Acquiring an investment property

Freehold v Leasehold

Most people prefer to purchase a freehold property. However, if you are considering a leasehold as a potential investment property ensure that the lease term is at least 75 years. Remember to check that sub-letting is permitted under the head lease. Landlords are responsible for service charges, these can vary depending on the range of services provided within the building.

The Investment equation

Gross yield is the achievable rent expressed as a percentage of the capital value of a property. A good yield will be of considerable interest to any property investor, it is wise to remember that when times of high capital increase the gross return will be reduced as the rent often does not rise proportionately.

Example

Purchase price (V)	250,000
Assumed rent per year (Y)	9,000
Gross yield (Y/V x 100)	3.6 %

 

Presenting the property

In our experience properties that look their best let quicker and achieve higher rents, so it is worth thinking about the type of tenant you are trying to attract and decorating it accordingly. Whether you are letting your own home or a rental investment, it pays to make sure that the décor chosen will suit your target market. We will be happy to provide further guidance and advice if required.

When decorating an investment property, please take into consideration the following:

We are able to advise you on the best way to present your property.

• Keep carpets and walls neutral-whites and creams make a cleaner, fresher impression. Wooden floors are also very popular.
• A paint finish is easy to maintain.
• Good quality flooring and window dressings, particularly in unfurnished properties where they are more visible.
• Stick to simple, good quality fixtures and fittings throughout-nothing that will date too quickly.
• Kitchens should be well equipped, ideally with a dishwasher, large fridge/freezer, washing machine, tumble dryer and microwave. Recycling facilities are becoming more popular with Council requirements and tenants are becoming more concerned with ecological issues.
• Bathrooms should have high quality fittings and be well lit. Power showers and fully tiled floors and walls are preferred by most tenants.
• There should be ample wardrobe space in the bedrooms.
• Tenants may be looking for a property to support the latest technological capabilities. This should be considered at the time of refurbishment so that wires can be cosmetically concealed.
• Communal area and/or entrance hallways should be well presented in order to create a good first impression. Also bear in mind the condition of the exterior of the property as first impressions count.

Good repair is good business

If you are letting your home, it makes sense to clear away any clutter and clean it thoroughly throughout, including carpets, curtains and upholstery, before viewings commence. Any odd jobs that have been ignored or put off should be completed before the property is marketed. It also makes good business sense to service the boiler and electrical appliances, clear gutters and drains and tidy the garden-this helps to reassure tenants that the property has been well maintained. These tasks can all be arranged through us as part of our management service.

Furnished v unfurnished

We are able to advise you on the best approach to furnishing your property but taking a flexible view will mean that you reach as wide a range of potential tenants as possible. Furnishing a property will not necessarily affect the rental price, but the quality of any furnishings provided certainly will and increase the desirability. If you are furnishing a property then the furniture should be neutral and modern and should help to define areas of use and reflect a certain lifestyle.

Marketing your property

We know what tenants want from rental properties and what features they will be drawn to. Our complete understanding of their requirements means we can efficiently market your property in a way that will attract the right tenants for your property.

We will get your property seen by as many of the right tenants as possible. With the vast majority of property searches starting online the web is a vital tool for marketing your property effectively.

Our own website has a fresh design and quick search functions making it simple for tenants to use. Features include maps, floor plans, detailed information about individual properties and downloadable brochures.

As well as our own website we list all our properties on the industry-leading portals.

Choosing Sally Hatcher Estates Limited

If you select us as your agent, the right tenants will follow. We have been letting property in Canterbury for over 16 years, so we know what we are talking about.

Why choose us?

• Extensive knowledge.
• We provide a high level of service for all our clients.
• We contact you every week when marketing your property to discuss feedback from viewings and update you on the letting market.

Pre-let service

We offer a pre-let service, which ensures that the property is ready for tenants to move in by arranging:

• Landlord’s Gas Safety Record.
• Portable Appliance Test.
• Inventory report and check in.
• Professional Cleaning.

