What Rules and Regulations Are Ayrshire Landlords Falling Foul of the Most?

Being a landlord is a tricky business. There are nearly 200 different pieces of legislation covering the how, why, and when of managing a rental property. Here are just four that landlords are often not getting quite right.

Deposit protection

In England, Scotland, and Wales, the deposit must be registered with a deposit protection scheme. The 2021 UK Landlord Survey found that 81% of landlords find registering their deposit difficult.

The deposit must be registered within 30 days of receiving cleared funds. The schemes are government-approved and the tenant must be informed where the money is deposited.

Energy performance certificates

Every rental property in the UK has to have an Energy Performance Certificate (EPC). They are stored on an electronic register that is publicly available. However, they also have to be included in any advertising you do for your property.

Electrical safety regulations

In December 2015, strict rules about electrical testing for new tenancies in rental properties came into force. Inspections must be carried out by a qualified person on all fixed electrical installations.

Gas safety check regulations

If you have gas going in to your rental property, all appliances, pipework, and flues must be checked annually.

As for the electrical safety tests, ensure that you use a qualified engineer and don’t plump for the cheapest. The report must be given to the tenant within 28 days as well.

TOP TIP: As with any time you need to visit, or arrange a visit to the property, make sure you give the tenant at least 24 hours’ notice. Keep a record of having given notice. If the tenant refuses access, you’ve then got the evidence that you tried.

If you’re a landlord in Ayrshire and are not 100% sure on all the rules and regulations you need to abide by, get in touch with us at Parkview Property. A free, no-obligation chat will show you what you might need to tweak or if you’re on the right track.

by Andy

A Guide To Buy To Let Mortgages for Ayrshire Landlords

In this three-minute read, we compare the different types of buy-to-let mortgages.

When choosing the right buy-to-let mortgage, landlords face a key decision: go with an interest-only deal or opt for a capital repayment arrangement.

Both options have their pros and cons. Let’s take a closer look.

Interest-only mortgage

Your payments only cover the interest on the loan and have no impact on the capital. 

Pros

  1. Lower repayments

Your monthly repayments are lower than that of an equivalent capital repayment mortgage.

For example, with a 25-year interest-only mortgage of £200,000, monthly repayments would be £573 (4.45%, fixed for three years). With a similar capital repayment mortgage, you’d pay £996 a month*. That’s a difference of £423 a month.

  • Less financial stress in between tenancies 

If the property is vacant for any reason, it will fall on your shoulders to cover the repayments. Lower repayments equal less stress.

  • Bigger monthly income

As your mortgage repayments are lower, less of the rent goes to your lender. Instead, it winds up in your pocket.

  • More flexibility

You can spend this extra cash on the upkeep and improvement of the property or divert it to other investments.

  • Sell and make a profit

If the property appreciates in value over time, you can sell up and make a tidy profit.

Cons

  1. You won’t own the property

As you won’t be repaying the capital loan, you’ll still owe a substantial sum at the end of the mortgage. (Although you can sell the property, pay this debt, and hopefully still be ahead.)

  • The lender earns more

You pay more interest to your lender over time compared to a capital repayment mortgage. This is because you never reduce the size of the capital loan, so the interest charges never reduce.

  • Risk of negative equity

Historically, property prices have been on an upward trajectory – last year, they grew in the UK by a whopping 8.5% – so the risk of negative equity is low. 

And even if prices do drop, if you’re prepared to ride out market fluctuations, then the long-term outlook is positive.

The real risk comes if you need to sell in a hurry. If the property’s value has dropped, you could end up owing more than the property is worth.

Capital repayment mortgage

Your monthly repayments cover the interest and gnaw away at the capital.

Pros

  1. Ownership

At the end of the mortgage term, the property will be yours.

  • Less interest

You pay less interest overall because the capital loan decreases – albeit gradually – with every repayment.

Cons

  1. Higher repayments

As we mentioned earlier, the monthly repayments will be higher, and you’ll need to cover them when the property is vacant.

Choosing the right option

There’s no one-size-fits-all solution, although most landlords opt for interest-only**. 

Landlords need to weigh up their circumstances and investment goals carefully. For some, the priority is earning a monthly income; for others, it’s working towards owning a property that they can pass on to their children or even move into themselves.

For advice about making a buy-to-let investment work for you, contact us here at Parkview Property Ltd.

*Approximate figures only, based on a property worth £265,000. Always seek independent financial advice.

** National Landlords Association

by Andy

Top Tips for Landlords

Top Tips for Landlords to Stay Calm and in Control of their Properties.

In this two-minute read, we show you how to keep calm and in control when letting your Ayrshire property.

The idea that investing in rental property is easy passive income is a myth. Letting and managing rental property can be stressful, especially for inexperienced or accidental landlords.

This month sees the championing of Stress Awareness Month; an annual event which recognises the dangers of modern-day stress and provides valuable coping strategies. If you are wading through tenancy treacle, read our top tips to temper your tension.

Do your homework

Whether it’s a simple credit check or a comprehensive background check, referencing your tenant is ESSENTIAL. If you have concerns, you could arrange to meet your prospective tenant in their current property to see how it’s been looked after or even go a step further and ask for a rental guarantor. If you have rental income insurance, check whether the terms of your policy stipulate the level of referencing required.

Build a circle of trust

People buy people. And much like you want the right tenant in your property, you want the right tradespeople working in it. We guarantee that you will, at some point, have some repairs that need attention – whether from an accident or general wear and tear. Building a trusted network of tradespeople that provide value for money will stand you in good stead.

Don’t leave yourself short

Now, more than ever, we understand the importance of an emergency fund. In tough financial climates, rent arrears can be more of a reality than a risk. In situations like this, contact your tenant – there may be a simple explanation which is easily remedied. If not, don’t delay in taking advice. If you rely on your rental investment for income, consider whether rental insurance is a sensible option.

Know when you need help

If it all gets too much, ask for help. A good letting agent can manage the entire tenant journey for you: from tenant sourcing right through to the end of tenancy clean. Inventories, referencing, deposits, rent collection, repairs, and legal and regulatory compliance; you name it, it’s covered.

We understand the pressures involved in letting your property and are here to alleviate your anxieties. If you’d like to hear how we can make your property let a stress-free experience, give us a call on 01292 442888.

Copyright Parkview Property Ltd 2021

by Andy