Tenants in exclusive locations have high expectations from their landlords, with many owners delegating day-to-day maintenance tasks to professional property management companies, adding value to the rental experience and ensuring that all necessary services are available on demand.
Let’s look at the essential aspects of managing rental properties to the highest standards, maintaining superb tenant relationships and what you might expect to pay for expert property management.
The Benefit of Professional Property Management Services
However, property management is often one of the concerns for owners, who may not have the time to deal with maintenance callouts, regular upkeep and compliance with tenant documentation.
Tod Anstee’s property services are led by accomplished colleagues with decades of expertise in maintaining every property to exceptional standards, providing responsive, positive communications, and assuring each property owner that their rental home is in good hands.
Property Managers for Premium Rental Homes
Full-service property management involves far more than dealing with building repair work or ensuring that complaints are handled swiftly on your behalf.
Landlords can choose between varying management services depending on their requirements:
- Applicant selection and vetting: your property manager will market your rental property to target prospective groups in select areas and arrange private viewings. On application, the property management team checks references and draws up formal paperwork.
- A more active service involves all the above, plus collecting rent, with deposits stored according to tenancy deposit protection regulations and any queries or late payments addressed directly.
- Fully managed services provide complete rental management, comprising the above alongside property inspections, day-to-day management tasks, appointing contractors to complete repairs, and ensuring the residence is maintained to the expectations of you, as the owner, and your tenants.
Comprehensive management provides multiple benefits, not least addressing the time burdens of responding to requests, liaising with repair professionals, and managing tenants’ finance agreements.
What to Look for in a Capable Property Manager
Property owners are advised to conduct due diligence before contracting any property management companies to manage their residential property assets. Several skills and abilities are crucial to being a responsible property management team.
Local knowledge is key, not solely to establish reliable networks of property management tradespeople, but to understand how to market a premium rental asset or development site to the correct demographic.
Other factors that we suggest owners look for include the following:
- Experience – wherever the property in question is, you require a reliable property manager who can independently handle residential property repairs, communicate on your behalf, and take on all the responsibilities associated with strong tenant support.
- Services – we provide the full spectrum of property management, including assessing your property to determine the optimal rental premium, collecting payments, arranging maintenance, delivering rent increases and providing emergency liaison 24/7.
- Transparency – our property managers often work with clients disappointed with previous services due to unexpected charges, fluctuating rental property costs, and delays in meeting requests. As a respected leader in West Sussex real estate, our property managers keep you fully in control and provide a clear fee structure upfront to ensure you make informed choices about your rental business assets.
The aptitude of your appointed property company is even more important for higher value residences, creating a flawless level of service, and mitigating the potential for vacant periods.
How to Compare Property Management Company Fee Structures
We endeavour to cater to the needs of every owner we represent and will always discuss your requirements before providing advice about the right property management services for you.
Much depends on your level of involvement and whether you would like to retain responsibility for particular tasks, such as day-to-day management, liaising with rental clients who are in arrears or selecting from prospective new renters based on our background checks.
From there, your property management costs will vary depending on the scope of the work you would like us to conduct and how you prefer to engage with your tenants.
When comparing UK management quotations, we suggest you examine pricing carefully to establish variances and potential extra costs, such as:
- Authorisation policies for recommended repair work.
- Early termination charges if you opt to discontinue the property management contract.
For more guidance around management services for high-end rental accommodation or to discuss our fee structures and the services available, please contact Tod Anstee at your convenience.
Alternatively, our Residential Property Management page details the options you may wish to choose from.
Information Source – https://www.todanstee.com/latest-news/how-much-pay-for-high-value-property-management-services/
A swiftly changing tax landscape is adding more confusion to the pros and cons of purchasing a rental property as an incorporated company vs as a private individual.
However, where the rental property belongs to an existing company owner, they might decide to transfer ownership or invest in a new property through their commercial business.
In this guide, the Tod Anstee team explores all the options, with comparable information to help you make informed decisions about which property ownership structure is right for your portfolio.
Stamp Duty Rates for Limited Companies, SPVs and Individual Property Investors
Stamp duty is payable by the property investor at the point of acquisition, but rates vary depending on your tax position and legal ownership status.
Limited companies pay commercial stamp duty at 15% if the property is intended as residential accommodation and costs over £500,000. A 3% surcharge is automatically added, plus a further 2% if the buyer is not a UK resident.
