Getting Property Services & Advice

A-set-of-house-keysFew novice landlords realise the full requirements of the services they have to provide to make a success of their business. Presuming a mix of properties such as apartments, single let family homes, multi let properties, houses of multiple occupation (HMO’s) and commercial premises fits within an investors criteria, there are different service needs for each to be taken into consideration. Being aware of these and taking steps to ensure all is done properly at the beginning can save embarrassment, expense and potential legal action further down the line. Some new landlords start in the accidental way from being unable to sell their own home when needing to move and then let out their accommodation. This being the case the first and most likely service you have to organize will be the mortgage, and it is a condition of that mortgage that you inform the lender of your change of use from residential property to rented property. There will most likely be an additional charge for this.

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Each type of property will have different service needs which for ease of accounting purposes should be separated as they fall into different categories on a year end tax return. An apartment will have a service charge, this is usually a monthly fee paid to a management company or association to pay for communal expenses such as cleaning, gardening, exterior maintenance and insurance. Paying a monthly sum doesn’t mean that there won’t be surcharges for major items like a new roof which would affect the whole block. On top of the property service charge which is often forgotten when people purchase flats, there will usually be a lease or ground rent charge either annually or half yearly which again can be substantial and should be taken into account when looking at the initial costing’s to see if it is a viable proposition.

Single let properties such as houses let to families or individuals where the whole property is let to one tenant, will generally have all service charges other than insurance and lease or ground rent paid directly by the tenant. This alone can make them a favourable alternative for new landlords,there is however the drawback that a property let as a single unit is likely to return far less rent than anything else so it can be a balancing act between easier management against less income. The majority of investor landlords try to redeem as much income out of a property as possible, this isn’t necessarily a plan of action we would advocate but we look at each client’s individual circumstances to give them the best alternative to help themselves.

Landlord and keysWhen renting out multi let properties; these are typically family homes that have been let to three, four or perhaps more individual sharing communal kitchens and bathrooms, most landlords include water, gas, electric, council tax, TV licence even broadband cost and possibly cleaning services as part of the rent. These are costs that have to be added to any insurance, lease, ground rent, finance or legal type costs that need to be borne by the landlord as part of the standard package of owning any property. All the costs have to be calculated before setting the rent figure to be charged to make sure the property will actually be cash flow positive. There are surprisingly a lot of landlords that are subsidizing their tenants. All of the above costs are of course additional to any initial building costs, annual gas certification and PAT and main electrical check needs, the continual repair and maintenance requirements, upgrading and renovating necessities, general wear and tear, void period costs and tenant find expenses.

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The reality of meeting all the costs of all the property services can be seen as daunting to many prospective investors. The administration of them alone certainly shouldn’t be taken lightly. For many a more hands off approach is sensible but a lot depends on the advice they receive, much of which is not from properly experienced sources. HMO properties generally have to be licensed now according to the particular local council rules and regulations and include all the above costs with additional fees for a licence and other potentially unseen charges such as special waste disposal services. Whilst the rental returns on HMO properties are generally the highest it comes with the biggest management headaches as you will be dealing with many people in a single unit. The initial costs of creating a bonefide HMO can be onerous now too as so many building regulations govern the standards needed within the property. Commercial properties often surprise new landlords in their lack of service requirements as they are normally on a fully repairing and insuring lease which leaves the owner with very little direct action needed as far as the property itself is concerned.

Always remember to cover all property services costs in the rent charge.

Written by:
Lionel Palatine – He is a regular networker and a speaker at events as well as being a property author and adviser. He joint ventures deals and shows people how to buy property for low cost which are inclusive of all fees and deposits.

You can find him on regular social media Twitter |  Facebook  |    |  Youtube  don’t forget to add him

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