way to assess the condition of homes in England
& Wales. Within the Act, the Housing Health & Safety Rating System is a risk assessment
approach to assess hazards to health and safety in dwellings, and on which remedial and
enforcement action can be taken if
necessary.
The HHSRS provides a method of grading the severity of threats to health and safety in any
dwelling. A dwelling can be a:
House
Self-contained flat
Non self contained flat
Bedsit
The key structure of the system is that a dwelling, including the structure and associated outbuildings
and garden, yard and/or other amenity space, and means of access, should provide a safe and
healthy environment for occupants and, by implication, for any visitors.
It should be borne in mind that all properties contain hazards, for example stairs, electrical outlets
etc. and it is not possible (or desirable) to remove all hazards. The emphasis should be to minimise
the risk to health as appropriate.
What are the hazards?
Dampness, excess cold / heat
Pollutants e.g. asbestos, carbon monoxide
Lack of space, security or lighting or excessive noise
Poor Hygiene, sanitation, water supply
Accidents – fall, electric shock, fires, burns, scalds
Collisions, explosions, structural collapse
Damp and mould growth caused by rising or penetrating damp should be seen as a high priority
Condensation mould should be addressed by better ventilation and ambient temperatures
Asbestos and such like need to be removed from the property by specialist firms
Carbon Monoxide detectors should be installed
Security measures should be put in place, such as 5 lever locks on main entrance doors, security
lighting with PIR detectors
Better provisions for waste products, food. Provisions for storage of cleaning agents away from food
storage and preparation areas.
Constant supply of clean hot and cold water
Safeguard against trips or falls due to uneven surfaces, worn carpets etc.
Safeguard against electric shock by having the installation tested by an NICEIC contractor
Safeguard against fires by installing smoke detectors as standard, fire extinguishers and blankets in
kitchens.
Safeguard against structural collapse by regular and routine maintenance throughout the letting
(Above information extracted from Asset Skills essential information for landlords and agents)
The Owner, Landlord, or Management Agent will be responsible for making changes to the property.
Failure to comply will local authority notices can carry a penalty of up to £5,000

Therefore as management agents we have to “Self Assess” a property to determine whether the
property has hazards that may cause a health or safety risk to tenants. Should potential hazards be
found we would inform you to correct them prior to acting as agents. We would refer you to “B”
overleaf regarding our position.
The Effect of the Defect could cost lives not just your pocket
It is therefore the Landlord’s responsibility to ensure that the property is made available for letting in
a safe condition and in compliance of the above regulations prior to the marketing of the property.
Although we do not purport to be experts in this field, we have suitable knowledge of potential
defects. It is recommended that you seek advice from qualified contractors on all aspects.
3. Categories of Houses in Multiple Occupation
Not all HMOs are treated alike!
The various categories of HMO are listed below and, depending on your local authority, each
'category of HMO' will be required to meet different levels of fire safety etc…
However, it must be stressed that the inclusion of a particular class of premises in the list, e.g.
guesthouse, does not mean that it is necessarily an HMO. It is the circumstances of the occupancy
(i.e. temporary stay) that will determine this.
3.1 Category A - bedsits
Houses occupied as individual rooms, bedsits and flat-lets which are considered to have a number of
rooms for exclusive occupation, not necessarily behind one door, with some sharing of amenities
usually bathroom and/or toilet and maybe kitchen. In such a house, each occupancy would be
separately rented.
3.2 Category B - student accommodation
Houses occupied on a shared basis. These properties would normally be occupied by students
where, activities, the occupiers might live as a single household unit but for others do not. Usually
the house would be let to a defined group and not individuals.
Although most common amongst students it is increasingly found by groups of people coming
together in the house who share certain amenities as they wish but have certain individual facilities
such as bedroom
3.3 Category C - houses let in lodgings
Houses described as "houses let in lodgings" i.e. catering for lodgers on a small scale, not living as
part of the main household normally with a resident owner/occupier.
3.4
3.5 Category D - 'hostels and guest houses'
Houses generally referred to as "hostels", "guest houses", and "bed and breakfast accommodation".