However, the purchase may qualify for a different treatment if:
- The business is a property rental company, for example, an SPV, AND
- The property is expected to generate a profit (e.g., not leased free of charge to a family member or employee).
This factor is one of the key contrasts between investing in property as an SPV and buying rental assets through an incorporated business with another purpose. SPVs pay the standard stamp duty rates plus a 3% second homes surcharge on any acquisition of any value over £40,000.
Note that the 3% applies regardless of whether you, or your company, already own a private property.
Stamp Duty Rates for Companies
Companies pay stamp duty at a standard higher rate of 15%, plus a 3% surcharge if they purchase a residential property. This rate applies to investments of over £500,000 made by companies, partnerships where one partner is a company, and investment schemes.
SPVs pay the normal stamp duty rate as below, plus the 3% surcharge.
Stamp Duty Rates for Private Individuals
Stamp duty thresholds changed on 23rd September 2022 and will remain as follows until 31st March 2025, any further announcements notwithstanding.
Property investors who purchase residential accommodation as a private individual pay these rates, plus 3%, if they already own another residential property.
Property Value Stamp Duty
Up to £250,000 0%
£250,001 – £925,000 5%
£925,001 – £1.5 million 10%
Over £1.5 million 12%
The Tax Advantage of Owning a Rental Property through a Limited Company
An SPV works like any other limited company but is designed for rental property ownership rather than a trading business, with financial benefits linked to stamp duty.
Changes to mortgage tax relief have driven more landlords to consider managing their property business through a limited company. The ‘sliding scale’ gradually reduced the amount of mortgage interest and other expenses self-employed landlords could deduct from their taxable profits to zero.
Landlords that pay tax as a company rather than as an individual can deduct 100% of their mortgage costs from their revenue before calculating a net profit against which they pay corporation tax rather than income tax.
Other Tax Considerations for Landlords
While there are clearly multiple, potentially complex factors to consider, additional tax system elements could impact your decision. Stamp duty and income tax are only two tax obligations associated with owning a rental property through any ownership structure.
Capital Gains Tax
Another reform due to hit in April 2023 is the cut to capital gains tax allowances, dropping from £12,300 to £6,000 and again to £3,000 in April 2024. Landlords pay capital gains tax when they sell a property based on the profit made.
Property owners who intend to sell portfolio assets this year may wish to proceed quickly to avoid paying an additional £6,300 on the net gain.
Owning a Rental Property Privately vs Through a Company
This long list of considerations demonstrates why there isn’t a clear-cut answer. Although stamp duty rates make the cost of owning a rental property through a business appear less attractive, this option may remain the most tax efficient.
Please contact Tod Anstee at any time if you would like to arrange a more detailed conversation about any of the information contained within this guide, or speak with your accountant or financial adviser for advice on your tax exposure and the most suitable route to take.
Information Source: – https://www.todanstee.com/latest-news/stamp-duty-levies-worth-investing-property-through-limited-company/
Landlords rely on a letting agent to take over the management, advertising, maintenance, and tenant communications linked to their rental properties, and need an agent they can trust to fulfil their expectations in terms of tenant care and professionalism.
One of the many ways to assess the quality and standard of a prospective letting agent is to evaluate the accreditations, quality marks and experience they have. A well-established letting agent will always be happy to discuss their capabilities, specialisms, and expertise.
What Is an ARLA-Approved Letting Agent?
Propertymark is a designation awarded by the Association of Residential Letting Agents (ARLA), an industry body launched in 2017, absorbing several previous organisations. It focuses on industry standards and only accepts applicants who prove they meet the requirements.
Some of the advantages of working with an ARLA-approved agent include the following:
• Income protection through the Propertymark Client Money Protection Scheme, which applies to tenants and landlords. Any affected party could claim compensation if a dispute arose.
• Access to up-to-date professional knowledge, with agents required to demonstrate professional development to remain current regarding property law and legislation changes.
• Professional indemnity insurance, providing peace of mind that if you ever receive poor advice or experience substandard service, you will be backed by full coverage.
NAEA Propertymark Protection
Tod Anstee is also an NAEA Propertymark agent, although this applies to the estate agency aspect of our business. The same rigorous standards apply, ensuring that every landlord consults with an experienced agent at the forefront of current market knowledge and advice.
Letting and estate agents do not need to register with any compulsory supervisory body, and ARLA and NAEA membership is entirely voluntary and at the agents’ cost. However, this investment in standards, transparency and industry leadership is an important way to showcase a level of service unavailable elsewhere.
