Landlords should ensure they use a legitimate tenancy deposit scheme!

Many landlords and other property professionals have recently been made aware of online sites which are offering tenancy deposit schemes, but which, unfortunately, are not government authorised.

Landlords, and agents, should be aware that if they use non-official companies to hold tenant deposits, then they are not complying with regulations and may be subject to significant fines.

The Government has awarded contracts to only three companies to run tenancy deposit protection schemes. Find out more information about these companies and the schemes at Directgov.

Find out how Chez-Vous HomeSearch can help you with property finder and relocation services.

Gas safety warning for landlords

The UK Health and Safety Executive (HSE) has issued a warning to all landlords to ensure that gas appliances are safe for tenants. This follows the successful prosecution of a landlady who failed to safely maintain gas appliances in one of her properties.

The landlady in question pleaded guilty to a breach of Regulation 36(3) of the Gas Safety (Installation and Use) Regulations 1998 in December and was fined £5,000 and costs exceeding £3,700.

The HSE commented, "This case sends out a clear message to landlords who may be tempted to cut back on safety. This is a time when many buy-to-let landlords are under a lot of pressure, but they must make sure they don't put their tenants in danger".

For more help and information regarding gas safety visit: http://www.hse.gov.uk/gas/domestic/index.htm

Landlords, remember your Energy Performance Certificate!

In December 2007 I wrote about the requirement to provide a HIP (Home Information Pack), which must contain an Energy Performance Certificate (EPC), when selling a property.

From 1 October 2008, all buildings, whenever they are built, sold or rented out, will require an Energy Performance Certificate (EPC).

This new piece of legislation will affect landlords starting new tenancies (many landlords are still unaware of this – please do not Landlords, remember your Energy Performance Certificate!
hesitate to forward this information).

If you are a landlord and you:

• already have a tenancy agreement on 1 October 2008; you will NOT require an EPC.
  
• plan to let for the first time or re-let your property(ies) after 30 September 2008; you will have to provide a copy of the EPC (a photocopy of the original is acceptable) to serious prospective tenants, either prior to or at the viewing of property.
  
  - If you let a property to several individuals each of whom has free use of the whole property (from a contractual point of view), then only one EPC will be required
  - If you let a HMO (House in Multiple Occupation) – a property with shared living amenities plus individual contained bedrooms (with locks) – to 5 people, for example, then six EPCs will be required: one for the property, and one for each self-contained room
  - I advise you to commission an EPC for each property you plan to let as soon as possible, as it is very likely that there will be huge demands for new EPCs in August and September.

An EPC is produced after an inspection of a property is carried out by an accredited Domestic Energy Assessor. The landlord is responsible for ensuring this is done. An EPC is likely to cost between £50 and £100, and will be valid for 10 years.

However, if modernisations are carried out, it may be advantageous to have the property re-assessed to reflect the improvements.

EPCs only apply to England and Wales. Northern Ireland and Scotland are producing their own regulations.

The rationale behind EPC and its characteristics
EPCs are part of measures being applied across Europe and are in line with the European Directive for the Energy Performance of Buildings to help cut buildings’ carbon emissions and tackle climate change.

EPCs are measured using the same calculations for all properties, enabling comparison of the energy efficiency of different homes. Part of the EPC is a recommendation report which lists the potential rating that a property could achieve if changes are made. The report lists improvements that one could carry out and how this would change the energy and carbon emission rating of the property.

An EPC (see sample) provides ‘A’ to ‘G’ ratings for the building, with ‘A’ being the most energy efficient and ‘G’ being the least, with the average to date being ‘D’.

Measures you can take now to improve your property energy efficiency
If your rental property is already energy efficient, the EPC will help it stand out compared to those not so energy efficient: potential tenants will be re-assured of lower energy bills – very important in these days of rising energy and fuel prices.

There are some measures you can take now to improve your property energy efficiency, and improve your EPC rating:
1: Replace light-bulbs with low-energy versions
2: Ensure the hot water cylinder has a jacket
3: Insulate the loft
4: Insulate cavity walls
5: Replace an old boiler (15 years+) with a new high efficiency condensing unit, which could save around a third on heating bills straight away.

To find out more about EPCs, visit Directgov.

Laurent Stadelmann
The Property Finder & Relocation Professional

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Property investors, landlords - are you claiming all your expenses?

Here are some tips that I published in my last newsletter that I thought may be useful.

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Some investors or landlords may not be aware of some of the expenses and allowances they can deduct from the taxable rental income. Ensuring that you offset all your legitimate costs will help minimise your tax bill.

Some of the expenses that can be offset against rental income are:

• Finance charges: any interest paid on the loan/mortgage taken out to purchase a rental or buy-to-let property is tax deductible, as is interest on any secured or unsecured loans taken out to obtain the property or to finance repairs.
  
  
• Legal & professional fees: if you use the services of accountants and letting agents, their fees are tax deductible.Legal expenses associated with preparing tenancy contracts and dealing with tenant disputes are also tax deductible. However legal expenses associated with purchasing property cannot be offset against rental income (these expenses are offset against your capital gains tax liability when you sell the property).
  
  
• Council Tax, electricity, water & gas: if all rooms are rented out, all the usual running costs are fully tax deductible, assuming that none of the tenants makes a contribution to the bills. If you let your property exclusive of all the bills, then you cannot claim.Between tenancies the landlord is responsible for paying council tax and utility charges, which are tax deductible.
  
  
• Insurance: buildings insurance, contents insurance, rental guarantee, as well as maintenance insurance policies for gas boilers, plumbing cover and white goods are also tax deductible.
  
  
• Ground rent & service charges: on a leasehold property there is usually a ground rent and a service charge to pay to the freeholder; these are deductible.
  
  
• Marketing and advertising costs: any costs associated with finding tenants or selling your property are tax deductible. Other tax deductible costs include expenses such as setting up a website or having some “to let” boards made up.
  
  
• Managing / letting agent fees: if you use agents to let and/or manage your property, their fees are tax deductible.
  
  
• Cleaning between tenancies
  
  
• Garden maintenance
  
  
• Wear and tear: if you let furnished accommodation, you can claim 10% of the gross rental income (minus rents, rates, council tax, water rates).
  
  
• Administration expenses: any stationary, office and administration expenses such as telephone, all paper and envelopes, printing, postage, office consumable and any other costs incurred in connection with running your property business are fully tax deductible.
  
  

I would like to clarify that I am not a tax expert. Please check with an accountant or Tax Office if there are issues that are particular to your personal and property circumstances.

Laurent Stadelmann
Managing Director - Chez-Vous HomeSearch