3 common myths about buying a flat: management company, repairs, and flooding 

I’m buying a flat so the management company will take care of any repairs 

In some ways this is true, but in most cases the management company is made up of the individual flat owners. In the majority of cases, flat owners each pay an amount of money to the management company to cover items such as insurance, maintenance and repairs. Sometimes additional payments need to be made if there are insufficient funds to cover outgoings such as unexpected repairs.

In cases whee there is no management company, such as with a two storey terraced house which has been converted to two flats, there may not be a management company.  However, in most cases the leases for the individual flats will set out liability for repairs to the building as a whole.  If there are two similar sized flats then it is likely that the cost of any repairs will be shared equally, but the precise terms would need to be checked.

In a nutshell, in most cases the flat owners are responsible either directly or indirectly, via a management company, for repairs to the building.


I’m buying a ground floor flat so it doesn’t matter what condition the roof is in 

If you are buying a leasehold flat then you will need check the lease clauses. A typical lease will clearly set out a leaseholder’s obligations to repairs and maintenance and will state what proportion of the repairs each leaseholder is responsible for. Many leasehold flats have a management company which will deal with certain repairs, which often includes external repairs. It is possible that each flat owner has to contribute to any works to the roof.

If you are having a survey then it’s a good idea to arrange for the surveyor to have access to any roof spaces (possibly via another flats/s or communal areas) to check for any defects.  See instructing a surveyor. Also, you should enquire with the management company to find out whether they are aware of any defects and whether any repairs are programmed in the near future or medium term.


I’m buying an upper flat so I won’t be affected by flooding

While upper flats are less vulnerable to flooding than ground floor flats and basement/garden flats, you should check the terms of the lease so that you are aware of your liability to any repairs to other flats in the block, including ground floor flats and basement/garden flats.

If parts of the building have flooded previously, then the insurance premium may have increased, or there may be a higher excess in the event of flooding.  In some cases flooding may be excluded from the insurance cover. It is likely that you will contribute to the insurance premium either directly or indirectly through the management company and if this is the case then yes, you may be affected by a risk of flooding.

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Buy to let property:  choosing, managing, student lets and landlord’s responsibilities

 

There has been an increase in the purchase of buy to let property over the decades as some people see this as a preferred form of investment.  However, it is important to be fully aware of a landlord’s responsibilities to ensure the safety of tenants and ensure all legal responsibilities are being met.

Choosing a Buy to Let Property

Choosing a buy to let property is not the same as choosing a property to live in yourself.  You may wish to live in an old property and take your time refurbishing to your taste but this may not be practical for a buy to let property.  A buy to let property must be in good order before a tenant can move in.

When choosing a property for buy to let, consider the following:

  • Ease of maintenance. Many landlords find a modern property is the most suitable.
  • Locations where there is an established demand for properties to rent.
  • Proximity to amenities such as shops, schools, etc.
  • Ease of access and parking.
  • For flats, consider any restrictions the lease may impose on letting. Also, repairs  are likely to need the approval of the Management  Company, whereas with a house any external  repairs are likely to be easier to arrange.
  • Whether you would prefer to let to working people or students.

Have a survey to establish the condition of the property.  Some works may be essential before a tenant can move in particularly if any hazards are identified.  Works may be required including:

  • Upgrading wiring.
  • Provision of opening restrictors to large opening windows
  • Provision of a safety film/safety glass to large panes of low level glazing (unless they are of safety glass).
  • Works in respect of fire protection and means of escape including the provision of smoke alarms, fire doors where necessary, (eg, for a door opening directly from the dwelling into the garage), etc.
  • Works to any leaning/unstable garden walls.
  • Works to uneven pavings.

The survey will also help you plan a budget for future repairs.

Letting to students

Houses or flats with at least three letable bedrooms in student areas, close to a university, lend themselves to student accommodation.  One or more of the letable rooms may be a ground floor reception room.  An additional bathroom/shower room and WC are an advantage in shared houses and many students now prefer an en suite.

It is a good idea to contact the university accommodation service to arrange to have your property included on their list of available student accommodation.  You may also choose to register with a local letting agency or advertise the property yourself.