Tenancy Deposit Scheme Members
Letting agents, and landlords who manage their rental properties directly, must comply with government legislation around the handling of deposits. There are specific rules in place, which protect deposit funds and ensure landlords, or their representative agents, return funds at the end of a tenancy according to the regulations.
The Tenancy Deposit Scheme is one of the compliant schemes which includes adjudication in the event of a dispute, which protects the interests of all involved.
The Guild of Property Professionals
Our membership of The Guild represents inclusion in a limited network of 800 selected property agents, chosen for high standards, knowledge-sharing, innovation, and outstanding customer service. Guild members are spread across the UK and are an exclusive group of the best property experts available.
Tod Anstee follows The Guilds’ Trading Standards recognised industry training – the only one of its kind – which sets Guild members apart in terms of compliance and trust.
Registration With the Property Ombudsman
We also recommend you select a letting agent (or estate agent for sales transactions) registered with the Property Ombudsman (TPO) Scheme, which provides the approved code we display on our website.
This scheme delivers redress options in a conflict or disagreement, holding agents to stringent standards and implementing an independent, fast, and fair complaints resolution system.
Trading Standards Approved Code
Trading Standards sets various rules and regulations about how British businesses serve and support their customers. The Consumer Codes Approval Scheme is awarded to companies that meet the requirements and provide good service levels, including clear information and access to a complaints procedure.
The Benefits of a Highly Accredited Letting Agent
Each of these standards or awards focuses on a slightly different aspect or area of the property letting market, but evidence whether a letting agent has successfully been granted membership, or has achieved the requisite professional standard to gain the accreditation.
Landlords need to know which standards to look out for to be able to clearly distinguish between a substandard agent without formal training, education or marketing networks and an established, talented team with wide-reaching skills.
Choosing a letting agent with a broad range of accreditations ensures landlords are protected by redress schemes and receive improved service levels for themselves and their tenants with a significantly lower risk of error, extended vacancies.
Background checking can help you select a competent, professional property team with appropriate formal credentials and independent endorsements from recognised trade bodies.
Please contact our friendly letting team for more details about our accreditations and awards, including the Estate Agent Awards 2021 award for Best Agency Network, presented by The Guild of Property Professionals.
Information Source: – https://www.todanstee.com/latest-news/important-arla-propertymark-letting-agent/
Location is always an important factor in property, especially when deciding on the best opportunities to expand a buy-to-let investment properties portfolio. Landlords may have a preferred niche, such as high-end apartments for professionals or semi-detached family residences, but local knowledge is key.
For example, a well-maintained rental property marketed to tenants with children is less likely to command a premium if it is outside the catchment area for the best local schools, and vice versa.
As we’ll explore below, there are advantages to working with an established agent with comprehensive experience in property sales and the letting market in any region you intend to buy.
Calculating Demand before Making a Buy-to-Let Investment Property Acquisition
One of the fundamental elements of making a reliable profit through property rental is demand; both having plenty of quality tenants to select from when letting a new rental asset and ensuring that tenancies are longer-running and sustainable.
Every city, town and village has specific neighborhoods, roads and areas that are considered the most exclusive or preferable for diverse reasons:
• Falling within catchment areas for outstanding schools.
• Excellent views, with sea or river views a particular draw.
• Off-street parking or free and plentiful on-street parking.
• Easy access to transport routes, supermarkets and local amenities.
• Being within walking distance of parks, beaches and attractions.
These features are unrelated to the property itself. Still, they can make a significant difference in the rental value assigned when a residence is offered to let and demonstrate a variance in the rental price achievable for two comparable properties but in different areas of the same town.
Understanding Tenant Demographics for Rental Investment Properties Marketing
Landlords who live locally may be aware of some of the factors that might make one address more favourable than the other, but it is also important to consider demographics and those things that will matter most to the tenant group you expect to let to.
It can be useful to assess who you most anticipate renting your newly acquired property to and then consulting a letting agent to pinpoint the most meaningful priorities for that group.
Examples include properties within ten minutes of central city office districts, homes with larger outside gardens, residences close to harbours or marinas, or even homes away from flood plains or areas more exposed to high winds in coastal areas.
While most landlords will be used to considering their tenants rather than their own preferences and tastes when selecting investment properties, local agents can provide valuable insights that can add value to your bottom line.
