Author: Bridget Carter

One of the more popular options for investors these days is to purchase larger properties that can be let out as multi-occupancy units. These properties can be lucrative, particularly in university towns, where they are especially suitable for students.

And a new rule introduced on 6th January could make it easier to invest in these properties. The new rule will mean that landlords have to get a building licence if they want to rent one out to at least three unrelated people who all chose to live there, and if the building is on at least three floors.

The reason the rule will help you? Because it will help to convince finance companies that these properties can be divided up to rent out and thus become a viable option for a mortgage.

The Licence for Multiple Occupation was brought into force as part of an attempt to up the housing standards in the United Kingdom. The cost of the licences is understood to be almost £100 for each occupant and the licence lasts five years. Before this, however, you need to get a property inspection conducted to check the situation of the property. For example, things such as the fire regulations and the facilities and room size etc. You, as the landlord, might also be asked questions about your plans for the premises. Dodge these rules and you may have to fork out fines worth up to £20,000.

Other rules came in at the same time as this one – and if you are considering investing for a buy-to-let situation, you might need to know them.

The Housing Health and Safety Rating System means your tenants can call in the inspectors if they feel that repairs are not being conducted. As a consequence, you as the landlord are liable for a £5000 fine if you do not carry out the work that is needed to keep the building up to scratch.

You might also want to think about the Tenancy Deposit Scheme – a rule that swings into force in October that will deal with the handling of a deposit on a property.

What it basically means is this. A tenant’s deposit on a house gets kept with an official Tenancy Deposit Scheme, administered by a person who is seen to be neutral. There can no longer be a situation where you can fail to hand over a deposit, as some landlords have done in the past, for petty reasons. When the tenant moves out, the scheme administrator gets told and the deposit is given back to either the tenant, or if they feel it is just to do so, the landlord. In a situation where there is a dispute, the matter might wind up in court.

But the important part of this is that when the deposit gets returned, it gets returned with interested added and just what that interest rate will be is something yet to be decided on by the government.

You think these new rules sound expensive? Maybe they are, but what is expected is that rents will go up to counteract all the new charges. And the up side is maybe this will play favour with the banks. More rent, and more paper work to prove that you are able to rent out your property to various people…it really might just play in your favour.

Landlords will find more information about this at: www.propertylicensing.gov.uk

More Mortgage FAQ’s
More Mortgage Articles

Technocrati Tags[mortgages]