How landlords can renovate and decorate the perfect rental properties for tenants?

Being a landlord is a huge undertaking. It’s not a passive form of income whereby rent money just lands in your bank account every month over and above your mortgage payment. If only! Landlords have several concerns heading into 2020. Here we list landlord’s biggest worries.

Tax

New tax changes in 2020 are the biggest worry of most landlords. Mortgage tax relief has been gradually reducing since 2018 and 2020 will see it scrapped altogether. With landlords facing higher tax bills inevitably reducing their profit margins, many will have few options but to raise rents in a market where demand is falling. 

Raising the rent once a year is legal if reasonable and fair and you must give your tenant’s one month’s notice if they pay monthly. However, raising the rent may lead some tenants to move out. Other tenants may simply not be able to pay the increased rental and fall into arrears.

Rental Payments

In a perfect world, perfect tenants would pay the rent on time every month. Most landlords have found themselves in the situation of late or non-payment of rent. It remains one of the biggest of landlord’s worries, year in, year out. For the most part, rent arrears are not caused by wilful tenants that want to live in your property without paying. Over recent years, the cost of living in the UK has continued to rise with wages remaining stagnant. 

Most tenants prioritise paying their rent before other bills, so if your tenant is struggling to pay the rent, a sympathetic approach is often key rather than evicting people. It could very well be that an unexpected bill such as repairing a vehicle may be the reason behind your tenant struggling to pay the rent. If you communicate with your tenant and try to find a solution then you can reduce stress and worry for both parties. 

No one wants to evict someone so if you can find a way, it’s best you do. However, you are not obliged to house people that do not have the means to pay rent, and you may have to ask tenants to leave eventually. Don’t let the rent arrears get out of hand whereby your tenant will find the debt is unassailable that they may as well do a moonlight flit with a few savings to rent another property. Similarly, don’t let your tenant’s difficulties take you to a financial breaking point.  

Refusing to Leave

If you are forced to evict a tenant for whatever reason, you may be forced with a tenant that refuses to leave. This is not as rare an occurrence as you might think with around one in six landlords being faced with this stressful situation. Many tenants may simply not have the means to move on and may outstay their welcome while they save up for rent elsewhere. 

 

All the while you’ll you won’t be receiving, rent, have to pay eviction costs, and it’s a nasty business all around. Since around one-sixth of landlords have encountered this issue it’s wise to take out provision for this eventuality. Choose a landlord’s insurance policy that will cover you for loss of rent and court costs, and this will make the situation far less financially troubling.

Repairs

Another big concern that landlords have is the cost of repairs when a tenant moves on. Recent changes from 2016, mean that landlords can no longer claim 10% tax relief on their profits for wear and tear. The allowance previously allowed landlords to offset the cost of replacing assets including kitchen appliances, carpets, furniture, soft furnishings, crockery, and cutlery. 

However, new changes essentially stopped landlords that let unfurnished property from claiming wear and tear tax relief aside from built-in appliances such as cookers, dishwashers, and fridges.

Brexit

After years of wrangling the UK left the EU on February 1st, 2020. This is a big change for the UK and will have a ripple effect on many areas of the UK economy and society. 

UK landlords have voiced concerns about the changes that Brexit will bring. With EU nationals making up a substantial proportion of UK tenants, then it’s expected that demand for rental property may reduce. Unsure of their future, EU nationals are less likely to take on longer tenancies. 

Landlords are always hoping for tenants that stay for extended rental and are, therefore, hesitant to rent to EU nationals. It’s expected that demand for rental property will fall and ultimately this will lead to a reduction in house prices as well as rental prices. All of which are bad news for UK landlords. 

Void Periods

With mortgage payments that need paying every month, one of a landlord’s biggest worries are void periods when your rental property remains vacant and you have no rental income to cover your mortgage payments. Understandably an extended period of a few months can very easily lead to many landlords reaching financial breaking point. It only takes a short time for landlords with overloaded finances to face having a property repossessed. 

To avoid void periods you can try your best to choose tenants that are likely to stay longer and by being a good landlord so that you don’t give your tenants any reason to leave. 

Of course, everyone’s circumstances change from time to time, so you’ll need to look for new tenants. If you regularly inspect your rental property every few months you’ll ensure you don’t have any nasty and expensive surprises when a tenant leaves and you can quickly let your property again.

Landlord’s Worries checklist: Important things to remember

There are many things to be concerned about moving forward as a landlord in 2020. Paying close attention to your finances can help you avoid coming into financial difficulties yourself. 

  • Landlords insurance can help you with nearly all these issues and cover you for most eventualities 
  • Protect yourself from facing excessive repairs by checking on your rental property periodically. 
  • Unfurnished properties often lead to longer tenancies. However, with changes to tax relief, you can no longer claim tax relief at 10% for unfurnished properties. 
  • Communicating with tenants in arrears can help you avoid eviction. 
  • With mortgage tax relief being abolished in 2020 you may have to consider increasing your rents. 
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