Another good example is the EPC rating, not least because of the evolving standards. Particularly for smaller properties, a rental investment with upgraded insulation, double-glazing and heating is far less likely to be vacant since lower-income renters will want to know what a rental home will cost to run, as well as what the monthly rent will be.
Evaluating the Right Rental Price
Rental pricing can be difficult to get right because so much depends on the perceived desirability of a postcode, area or property, balanced with the type of tenant you intend to market to, general market conditions and the property itself.
Setting the price too high can make it harder to attract quality tenants and will usually mean a rental property remains on the market, provided other accommodation options are available at a more competitive cost.
However, if you set the rental value of a newly purchased buy-to-let too low, without realising a feature or element could allow you to charge more, you could be inadvertently reducing your potential profits.
All the aspects mentioned above can add real value to a rental property, and a letting agent working in the area will be able to offer guidance as to the following:
• The number of prospective tenants on waiting lists.
• Average rental prices in the specific part of West Sussex.
• Demand for property types, sizes and locations.
• Comparable rental premiums currently being charged.
• Marketing options to boost visibility.
The final point is important because although many rental investment properties are let to tenants living in the local area, that may not always be the case.
For more information about buying rental investment properties in any area within West Sussex, please get in touch with Tod Anstee – estate agents chichester at your convenience.
Information Source: – https://www.todanstee.com/latest-news/local-knowledge-essential-to-select-profitable-rental-investment-properties/
The government announced new rules linked to UK properties owned by overseas businesses in August 2022. Businesses and owners had until 31st January 2023 to report to the Register of Overseas Entities.
However, various issues, from lack of awareness to non-compliance, mean that only 19,510 of 32,440 overseas organisations submitted their details to the register before the deadline. A further 5,000 are expected to be pending.
This guide explains what the register means, who it applies to, and what to do if you are obliged to declare your ownership and still need to do so.
The Purpose of the Register of Overseas Entities
The logic behind the register relates to attempts by the UK government to enforce transparency around foreign nationals with business assets and properties within Britain – it is part of the Economic Crime (Transparency and Enforcement) Act 2022.
One of the many problems has been the scope and breadth of the scheme, which incorporates beneficial owners and expatriates, potentially including British citizens who trade through an offshore limited company or similar structure, because of the tax efficiencies available.
The pre-existing Non-Resident Landlord system is separate and may have led to confusion where owners of UK Chichester rental properties believe that they are already compliant and registered as an Overseas Landlord and therefore are not subject to the new rules. This scheme applies to individual owners, rather than those trading through an overseas business.
Who Needs to Register as an Overseas Entity?
This new register is aimed at businesses and the individuals that own them and applies to:
• Any business registered overseas that has purchased property or land in Britain since 1st January 1999 (in England and Wales).
• Company owners who purchased property or land within that period and disposed of it before 28th February 2022.
• Properties or land owned freehold or leasehold for at least seven years.
• All legal entities, including companies, partnerships and other organisations registered outside the UK, including owners of businesses in Ireland.
Beneficial owners can be individuals, trustees, or other companies, but the regulation requires disclosure of anybody who holds 25% of shares, directly or indirectly.
Verification Checks for Overseas Entities Owning UK Property
Another complication is that companies or organisations registered overseas are required to work through a verification process. However, overseas entities that had owned British land or property and sold it before 28th February 2022 are exempt.
A verification check can only be completed by an agent registered in the UK, who can validate the identity of the owners and status of a business registered overseas – this is necessary before the organisation can submit details to the overseas register.
Agents include legal professionals and financial institutions, and the verification must be completed within three months of the registration date.
Those professionals with the accreditations to act as agents must also contact Companies House to request an agent assurance code before they can provide services. Agents without a code cannot file verification statements.
Once an organisation has appointed an agent, it must also give one month’s notice to beneficial owners before their details can be registered. The notice asks the owner (or shareholder) to respond within 30 days, confirming their details.
Impacts of the Register of Overseas Entities
Many organisations subject to these new rules will not take any further action since the primary objective is to identify concealed ownership structures, prevent money laundering, and avoid companies from disguising the true beneficial owners of UK property and land.
However, restrictions will be applied to all overseas entities from 31st January 2023. An overseas organisation is prohibited from transferring or leasing any UK property or land for seven years or more without registration.