They will provide accommodation for people with no other permanent place of residence.
This category would include hotels, guesthouses and bed and breakfast establishments used by
Local Authorities to house homeless persons whose only financial support in State Benefit.
3.6 Category E -'Old peoples homes etc…'
Houses that are hostels and require registration under the Registered Homes Act 1984. The homes
provide board and personal care for the persons in need of such care due to old age, disablement,
past or present dependence on alcohol or drugs, or past or present mental disorder.
Unlike Category D houses these houses would provide permanent accommodation for people with
nowhere else to go; this would be their only home and would include a level of support not normally
present in Category D accommodation which only provides a home for the time being.
3.7 Category F - 'Rooms with no common areas'
Houses, which by conversion, contain dwellings that are self-contained and behind one access door
off a common area. There would be no sharing of amenities with occupiers of other dwellings
3.8 If your property falls in more than one category?
There is no clear boundary between each of these categories and a house (or even part of a house)
might move between categories over a period of time.
Remember that the responsibility of enforcing the HMO legislation falls to the Local Authority and it is
the HMO housing team.
In addition, it has been know for different officers from the Local Authority to categories and treat the
same property (or identical properties) differently.
For example, one property was required to use fire safety doors on only the front and internal kitchen
doors. Another office when viewing the property insisted on fire doors on all rooms in the property.
4. Legal aspects of letting HMOs
The following two Acts of Parliament deal with all aspects of the letting (not just HMOs). All other
Acts and Regulations come under these Acts.
Consumer Protection Act 1987
Health & Safety At Work Act 1974
Therefore, if you feel that the Furniture, Gas, Electric, Water and structure of the property are sound,
and it comes to light that there are defects, you will fall foul of these Acts, so there is no escaping the
fact that all areas of the property, whether structural or fittings, must be in safe working condition.
The consumer in this circumstance is deemed to be the Tenant.
There is plenty of guidance available for Gas (see section 4.3), but little is advice for electrical
equipment and wiring which came into force in January and February 1995 respectively.

4.1 Furnishings
Two acts apply to the furnishings of HMOs (Houses in Multiple Occupation)
Fire and Furnishing (Fire) (Safety) Regulations 1988
Fire and Furnishings (Fire) (Safety) (Amendment) Regulations 1993
The Regulations apply to all upholstery and upholstered furnishing, loose fittings; permanent or loose
covers, which we will refer to as "Furniture" in this article, but the technical criteria, are beyond the
scope of this article.
You cannot give, sell, lend or supply in any other way Furniture that does not comply with the
Regulations.
Labels must be attached to the Furniture to say that the article complies.
If no label is visible, it will be deemed NOT to comply and must be removed from the property. In
certain circumstances, if document can be produced to confirm the article complies, this may be
acceptable. On mattresses, if there is no label, there may be a BS number, this should be BS7177
and is acceptable.
4.2 Electrical requirements
Plugs Sockets etc (Safety) Regulations 1994
Electrical Equipment (Safety) Regulations 1994
Low Voltage Electrical (Safety) Regulations 1990
The first set of regulations applies to the electrical wiring installation in the property, while the second
deals with plugs, sockets and flexible leads to the domestic appliances supplied with the property as
part of the furnishings or fittings.
You are required to ensure that people and domestic animals are adequately protected against
danger of physical injury or other harm that might be caused by electrical contact, direct or indirect.
The installation and all electrical equipment should be tested by an approved and qualified contractor
on a regular basis (every five years) or earlier if alterations have been carried out in the meantime.
If the incoming mains is not protected by an RCD (Residual Current Device) or 'circuit breaker' to
protect against potential electric shocks, one must be fitted if you install an electric shower.
On an upgrade of the wiring it is advisable that a new consumer be installed to cope with the high
demand in such a property.
The incoming gas main must be earthed not more than 1 metre inside the building – Equipotential
Bonding.
Gas and water pipes need to be "Cross Bonded" or supplementary bonded. That is having a
continuous earth bonding to all gas and water pipes back to the main earth conductor of the
distribution board.
The consequences for not making adequate provisions to ensure the safety of such installations and
equipment could be very serious and is a criminal offence.
My advice and company practice is to instruct an approved and qualified electrician to undertake an
electrical safety check on the property. A report is then issued and any defects will then need to be rectified before a tenancy commences. You will be required to submit a test certificate to the local
authority for the gas and electric supplies.
Plan for regular (perhaps annual) checks, as damage by tenants or alterations on the property can
affect the property condition.
4.3 Gas requirements
Gas safety (Installation and Use) Regulations 1998 and amendments
These Regulations makes it a legal obligation to ensure that ALL gas appliances, whether fixed or
portable, be maintained and checked every 12 months. A record should be kept of these checks and
any maintenance undertaken.
The appliances should be checked and maintained only by qualified CORGI ACOPS registered
installers. The checks also apply to flues, pipe work and ventilation.
Information must be supplied to the tenants of such checks and any previous maintenance work
records must be made available to them.
A copy of the Gas Safety Certificate MUST be given to tenants at the commencement
of the Tenancy.
Any breach of the Regulations could result in prosecution - with fines now up to £60,000 and/ or
even imprisonment for severe non-compliance where death or injury is caused.
4.4 General Product Safety Regulations 1994
The "Catch All" Regulations came into force in October 1994, implementing a European Council
Directive in 1992: Any product supplied to a consumer (in this case the tenant) must be safe. A
dangerous product is defined as one that that is not safe. Only antiques are exempt.
Failure to comply with any of the Regulations may result in prosecution
4.5 HMO Regulations
Housing (Management of Houses in Multiple Occupation) Regulations 2006
Section 234 of the Housing Act 2004 makes provisions for the person(s) having control of the
property.
The person in control of the property, namely, the Owner, Agent or whomsoever has certain duties to
keep the property in safe, clean and good standard of repair. These are such areas as the water
supply and drainage; common parts; windows and ventilation; means of escape from fire and
disposal of refuse and litter.
The Regulations require the person in control to display a Notice containing the name, address and
contact telephone of that person.
Non compliance under this Section may constitute that the person is not a “Fit and Proper Person”
and therefore a License may be revoked.
The person overall in control of the property is the LICENSE HOLDER

