Letting Market Appraisal, Insurance and Buy-to-Let

Published on 2015-08-11

Before the Market Appraisal

Before attending a market appraisal, as much information on a property should be gathered as possible including location, style, size, whether it is furnished or unfurnished and availability.

An agent should also know the Landlord’s contact details, whether they are letting their own home or a buy-to-let investment property, restrictions on the type of tenants they are looking for and whether they will be living overseas. If the landlord will be living overseas, there are tax implications and particular forms that will therefore need completing.

The Market Appraisal

At the market appraisal, a number of things should be established such as timeframe, viewing arrangements, details about the property (including for example services, type of heating, condition), the specific accommodation available including any gardens and parking spaces and details of the lease, if applicable etc. The landlord should be provided with certain information from the agent including the services offered, fees charged and their statutory and contractual obligations.

Assessing Rental Value

The rental value should be assessed by obtaining comparables which are used to verify rental figures in conjunction with current market conditions and forces. Comparable properties are best if they have a similar specification, are in a similar area and have been let recently. The timing of the letting is important as rental values rise and fall in line with market conditions. Style, location, size, age and condition – both internal and external, accessibility to local amenities are other details about the comparable properties that need to be considered.

Occupancy Restrictions

A landlord may choose to place restrictions on the type and number of tenants as long as this does not breach legislation e.g. non-smokers, no children, no students. They can also restrict access to certain parts of the property as long as there is no impact on any emergency escape route from the building.

Insurance

If a property is being let, insurance providers must be made aware. Landlords are required to have both buildings and contents insurance to ensure they are covered for public liability. Some insurance companies specialise in insurance for landlords and tenants and may provide insurance for building and contents, legal protection, rent guarantee and emergency call-out cover.

Buy-to-Let Property

As buy-to-let schemes have increased in popularity, the number of quality properties available to let has increased. But there are a number of upfront and ongoing costs involved in buying and renting a property that the landlord must consider e.g. ongoing maintenance, redecorating, repairs, gas and electrical safety checks, VAT, void periods (a period when the property is empty and no rental income is received). Landlords are required to pay income tax on net income received from rent, although some expenditure can be offset against tax including agents’ fees, insurance, interest on a mortgage and cleaning.

A landlord must also consider rental levels the property will achieve, as rent is generally required to be sufficient to satisfy mortgage providers.

Landlords must understand what type of property is more likely to rent out successfully in their chosen area and what type of tenants they are seeking.

Categories: Residential Lettings Best Practice