Advantages of letting to students include:

  1. There is usually a high demand for accommodation in student areas close to universities.
  2. Most student letting contracts will be for the academic year. If a student moves out during the year then they are still contracted to pay the rent until the end of the agreement.  This typically means a change of tenant only once a year with fewer months without rent.
  3. Some landlords charge a retainer, eg, half rent for unoccupied periods such as during the summer months. This increases overall income during the year.
  4. Student housing generally offers a higher income than a property let to an individual, couple or family, particularly if one or more of the reception rooms are let as bedrooms.
  5. Many student rents will be partly funded by student loans and/or parent top-ups so there is less chance of the rent not being paid to the landlord. A parent of each student should act as guarantor for each individual student to ensure that rent will be paid.

Disadvantage of letting to students include:

  1. Most student houses will need furniture and furnishings including beds, wardrobes, desks, chairs, table, sofa, carpets and curtains.  This will need to have appropriate fire resistance.
  2. Many student houses will need electrical items such as cooker, washing machine, dryer, fridge, freezer, microwave, vacuum cleaner, lamps,   These will need to be safe to use and should be checked regularly.
  3. Student houses generally suffer more wear and tear and damage than houses let to working people.
  4. Most student houses will require more thorough cleaning at the end of the tenancy and this may involve additional costs.

Managing a Buy to Let Property

Many privately let properties are let on an Assured  Shorthold Tenancy  Agreement.   Your letting agent or solicitor can advise on the most suitable agreement.   If rooms are let separately, eg, to students, then consider a joint  tenancy agreement.   In some instances a licence may be required  from the Local  Authority.   Visit  https://www.gov.uk/private-renting-tenancy-agreements

Give consideration to any restrictions you might want to place such as non-smokers, no pets, etc.  

Many private landlords choose to employ an agent to manage the property on their behalf instead of managing it themselves.  The agent will  be responsible for advertising, vetting tenants, collecting rent and checking the property at the end of the tenancy.  This frees up the landlord’s time.  It also leaves management of the property in the hands of an agent with experience in dealing with such matters.  Some letting agents may offer different levels of service enabling you to choose the level of service which meets your needs and falls within your budget.

For general information on managing a buy to let property visit  https://www.gov.uk/private-renting

and

http://www.which.co.uk/money/mortgages-and-property/buy-to-let/guides/using-a-letting-agent

Buy to Let Responsibilities

As a landlord you have certain responsibilities.  You must:

  • Have gas appliances/flues checked every 12 months by a Gas Safe registered engineer.
  • Have the electrical installation checked to make sure it is safe and have any recommended works undertaken before the tenant moves in.
  • If the property is furnished then make sure any furniture (and furnishings if provided) have the appropriate fire resistance.
  • Provide smoke alarms, and in some instances, carbon monoxide detectors.
  • If any appliances are provided, eg, cookers, microwaves, irons, etc, then ensure they are safe to use and have them checked regularly.

You must also hold any deposit from the tenant in an approved deposit scheme.  Visit

https://www.gov.uk/tenancy-deposit-protection/overview

Don’t forget to check that your proposed tenant has a right to rent.   Visit

https://www.gov.uk/government/publications/right-to-rent-document-checks-a-user-guide

For further information visit  https://www.gov.uk/private-renting/your-rights-and-responsibilities 

And finally, remember to arrange buildings insurance.

Insurance of Buy to Let Properties

As landlord, you will be responsible for insuring the building and also any contents which you have provided.  The tenant will be responsible for the insurance of their own belongings.

Inform your insurer that the property is tenanted right from the start to make sure your insurance is valid.   Check whether there are any restrictions on the policy, eg if there is a maximum amount of time the property can be vacant as some insurers  have a time limit.  Check whether the policy gives additional cover, eg, landlords  liability, and, possibly also legal expenses which may be useful if any problems arise with the tenancy.

Financial Issues for Buy to Let Properties

This article deals with choosing and managing a buy to let property.  It does not offer any information on financial issues.  However, in brief, there are a number of financial issues to consider which require investigation and consideration before buying a buy to let property, including:

  • How you plan to finance the property, such as a cash purchase, buy to let mortgage or remortgaging your current property to finance the purchase.
  • Allow for periods when the property might be vacant. It is possible there may be a gap between one tenant moving out and another moving in.  If you have taken out a mortgage this will still have to be paid even during months with no rental income.
  • Check current Stamp Duty for a second home. This often differs from the Stamp Duty on a main residence and varies from time to time.
  • If you choose to sell the property check your liability to Capital Gains Tax.

Generally

If you plan to purchase a buy to let property, whether for working people or students, whether let privately or through an agent, then this will require careful financial planning and full consideration.  In general, buy to let properties should be viewed as a long term investment and can be a successful form of investment if chosen and managed properly.

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