The general running of the property is the responsibility of the MANAGER
They may be one of the same or you could find that the manager is NOT the License Holder and any
litigation would be direct to the say (the landlord, if he/she was the License holder).
5. General Requirements for HMO properties (having regard to
HHSRS)
Remember, not all HMOs are required to meet the full list of requirements.
Please check with your local authority about which regulations apply to your property, especially
before purchasing or working on a property.
Detailed specifications will be provided to the Landlord following an inspection appropriate to each
individual HMO.
Landlords are advised not to carry out any work until they have received the schedule of works from
the Environmental Health & Trading Standards Dept. in the Local Authority giving detailed
specifications.
Under the new guidelines a consultation process is compulsory with the Fire Authority following an
inspection of each individual HMO and precedes submission of the schedules to allow for
amendment if so required.
5.1 Doors
The provision of purpose made fire doors with intumescent strips and smoke seals around the doors
to all high risk areas, such as kitchens, bedrooms, electric meter cupboards. Fire door blanks must
be used in existing door frames. These must be edged in hardwood.
5.2 Floors
6mm Plywood or high density hardboard floor covering to all suspended timber floors.
5.3 Ceilings
Upgrading or renewal of old lath and plaster ceilings or otherwise defective ceilings to provide
adequate fire resistance.
Vertical separation and horizontal separation of flats must be at least 1 hour fire resistance and 1/2
hour fire resistance within the flat.
Polystyrene and other hazardous ceiling coverings to be removed (Artex) etc.
5.4
5.5
5.6 Loft Hatches
Upgrading of hatches and provision of bolts to secure them shut

5.7 Staircases
Under drawing of soffits to provide 1 hour fire resistance.
Infilling of under stairs area to deny the facility for storage
Adequate headroom clearance between the string of the staircase and ceiling
5.8 Partitions
Construction or reconstruction of partitions to meet the appropriate separation requirements
5.9 Storage
No storage within the protected Means Of Escape (MOE)
Cupboards within the MOE (Means of Escape) route to be emptied and locked shut or removed
No gas or electric cookers or portable heating appliances, including gas water heaters, within the
protected MOE (Means of Escape) route.
5.10 General
No portable LPG (butane gas) appliances in the premises
No gas meters within the protected MOE (Means of Escape) route
Electrical installation to comply with current standards (16th Edition) of the Electrical Installers Code.
Work to be carried out only by a NICEIC or ECA accredited contractor
Gas installation should be inspected at least once in every twelve months and a Landlords safety
certificate issued by a CORGI registered installer for ALL gas appliances and installations.
5.11 Fire Fighting Equipment
To be provided to cover protected MOE (Means of Escape) route and kitchens
5.12 Fire Warning System
The installation of independent, mains operated smoke alarms in all rooms & common areas such
and halls and landings, with heat detectors in kitchens which must be inter-linked for 2 storey HMOs.
The installation of an electrically operated automatic fire detection system in HMOs of 3 storeys or
more, with manual call points on each landing and exit point.
This system is commonly known as a L2 system. This system will need to be installed by an
electrician qualified in this field and an annual service agreement drawn up with a suitable firm.
Names, addresses and telephone numbers of at least two key holders are required in case of false
alarms.

5.13
5.14 Emergency Lighting
The installation of emergency lighting in bed and breakfast (hostel) type HMOs and in other HMOs if
considered necessary.
Under the process of risk assessment emergency lighting may be compulsory in means of escape
areas or high-risk areas.
5.15 Signs and Notices
The provision of signs and notices to alert occupiers of fire doors, fire exits and electric cables etc.
Also the name, address and telephone number of the “manager” of the property.
------------------------------------------------------------------------------------------------------------------------------------
This article was written by Robert J. Lewis FNAEA
© Robert J Lewis 2006
Michael G. Lewis & Son
Property Managers
City & County of Swansea
SA1 5TE
http://www.mglewisandson.co.uk
The Home of Property Management - mailto:mglas@globalnet.co.uk
Acknowledgments
I would like to thank Mr. Huw Williams – Technical Officer with City & County of Swansea’s
Environmental Health & Trading Standards Dept. for providing me with guidance for this article and
continued assistance in dealing with HMO’s
Information has been also obtained from DETR & ODPM for which I am grateful. As author I have
endeavoured to deliver information and advice of the highest quality; however you are advised not to
rely on this as your sole source of advice.

