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Here we are at the beginning of another New Year; the start of a new decade no less!
Whether you are excited about the future or still feeling the effects from your New Year’s Eve celebration, it’s time to focus on the way forward.
These are challenging times for landlords, So, here are some must-do tasks and New Year Resolutions to help you build a successful property business in 2020. Read on and find out what you should be doing to start this year as you mean to go on.
It’s Tax Return Time!
Not to be the bearer of bad news, but if you haven’t done your accounts in the last year, now would be a great time to start. January 31st is the deadline for online self-assessment returns. Being late with your tax return is an expensive option.
There is an automatic £100 fine for late tax returns – even if you’re only one day late. HMRC also charge an eye-watering £10 for every subsequent day you don’t submit your return; this is capped at £1,000. If you still haven’t sorted your tax return out after six months, be prepared to pay a further £300 or 5% of the tax owed, on top of the above fines and penalties. After a year, it gets even worse and HMRC could potentially fine you 100% of the tax you owe.
Don’t stick your head in the sand. If your accounts are non-existent and you suspect you owe money to HMRC, speak to an accountant immediately. You will face worse consequences the more you procrastinate.
Interestingly, HMRC data reveals that more than 240 people submitted their tax returns on Christmas Day! Clearly the satisfaction that comes from knowing you’ve finished your tax return is even more exciting than unwrapping festive socks…
Review Your Mortgage Deal
With the chaos of Christmas over and the decorations packed away, it’s a great time to review your mortgage to get a better deal. Interest rates are low right now, so if you haven’t switched lender for a while, you may be paying over the odds.
Mortgage interest rates have dropped significantly in the last 10 years and experts predict they will stay low for a while longer. There is a lot of competition between lenders to attract new business, which is good news for landlords looking for cheaper financing.
If your buy to let mortgage deal is ending, check out the latest offers or speak to a mortgage broker. Several lenders currently have low-cost deals. If you want financial stability, look at fixed rate deals where you could be paying as little as 1.44% on an LTV of 60% for two years.
Don’t forget to factor in any fees and penalties if you are still locked into a fixed rate or discounted mortgage.
Organise a Property Maintenance Plan
Rental properties suffer more wear and tear than the average home. As a landlord, it’s your duty to ensure every property you let to tenants meets minimum standards. The Homes (Fit for Human Habitation) Act came into effect in March 2019. Rental homes must be safe, secure, warm, and dry. If you don’t want to fall foul of the legislation, a regular program of maintenance is essential.
Don’t wait until a property has major issues before fixing them. Carrying out regular checks when the seasons change can help you spot maintenance issues early when they are still easy to repair. Plan maintenance in advance. It’s a lot easier to fund expensive projects such as a replacement kitchen or new windows when you have a schedule that suits your cash flow.
Buy insurance that covers the unexpected expenses, such as a faulty boiler or burst pipe. This will give you and your tenants peace of mind.
Read up on the Latest Legislation
There is a lot of legislation pertaining to landlords, and it’s a good idea to familiarise yourself with the relevant bits to avoid fines and penalties.
Here are some of the main regulations and legislation you should be familiar with:
The Homes (Fit for Human Habitation) Act
Tenant Fees Bill
Five-year electrical safety checks for landlords
Draw up a Cash Flow Forecast for the Next 12 Months
Cash flow is a fundamental accounting principle. If you don’t have enough ‘cash’, you can’t pay your suppliers or cover the bills when something unexpected happens. Sensible landlords run cash flow forecasts so they can budget for any expenses, routine or otherwise.
Be prepared for what lies ahead in 2020. Work out what expenses you expect to come up and calculate your projected income. Is there enough money in the kitty? If not, you need an action plan. If you’re using Landlord Vision, there’s a built in Cash Flow Report that will do this for you with the click of a button.
Pro tip: always have an emergency fund to pay for those unexpected expenses. If you don’t, you may find yourself having to take out a loan or overdraft and you’ll then have to pay the associated fees and interest for the privilege.
Check Your Insurance
In an ideal world, nothing would ever go wrong with your properties, but we all know that’s not how things work. If you are strapped for cash, landlord insurance might seem like an unnecessary expense you can live without, but if you want peace of mind, it’s worth having.
Landlords can insure against the usual things such as fire, flood, and burglaries and can even get additional coverage for rent arrears. If you don’t have landlord insurance, speak to a broker to see how much it will cost and what you could be covered for. If you are already insured, dig out your policies and read the small print. The last thing any landlord wants is to find they are not covered right at the point of making a claim. If your insurance is close to its renewal date you could shop around for a cheaper policy, but always remember to check what is covered.
Reassess Your Long-term Goals
The start of a new year is an excellent time to think about your goals, life or otherwise.
Think carefully about your long-term plans.
Are you considering leaving the sector?
Is now a good time to invest in more properties?
Whatever your goals, it’s important to reassess whether they are viable, or to put goals in place if you don’t have them.
Do you need to make changes?
Have your circumstances changed in the last 12 months?
Consider everything and decide how best to proceed.
Schedule Property Inspections
If property inspections are usually the last item on your to-do list, grab that 2020 planner you bought before Christmas and schedule them in now, before you forget.
It’s important to keep a close eye on rental properties, particularly when you have new tenants. Regular inspections help you spot potential problems, such as illegal sub-tenants or illicit pets.
Invest in Landlord Software
You knew we’d throw this one in somewhere!
Investing in landlord software is a smart move if you have plans to stay in the buy to let sector for the foreseeable future. Landlord software is the best way to manage a property portfolio. It streamlines property admin and means you don’t forget anything crucial, like a boiler service or chasing up a late paying tenant.
Be a smart landlord in 2020 and get your portfolio organised. Landlord Vision software is a cloud-based solution, so you can access it from anywhere. You can also try it free for 14 days!
Cast an eye Over Your Portfolio Yields
Analyse the rental yields on each property you own at least once a year. The property market is fluid and prices rise and fall. The same applies to rents. A cheap property in a high-demand area is likely to be very profitable, but an expensive property in an area with fewer tenants might not yield much in the way of profit.
Run the figures and see if it’s time to sell low-performing properties or invest in new ones.
Get to Know Your Tenants
You might not think it’s worth getting to know your tenants, but forging a relationship based on mutual trust and respect will pay dividends in 2020. Remember, being privy to what’s going on in your tenants’ lives means they will tell you if they are made redundant, fall pregnant, or win the lottery. Forewarned is forearmed.
The more ‘in the loop’ you are, the easier it will be to deal with any issues. Remember, always be professional.
Be a Nicer Landlord
Rogue landlords attract an awful lot of press interest. Being the type of landlord who throws his tenants out on to the street with no warning isn’t a blueprint for a successful buy to let business. Being nice and having a good rapport with your tenants will only serve your business well. It also keeps you out of the Daily Mail!
Start 2020 as you mean to go on. Be proactive, deal with problems quickly and efficiently, this may be your long-term investment but it’s also someone’s home. Treat tenants the same way you’d treat any customer – politely and with understanding.
We hope 2020 is your best year yet!
Leave a comment below to let us know what your stellar 2020 resolutions are or catch up with us on Facebook or Twitter.
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