Casual landlords need serious approach

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by Gill Montia

Buy-to-let lender, Paragon, is alerting so called casual landlords to the complexities of entering the rental market.

Homeowners who need to relocate but are unable or unwilling to sell in the current property market downturn are increasingly turning to the rental market for a solution.

According to the Royal Institution of Chartered Surveyors’ latest survey of members, 28% more surveyors reported a rise in new tenant lettings than a fall.

However, Paragon’s managing director, John Heron, warns that all would-be landlords need to do their homework or they could risk being caught out by a number of costs that have not been taken into account.

They also need to be aware of the legislation that applies when renting out property.

For example, if the property is mortgaged, the lender’s approval will be needed for a change of tenure.

The rent set should take into account void periods and repairs; it is standard practice for a lender to insist that rent is at least 125% of monthly mortgage repayments.

Tax implications need to be fully understood, HM Revenue & Customs is currently having a clampdown on landlords who are not making full and accurate declarations.

Insurance will need reviewing and possibly replacing with a specialist let policy, and landlords now need to comply with tenancy deposit protection legislation.

Homes let after 1st October 2008 will require an Energy Performance Certificate and landlords need to ensure they are aware of the rules and regulations relating to Houses of Multiple Occupation.