Do You Have What It Takes to Manage a Buy-to-let Property?

This is a sample chapter from “Renting Out Your Property For Dummies” supplied to LandlordZONE by John Wiley & Sons Ltd, publishers of the Dummies series of books.
Do You Have What It Takes to Manage a Buy-to-let Property?
In This Chapter
* Being aware of the advantages of owning rental property
* Identifying the differences between owning property and managing it
* Assessing your own management skills
Congratulations! Either you already own rental property or you’ve made the decision to buy. Property is great whether you’re looking for a steady supplement to your retirement income or a secure financial future. Most buy-to-let landlords want to become financially independent, and property is a proven investment strategy for achieving that goal.
But after you sign your name on the dotted line and officially enter the world of owning rental property, you face some tough decisions. One of the very first concerns is who will handle the day-to-day management of your rental property. You have properties to lease, rents to collect, tenant complaints to respond to, and a whole host of property management issues to deal with. So you need to determine whether you have what it takes to manage your own buy-to-let property or whether you should hire and oversee a letting agent. In this chapter, we give you the low-down on some of the advantages of owning rental property. Then we’ll help you assess whether you have what it takes to manage your own property.
Recognising the Advantages of Owning Rental Property
A great advantage to building wealth through property is the ability to use other people’s money - both for the initial purchase of the rental property and for the ongoing expenses.
The wide availability and low rates of interest on buy-to-let mortgages makes buying a second property a viable and realistic option for virtually everyone. Most people raise a deposit and then borrow the rest of the cash from a mortgage lender.

The deposit required for a buy-to-let mortgage tends to be higher than that needed for a “regular” mortgage. Expect to pay at least 20 per cent of the purchase price, depending on the lender.

The ability to control significant property assets with only a small cash investment is one of the best reasons to invest in bricks and mortar. For example, you may have purchased a £100,000 buy-to-let property with a £20,000 cash deposit and a mortgage for the remaining £80,000. If the property’s value doubles in the next decade and you sell it for £200,000, you will have turned your £20,000 cash investment into a £100,000 profit. This is an example of capital appreciation, where you are able to earn a return not only on your cash investment but also on the entire value of the property.
Rental property also offers you the opportunity to pay off your mortgage using your tenant’s money. If you’ve been prudent in purchasing a well-located rental property in a stable area, you’ll have enough income to pay the interest on your mortgage, as well as all the expenses, utilities, maintenance, taxes, and insurance. Each month your property should be appreciating in value while your tenant is essentially paying all your expenses, including the interest on your mortgage.
Your lender and tenant aren’t the only ones who can help you with the purchase of your rental investment property. Even the government is willing to offer its money to help your cash flow and encourage more people to become landlords. In calculating your income tax obligations each year, the government allows buy-to-let landlords to offset their income against interest payments on their mortgage and certain expenses. For example, you can claim 10 percent of the annual rent for wear and tear on fixtures and fittings in furnished properties.
Over time, you will generally find that your rental income outstrips your operating expenses. And after your tenants have finished paying your mortgage for you, you’ll suddenly find that you have a positive cash flow - in other words, you’re making a profit.
Being Honest with Yourself about Your Skills and Experience
One of the first steps in determining whether to completely self-manage your rental property or delegate some or all of the duties to other people is to analyse your own skills and experience. Many very successful property owners find that they’re better suited to deal-making, so they leave the day-to-day management for someone else. This decision is a personal one, but you can make it more easily by thinking about some of the specifics of managing property.
Property management requires basic skills, including marketing management, accounting, and people skills. You don’t need a university degree or a lot of experience to get started, and you’re sure to pick up all kinds of ideas of ways to do things better along the way.

Examine your own personality. Are you a people person? Serving as a landlord is a labour of love; you must love people, you must love working with your hands, you must love solving problems. Most of all, you must be able to do all this without getting much in the way of appreciation.

If you’re impatient or easily manipulated, you aren’t suited to being a property manager. Conveying a professional demeanour to your tenants is important. You want them to see you as someone who will take responsibility for the condition of the property. You must also insist that tenants live up to their part of the deal, pay their rent regularly, and refrain from causing unreasonable damage to your property.

