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Pension Freedoms As A Source To Buy-To-Let Investment

Posted by Arthur Brown on December 14, 2017
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In April 2015, pension schemes were revolutionised with the ability to access the funds of a pension as cash. With interest rates low, the term ‘pension pot landlords’ has become increasingly common as people are looking to derive a retirement income from buy-to-let investments.

As an agency we are keen for first time investors to get the full picture of being a landlord, and below are a few considerations for any first-time landlords:

Tax – What Are My Obligations?

  • Any landlords earning more than £10,000 per year are required to file tax returns digitally to HMRC by April 2019, if they are subject to VAT.
  • This extends to ‘non-VAT’ businesses or individuals by April 2020
  • Landlords will eventually have to update HMRC electronically on a quarterly basis

Tenants – Who Shall I Let To?

  • Is the landlord looking for a Family, Young Professionals, Students, DSS, Couples?
  • The landlord can look for, and conduct the relevant checks, the tenants or ask for the services of a letting agent to complete these.

Property Maintenance – What Regulations Do I Need To Follow?

  • Minimum Energy Performance Certificate rating of E by April 2018 (New Tenancies) or April 2020 (Existing Tenancies).
  • Smoke and Carbon Monoxide Alarm Regulations 2015 require one working smoke alarm on every storey of the house and a working carbon monoxide alarm in any room containing a solid fuel burning appliance.
  • Valid Gas Safety Certificate
  • The landlord will need to decide if to manage the property, or to use an agent. Letting agents can equally play a huge role in sourcing tenants, carrying out the necessary administration, collecting rent and keeping you informed of your legal obligations.

Finance and Investment – How Much Will It Cost?

  • Create A Financial Plan
  • Upfront Costs – Deposit, Stamp Duty, Work Prior To Tenant Moving In
  • Fees – Agency, Broker, Lender
  • Running Costs – Necessary Repairs, Gas/Electrical Checks, Void Periods Between Tenancies
  • Create An Investment Plan
  • How Many Properties?
  • Short / Long Term Objectives
  • Rental Growth / Capital Growth

The Buy-To-Let market in the UK is constantly developing and over the last two years has seen large scale change (Stamp Duty, Mortgage Interest Relief etc.). Before any jumps into becoming a landlord, here at Jameson and Partners we suggest seeking professional advice.

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