 

References

In assessing a prospective tenant’s suitability we gather references using a specialist agency and standard checks of financial, employment and previous tenant history are made where applicable.

The deposit

We take a security deposit equivalent to five weeks’ rent to protect you against non payment of rent or damages caused by your tenant. Under the provisions of the Housing Act 2004 it may be illegal for you as landlord to hold a tenant’s deposit unless you have individual membership of an approved scheme.

However, Sally Hatcher Estates Limited will secure your tenant’s deposit with the Deposit Protection Services.

The Inventory

A comprehensive inventory provides an independent record of the condition of your property at the start and at the end of a tenancy. It forms the basis of any claim you may need to make on your tenants’ deposit in the absence of an appropriately produced inventory you may prejudice your claim and result in it being rejected completely.

Safety regulations

Landlords in the UK are required to adhere to stringent safety regulations designed to protect tenants from avoidable hazards. We have detailed knowledge of how to handle these risks, guaranteeing you peace of mind that your legal obligations have been fulfilled. We would like to draw your attention to the following specific pieces of legislation, on which we can provide further advice and guidance.

Gas and electrical safety

The Gas Safety (Installation and Use) Regulations 1998 stipulate that all gas appliances must be inspected annually by a Gas Safe Register-registered engineer. A valid Safety Record must be issued each time and updated every twelve months. Non-compliance is a criminal offence with serious penalties.

The Electrical Equipment (Safety) Regulations 1994 state that electrical equipment, including wiring is safe. A Portable Appliance Test (or a more detailed full electrical inspection if necessary) should be carried out regularly and all electrical testing must be conducted by a registered and qualified engineer.

Although the law does not make specific provision for the following, Sally Hatcher Estates Limited recommends that additional (practical) precautions are taken by landlords prior to the commencement of any new tenancy, as follows:-

• Smoke Alarms should be installed on each floor of the property and if not mains operated, batteries should be replaced regularly.
• Carbon Monoxide Alarms should be installed next to each gas appliance and batteries should be replaced regularly.
• A Fire blanket should be provided in the kitchen.
• Potential safety hazards should be identified, assessed and improved upon wherever possible e.g.
• All stairs should have suitable fixed banisters.
• All ponds should be covered with mesh or netting.

Fire and Furnishings

The Furniture and Furnishings (Fire) (Safety) Regulations 1998 state that it is a criminal offence to let premises with upholstered furniture that does not comply with the safety regulations. There are certain exemptions to note, but the penalties for noncompliance are tough. We can provide further information and advice if you require.

• Furniture intended for private use in the dwelling, including children’s furniture.
• Beds, headboards and mattresses.
• Sofas, sofa-beds, futons and other convertibles. Nursery furniture.
• Garden furniture which is suitable for use inside. Scatter cushions and seat pads.
• Pillows.
• Loose and stretch covers for furniture.

Most furniture purchased from reputable suppliers after 1988 should be labelled to indicate it complies with the legislation.

Items exempt from the regulations:

• Sleeping bags.
• Bed linen (including duvets).
• Loose covers for mattresses.
• Pillow cases.
• Curtains.
• Carpets.
• Furniture made before 1950 and re-upholstered furniture made before that date.

The Housing Health and Safety System (HHSRS) and Houses in Multiple Occupation (HMOs)

Under the Housing Act 2004 there is a mandatory requirement for landlords of properties made up of three or more stories AND occupied by five or more people to have a license issued by the local authority as these are viewed as Houses of Multiple Occupation (HMO). You should familiarise yourself with the local authorities policy. The HHSRS is the risk assessment system by which residential properties are assessed by local authorities. Sometimes certain HMO’s and other properties maybe assessed by HHSRS. We are able to advise you on this.

Capital Gains Tax

Under the current tax regime, non-resident landlords may be exempt from Capital Gains Tax. Clients should seek advice as to their potential Capital Gains Tax status.

Landlord’s Checklist