People who need people: Putting your interpersonal skills to the test

Whether you’re confident you have what it takes to be a good manager of rental property or you’re still not sure, take stock of yourself and your abilities by answering these questions. Interview yourself as though you were a job applicant. Ask the tough questions. And more important, answer honestly.
* Are you a people person who enjoys working with others?
* Are you able to keep your emotions in check and out of your business decisions?
* Are you a patient and reasonably tolerant person?
* Do you have the temperament to handle problems, respond to complaints, and service requests in a positive and rational manner?
* Are you well organised in your daily routine?
* Do you have strong time-management skills?
* Are you meticulous with your paperwork?
* Do you have basic accounting skills?
* Do you have maintenance and repair abilities?
* Are you willing to work and take phone calls on evenings and weekends?
* Do you have sales skills?
* Are you a good negotiator?
* Are you willing to commit the time and effort required to determine the right rent for your property?
* Are you familiar with or willing to find out about the laws affecting property management?
* Are you willing to consistently and fairly enforce all property rules and rental policies?
* Are you interested in finding out more about property management?
* Are you willing to make the commitment to being your own property manager?
Ideally, you answered yes to each of these questions. This assessment is not scientific of course, but it does raise some important issues, particularly the level of commitment that you need to succeed as a rental property manager.

You need to be fair, firm, and friendly to all potential tenants and those who do actually become your tenants. Treat everyone impartially and remain patient and calm under stress. Be determined and unemotional in enforcing rent collection and your policies and rules. And maintain a positive attitude through it all. Not as simple as it looks, is it?
Even if you didn’t answer with an enthusiastic “yes” to all the questions in this section, you may still make a good rental property manager if you’re prepared to be flexible. Learn from your property management experiences. The really good property managers graduated from the school of hard knocks. The following sections give an overview of the key skills you need to manage your property effectively.

If your assessment revealed that your skills may be better served doing something other than managing your own property, turn to Chapter 2 for some alternatives. Owning rental property can still be a great investment, even if you don’t manage it yourself.
Making sure you have good management skills
Good management leads to good financial results. Having tenants who pay on time, stay for several years, and treat the property and their neighbours with respect is the key to profitable property management. But, like most things, it’s easier said than done. One of the greatest deterrents to financial independence through investing in rental property is the fear of management and dealing with tenants.
If you choose the wrong tenant or fail to address certain maintenance issues, your buy-to-let investment may turn into a costly nightmare. By doing your homework in advance, you can reduce those beginners’ mistakes. Experience is a great teacher - if you can afford the lessons.
If you already own your own home, then you already have some basic knowledge about the ins and outs of owning and maintaining property. The question then becomes how to translate that knowledge into managing rental property.
Delegating management activities
As a landlord, you may choose to handle many responsibilities while delegating some of them to others. Look at your own set of skills to determine which items you should delegate. A contractor may be able to handle the maintenance of your rental property and grounds more efficiently and effectively than you can.
The skills you need to successfully manage your own rental properties are different from the skills you need to handle your own property maintenance. Most buy-to-let landlords find that using trusted and reasonably priced contractors can be a valuable option in the long run.
Ultimately, you can delegate all the management activities to a professional letting agent. But hiring a letting agent doesn’t mean you’re off the hook. Depending on the arrangement you have with your letting agent, you may still oversee the big picture. Most letting agents need and seek the input of the property owner before they start so that they can develop a property management plan that meets the owner’s investment goals.
Keep in mind that no one will ever manage your rental property like you will. After all, you’re more motivated than anyone else to watch out for your buy-to-let investment interests. Only you will work through the night painting your property for the new tenant moving in the next day. And who else would spend her vacation looking through the local newspaper classifieds for creative ad ideas?
Start by being honest with yourself. Know your strengths and your weaknesses as a property manager. You may find that you’re able to do the job but wind up with frazzled nerves when you do. If you’re not truly excited and challenged by handling your own property management tasks, then you’re not likely to have success in the long run.
You may find that a letting agent can run the property more competently than you can. Many buy-to-let landlords possess the necessary skills and personality to efficiently and effectively manage their rental properties, but they have other skills or interests that are more financially rewarding or enjoyable. Hiring professionals and supervising them is often the best possible option.
Recognising how well you manage your time
If you’re like most buy-to-let landlords, managing your property is a part-time job. You can handle calls from the tenant, collect the rent, show the property to prospective tenants, and even perform most maintenance in the early evenings or on weekends. The challenge is finding the time required to do this. The good news is that the time required to be a landlord is in your control.
If you develop proper skills in marketing, tenant screening and tenant selection, you can greatly reduce the amount of time you spend managing your rental property. You also have to work smart or you may find that your time is better spent in other areas than management.

You can save a lot of time by asking your tenants to pay their rent by direct debit each month, with the money transferred straight into your bank account. A cheque in the post is also acceptable but not as convenient. The days of actually collecting the rent in person from the tenant are, thankfully, in the past.