The Land Registry will restrict the title deeds of all land or properties considered owned by an overseas entity that is not registered and will impose this limitation until the organisation complies. Those who do not register and fail to comply with the restrictions on the use of their property or land could face criminal charges or be further limited in any land transactions.
Non-compliance for registered organisations could result in an initial fine and a default penalty of up to £2,500 per day, as a maximum.
While these restrictions are intended to incentivise overseas entities to register, the fact that 40% still need to do so, weeks past the end of the transition period, demonstrates the level of confusion, misunderstanding or deliberate non-compliance present.
Information Source: – https://www.todanstee.com/latest-news/changes-to-rules-for-overseas-owners-of-uk-properties/
Property assets appreciate gradually over time and are considered a fairly inflation-proof investment since, although the economy may be sluggish, it is very unusual for bricks and mortar to drop in value.
However, with rising inflation putting pressure on other aspects of owning rental properties or managing a portfolio, there is the likelihood that higher mortgage interest rates, utility costs, and council tax will impact your bottom line.
Here we’ll run through some suggestions to help you maintain profitability, along with guidance about assessing the fair rental value of each rental property in your portfolio to recognise the increasing demand for quality accommodation, particularly in the most sought-after areas of West Sussex.
Why Does Inflation Impact Rental Property Profitability?
Inflation itself doesn’t normally have any marked impact on the valuation of a property, but it can affect other outgoings. Managing those costs during times of swift price rises can be essential to ensure your portfolio achieves the returns you expect to make on your investments.
Selling up is also inadvisable, given that the highest returns are realised over at least ten years. Purchasing a residence with a suitable rental value should cover the running costs, with a profit element.
An important consideration is that while interest rates may mean some expenses are higher, it also means that average rental premiums have risen. In many cases, the best course of action is to re-evaluate your portfolio to see where increases would be reasonable and fair.
Other solutions include marketing a vacant property or new portfolio acquisition as a short-term holiday rental, if permitted within any mortgage agreements you may have, seeking a higher income while interest rates settle.
Controlling Rental Property Costs During Rising Prices
For most landlords, the mortgage is the highest expense linked to a rental property. Although interest rates are currently high due to the successive base rate increases introduced by the Bank of England, they are forecast to revert in the coming months.
The Economics Observatory estimates that within the next 12 months, inflation will fall to 2%, in line with governmental targets, and the current average 6% mortgage interest rates will fall to 3.3% by 2026.
In the meantime, rental mortgages can be flexible, and professional property investors may have several options to consolidate, extend or reduce their payment obligations through:
Switching from repayment to interest-only. Although fewer buy-to-let homes are purchased on a repayment basis, this could be an effective solution in this circumstance.
Consolidating mortgage borrowing. This may benefit portfolio owners with a larger volume of properties, where lenders keen to secure their business may be more competitive when considering a larger portfolio mortgage rather than a standalone product.
Meeting Market Demand to Improve Property Portfolio Returns
The next area to consider is the income your portfolio provides and assessing how the costs of running and owning a property have changed over the last few years. We recommend landlords and investors compile detailed budgets to have comprehensive oversight of their margins, looking at:
• Maintenance and repair costs.
• Council tax and utilities.
• Borrowing interest and product fees.
• Gas and electricity safety inspections.
• Landlord licences for HMOs.
• Insurance coverage.
Once you have a clear picture of the costs, it becomes easier to evaluate whether the rental yields currently achieved are sufficient, and alongside a valuation, can help you make informed decisions about the best way forward.
Working with an accomplished and highly regarded lettings management team can improve your prospects significantly, advertising properties to the right demographics, using outreach marketing to reduce the duration of vacancies, and ensuring your rental property is presented in a professional and appealing manner.
Options may include, but are not limited to:
• Permitting tenants to take up residence with a pet, incorporating the safeguards around damage and maintenance within your tenancy agreement documentation.
• Making improvements to the condition, décor, exterior or space inside the property – this may range from simple refurbishments to more sizeable extensions or incorporating off-road parking and dropped kerbs to enhance accessibility.
• Investing in the energy efficiency of a portfolio asset, where tenants are keen to secure rental properties that are future-proof, low-cost to run, and have an excellent energy performance rating.
For more advice about managing your property portfolio in and around West Sussex, please contact the local Tod Anstee – Estate Agent in Chichester office to arrange a convenient time to talk.
Information Source: – https://www.todanstee.com/latest-news/how-to-protect-your-property-portfolio-from-rising-inflation/