Many of your contractors and suppliers will want to be paid immediately. But you can be more efficient and save time if you have a policy of paying all your invoices at the end of each month.
Time management is really about evaluating how much time you have and then looking for ways to streamline your tasks so that you make the best use of your time.
This is a sample chapter from “Renting Out Your Property For Dummies” supplied to LandlordZONE by John Wiley & Sons Ltd, publishers of the Dummies series of books.
The book is a comprehensive guide to the whole process of renting out property. It’s brim full of practical advice based on years of letting experience. In our opinion this new UK edition of a long-established US title is an absolute must for the bookshelf of serious landlords, novice and experienced alike. We can highly recommend it.

Finding the Perfect Rental Property

This is a sample chapter from “Renting Out Your Property For Dummies” supplied to LandlordZONE by John Wiley & Sons Ltd, publishers of the Dummies series of books.
Finding the Perfect Rental Property
In This Chapter
* Figuring out exactly what type of rental property you want
* Knowing where to look for a rental property
* Assessing whether there are enough suitable tenants in the area
Location, location, location is the mantra you should bear in mind when you go to buy property - particularly when you go to buy rental property. Not only do you want to pay a reasonable price for a property that will increase in value over time, but you also need to find a rich source of suitable tenants to fill it, look after it, and pay the rent on time every month. This task sounds straightforward enough, but you need to do your research very carefully before committing to the purchase of a rental property to make sure that all these aims are met.
It doesn’t matter how great a one-bedroom flat is if it’s situated in an area full of large family homes with big gardens. You’re not likely to find the single tenant or couple you need to fill it, and - at the end of the day - filling the property is your aim if you want your rental property business to be profitable. As a landlord, you have to be dispassionate and ruthless about your purchase, because the type of property you may want to live in won’t necessarily appeal to tenants. In this chapter, we help identify what to look for when choosing a rental property - and the pitfalls to avoid.

Knowing What to Look For
Before you start, you need to have a clear idea of what type of rental property you’re looking for. If you want a small family house, say a two-bedroom terraced house, don’t be persuaded to look at unsuitable properties such as studio flats or rambling six-bedroom mansions. By focusing on exactly what you want and avoiding countless unsuitable properties, you can save yourself time and money.
While staying focused is good, don’t be too narrow-minded. If you’re looking for a two-bedroom house for your rental business but then stumble across a slightly cheaper two-bedroom flat in the area, you may decide that the flat is perfect for renting to tenants. If you stick too closely to your original plan and don’t evaluate alternatives as they present themselves, you could find yourself missing a good opportunity.

Ask dedicated letting agents - not estate agents - for advice on renting property. Estate agents want to earn their commission and get the sale, so they are unlikely to be completely unbiased. The letting agent should provide more useful opinions on location and a particular property.
Big or little: Size matters
Letting agents will all tell you that the easiest properties to let to tenants are studio apartments and one-bedroom flats. If you opt for a huge, grand house in the hope that it will generate lots more rent, you are likely to discover that finding tenants is much harder. This fact is partly down to demographics: More people are living on their own than ever before. And with property prices out of the reach of many first-time buyers until later in life - the average age of a first-time buyer in the UK is now 33 - many 20- to 30-year-olds are being forced to rent until they have saved enough for a deposit.

If you have £300,000 to invest, consider using it to pay deposits on two or three small family homes rather than put all your money towards one big property. Doing so is advantageous in a couple of ways:
* The smaller properties are usually easier to let than larger ones, making life easier for you. In fact, demand for properties with three or more bedrooms is diminishing. You are better off choosing a property suitable for the young professional who is not yet ready to buy but still wants the freedom and independence of living on her own. 

* The rent on a studio or small flat is also going to be a lot less than on a big house. This may not sound like a good thing, but consider this: If you run into void periods, covering the mortgage yourself is likely to be much less of a burden than it would with a large property.
* Flats are much easier to maintain. Most flats in the UK tend to be leasehold rather than freehold so you will have to pay an annual service charge to the freeholder for the maintenance of the common areas. If you buy a leasehold property, you own the flat for the duration of the lease, unlike a freehold property where you purchase it outright. Watch out for properties with a lease of 65 years or less as these are likely to be cheap because mortgage providers won’t lend money on these. However, leases can be extended - and you can add the service charge onto the rent.
Setting your budget
Of course, what property you buy is largely decided by your budget. You can find more about financing the purchase of your property in Chapter 16, but the key factor to bear in mind is that you shouldn’t overstretch yourself. Most landlords use leverage to borrow much more than their deposit, but the rental income must cover at least 130 per cent of the mortgage repayments. And ask yourself this: If the property is empty for two or three months a year, can you afford to carry on paying the mortgage yourself? If the answer is no, you should think about scaling down your ambitions.
Location, location, location
Picking a good location isn’t as straightforward as it sounds. What you think is a good location might not be your tenant’s idea of a good location. Your ideal place to live could be a green, leafy street with minimal traffic, close to good schools. But your prospective tenants (some of whom won’t have cars) may be more interested in an area that is close to shops, pubs, and takeaway restaurants with reliable public transport links.
If your tenants don’t have a large family, a large supermarket two roads away isn’t as important as a 24-hour convenience store where they can pick up a pint of milk late at night.
Many prospective tenants don’t have the resources to run a car - which is why they are renting in the first place - and will demand a property close to local transport links. Most don’t fancy walking half-an-hour from the nearest train station when they return home late at night. For these tenants, the train station or bus stop needs to be close to a rental property: More than 10 minutes’ walk and your prospective tenants are likely to be put off.


To extend the likely pool of tenants, look at properties outside major cities but with reliable transport links into the city. For example, many towns in the South East, such as Guildford and Haslemere in Surrey, are around an hour away from London on the train. Many people prefer to live outside a city and commute in as necessary for work. Buying rental property in such an area widens your pool of potential tenants.

When you buy a property, keep your potential tenants in mind. You should have a good idea what type of person is likely to want to live in your rental property. If not, you’ll find buying the right property very difficult. For example, if your rental property is near a college, university, or hospital, a house that several students or colleagues can share for a reasonable monthly rent may be easier to let than a luxury one-bedroom flat with a hefty rent to match.
Ex-council flats
In big cities in particular, you can often find lots of ex-council flats for sale, at cheaper prices than swanky Victorian conversions. While you personally might not want to live on the edge of an estate in an ex-council property, tenants often aren’t bothered about renting such a flat or house, as long as the inside is up to scratch. If the property is clean, and everything in good working order, you shouldn’t have much trouble renting out an ex-council flat.
The benefits of buying locally
If you plan to manage your rental property yourself, without the help of an agent, buying locally makes sense. If the tenant has a problem in the middle of the night or complains of a malfunctioning boiler - problems you’d prefer to check out yourself before calling in a tradesman - your life is a lot easier if the rental property is just down the road rather than three hours away up the M1.
The other advantage of buying locally is that you are likely to know the area inside out. Many landlords feel more confident buying property in an area they know, especially when they start out. You are likely to know what is a bargain in terms of property prices - and what isn’t. Finding that bargain and snapping it up quickly is also easier: You might be driving down a street on your way to work and spot a property that you think would be ideal for letting. A quick call to the estate agent handling the sale, and you’re on hand to view it immediately. A scenario like this could save you the hassle of trawling through newspapers, property magazines, the Internet, and estate agents, and puts you in a position to find a good deal.
Buying too close to your own residence
Be wary of buying a rental property too close to your main residence. Buying the empty house next door to yours, for example, with a view to letting it out

may seem like a good idea. But while you can keep a close eye on the rental property, tenants living on your doorstep can be a pain in the neck, particularly if they’re the type to constantly badger you for this and that.
Just as you may regret having your tenants living next door, you may also find it difficult to rent the property in the first place. Tenants can be wary of living in close proximity to their landlord, fearful that they will be closely watched and monitored. It may be better for all concerned if you buy your rental property in another part of your town.
Buying in an area you don’t know
Buying in an area that you don’t know well is fraught with potential problems. The property you have your eye on may look like a bargain, but it could be in an area beset with problems, none of which are apparent to someone not familiar with the locality. The area could also be declining rather than improving in the long term, and you’re not likely to know that until too late.
If you want to spread your wings and buy further afield, do your research carefully first. The Internet is a great place to start when you want to research an area. You can get an idea of the type and price of property available, local amenities, and schools and transport. Once you have a general idea of where a good place to buy may be, visit the area to get a feel for whether it actually is a good place to buy in. Visit local estate agents and speak to letting agents to get an idea of what property is available and what sort of rent you can expect.
Dilapidated properties
A rundown property needing complete renovation may be well within your budget, but there’s probably a very good reason for that - the property is likely to need plenty of work. It may look like a bargain, but if it takes months to get ready to rent, it’ll cost you money, not just in renovations but also in lost income. Also, most mortgage lenders only offer buy-to-let loans on properties ready to let to tenants (see Chapter 16)
 

Converting an old rambling house into several flats may be tempting, but leave this well alone until you’re more experienced in property management. Over time, you’ll build up contacts, including a network of tradesmen and builders, who will be able to complete the work for a good price.

Letting out a basement in your home
If you live in a large property with a basement, you may be tempted to convert it into a self-contained flat to rent out and generate some extra income. But bear in mind that this strategy is feasible only if the property has space for a separate entrance. If you’re planning a new self-contained flat and building work is required, you also need planning permission. Building regulations also have to be followed concerning all structural aspects of the property, as well as the size of the windows, ventilation, drainage, and escape routes. Information on planning and building regulations can be obtained from your local council.

While converting your basement into a self-contained flat is potentially a good idea, think it through very carefully. Check with local letting agents as to the amount of rent you can expect to generate to see whether you’ll get a good return on your investment.
Where to Go to Find Your Rental Property
Wherever you decide to buy your property, prepare yourself for plenty of legwork. If you know the area well, perhaps because you live there, keep your eyes peeled when you’re out and about to see whether you can spot any houses and flats for sale that would be suitable for your purposes. You can take several other routes to find the right property for you, and these are explained in the following sections.
Using an estate agent
Although letting agents are more useful to landlords than estate agents when it comes to managing your property, you will need the services of an estate agent when you are purchasing a rental property. Although everyone loves to hate them, estate agents are very useful when you’re looking to buy a rental property. You can’t get round it - you’ll have to befriend an estate agent if you want to get ahead of the game. If you get on with your agent and prove that you’re a serious buyer, your agent is more likely to ring you first when suitable properties become available.
 

Estate agents are paid by commission, which they get by selling a property for their client - the seller. As a result, they want the property to fetch the highest price possible. Don’t forget this during your negotiations.

To prove that you’re a serious buyer, make sure your funds are ready to move forward with the purchase of a property as soon as you find a suitable one. Be proactive: Keep in touch with estate agents to see what new properties come up and make an effort to see these new properties as quickly as possible.
Buying at auction
Auction is the place to go if you want to buy a property with development potential. Hundreds of auctions take place across the country every week, organised by the big estate agents. But while auctions are good sources of properties, they can be intimidating places. If you plan to buy at auction, attend one or two first, purely as an observer, to see how they operate. Having done so, you may decide that such a process is not for you - and then you can channel your energies into buying property by another route.

If you go to an auction, set a limit beforehand as to how much you are prepared to bid for a property and stick to it. Exceeding this budget may be tempting if you have set your heart on a property, particularly if you get caught up in a bidding war. It is likely that the property requires quite a bit of work, so if you blow your budget buying it in the first place, you’ll be left with no funds to pay for refurbishments.
If you successfully bid for a property, the offer becomes binding and you have to exchange contracts immediately. You also have to pay a 10 percent deposit on the day and complete the purchase within a stated period of time, usually 28 days. If you don’t, you lose your deposit, could be sued for breach of contract, and be liable to pay the difference between the price you agreed to pay for the property and the price it eventually fetches. So make sure you don’t bid until you have done the following:
* Done your homework: Never bid for a property, even if it sounds like a bargain, without seeing it first. Look through the auction catalogue and visit any properties you’re interested in. If the property needs a considerable amount of work, take a builder with you so that he can give you an estimate.
* Arranged your financing: Unless you have enough cash to pay for the property outright, you must have the mortgage agreed with your lender before the auction. You must also ensure that you have enough cash available to pay the 10 per cent deposit on the day of the sale: Most

auctioneers require that you pay this via banker’s draft, so make sure the funds are available in your bank account.
Some auctioneers require that you register as a bidder at the start of the sale, so ensure you get there early on the day if this is the case.

It is possible to grab a bargain at auction, but it’s also just as easy to make a terrible, costly mistake. Think carefully before you buy and don’t get carried away in the heat of the moment.
Using the Internet
The Internet has really taken off in recent years as a source of properties for sale. Many of the big estate agents have realised the value of having some sort of online presence, as have sellers who want to avoid using the services of an estate agent altogether.
 

Local and national newspapers tend to have good Web sites featuring properties for sale. These sites are likely to be updated more frequently than the paper, particularly in the case of weekly local papers. Make a habit of checking sites on a regular basis.
Checking Out the Tenant Pool
It doesn’t matter how great your rental property is, or how close it is to major transport links, if the area doesn’t have sufficient tenants to ensure it is rented out virtually all of the time. Before buying a property, establish whether the property is located in a serious rental market. In areas that have lots of small “starter” homes, for example, people may tend to buy rather than rent. If you have a property there, you’ll struggle to find tenants who want to rent your property.
An area with more tenants looking for somewhere to live than available rental properties is the ideal location for your rental property. To get a feel for the rental market in the area, try gauging how busy letting agents are. If the market doesn’t appear to be strong, you may want to look somewhere else.

Markets can change quickly as well - an area that is rich with potential tenants working for a big company located in the area can change dramatically should that company close down or relocate. If you already own
 
a rental property in such an area, you may decide to sell up and buy another property elsewhere with a stronger source of tenants. As a landlord, you have to move quickly if you are going to keep ahead of the game.
This is a sample chapter from “Renting Out Your Property For Dummies” supplied to LandlordZONE by John Wiley & Sons Ltd, publishers of the Dummies series of books.
The book is a comprehensive guide to the whole process of renting out property. It’s brim full of practical advice based on years of letting experience. In our opinion this new UK edition of a long-established US title is an absolute must for the bookshelf of serious landlords, novice and experienced alike. We can highly recommend it.