It has been reported that for the first time in 100 years, the percentage of people who own their own home has declined, and reports suggest this figure will continue to fall. Experts advise this decline is due to a combination of stagnant wages and overvaluation of property.

The same report also advised that figures in 2011 show that the number of people within the social rented sector, equals the same amount of people within the private rented sector.

Although this report brings bad news for the homeowner who would like their run at the property ladder, for Private Landlords it suggests more of a business boom, where the days of waiting for tenants to rent property appear as a distant memory. However, with a demand for rented property comes the necessity of ensuring that you, as a Landlord, can offer great housing opportunities at affordable prices. It was recently reported that in London, many renters felt they overpaid for the standard of their accommodation.

To ensure you always have happy tenants, here are our top tips for Landlord success:

1. Clean Clean Clean: Always ensure the property is presentable, thoroughly cleaned and without any maintenance issues before the property is marketed to tenants, and of course before tenants move in. Landlords should also be mindful of the fact that when maintenance issues do arise it is their legal obligation to act quickly to ensure the issue is resolved.

2. Property Presentation: It has been reported that the better the property looks, the better the tenant it will attract, together with a better rental price of course.

3. Communication is key: It is extremely important to build a respectable rapport with tenants to ensure any issues are always communicated effectively, and that any problems are resolved quickly.

4. Legalities: Always ensure that tenants are presented with the appropriate paperwork when they move in, and that all gas and electrical items are officially certified for means of safety. Finally it is necessary to ensure that visiting rights are arranged in writing, to provide the tenant with as much notice as possible. Many experts advise that the property should be visited every 3 months to check on standards and maintenance.

5. Property Management: For Landlords that have a portfolio of properties, effective management can be a difficult task. Such landlords regularly use a property management team who are able to act on the Landlord’s behalf and offer an invaluable service of marketing the property, finding and retaining appropriate tenants, and dealing with any maintenance or payment issues.

For more information on property management services please contact Hera Management Services at info@heramanagementservices.co.uk or alternatively on 0845 683 8812. Hera Management Services specialise in both the private and social rented sector, and are the preferred managing agent for a major developer.

In most cases, “business property” attracts 100% relief for the purposes of inheritance tax once it has been owned for two years, so if you own such property when you die, its value will not be counted when working out the taxable amount of your estate for inheritance tax.

It is also possible to make gifts of business property during your lifetime without worrying about the usual requirement to survive the gift by seven years, provided the property remains in use for business in the hands of its new owner.

It used to be the case that HMRC accepted that Furnished Holiday Accommodation (FHA) qualified for business property relief provided the owner was involved at least to some extent in running the business. In November 2008, without telling anyone, they changed the wording of one paragraph of their Inheritance Tax Manual, to say that unless significant extra services were provided in addition to the basic ones of cleaning and laundry, they no longer accepted that FHA was business property.

Their logic for this was that owning and operating FHA fell within the definition of “holding investments”, which is one type of business that does not qualify for business property relief. It is well established that running a property portfolio, of residential or commercial properties, falls within this “investment” exclusion, but it is quite a stretch to equate FHA, where the occupants change every week or fortnight and the place has to be cleaned and prepared for the next customers, with longer term property letting where the tenants may be in place for many years and as a general rule do their own cleaning and decoration.

In December 2011 the First Tier Tax Tribunal decided the case of the late Mrs Pawson, whose executors had claimed business property relief on her one-quarter share in a holiday cottage. The decision was published on 27 January 2012, and could represent good news for those owning FHA.

Mrs Pawson owned a quarter share in a family owned holiday cottage, which was let out as FHA when it was not being used by members of the family. She was not personally involved in either finding customers or in the cleaning and laundry, which were subcontracted to agencies.

When she died (in 2006) her executors claimed business property relief – note that this was before HMRC’s change of mind in 2008, so presumably HMRC refused the relief at first on the grounds that Mrs Pawson was not “hands-on” enough to qualify. They then modified their argument to say that FHA was an “investment” and so excluded from relief.

The report of the case makes amusing reading, as the Tribunal Judge poured scorn on HMRC, both for the logic of their case, and the way they had conducted it. The following quotation gives you the flavour:

“We have no doubt that an intelligent businessman would not regard the ownership of a holiday letting property as an investment as such and would regard it as involving far too active an operation for it to come under that heading. The need constantly to find new occupants and to provide services unconnected with and over and above those needed for the bare upkeep of the property as a property lead us to conclude that no postulated intelligent businessman would consider such a property as Fairhaven to be correctly characterised as an investment. He would consider it to be a business asset to be exploited as part of the provision of services going well beyond an investment as such.”

HMRC may appeal against this ruling, but after such a lucid explanation by the Judge of why FHA cannot be called an “investment”, it will be interesting to see how they get on!

Practical Tip:

It would be prudent to keep a close eye on the Inheritance Tax Manual in relation to your holiday let just in case a word or two has been changed which may be to your detriment or not.

This is a sample article from the monthly Property Tax Insider magazine. Get your free issue of Property Tax Insider today.

Property landlords across the UK have been urged to protect themselves by obtaining essential electrical safety certificates.

The alert has come from property specialist Julia Williams as recent figures reveal there are around 30 deaths and 4,000 accidents each year in the UK due to faulty wiring or poorly maintained electrical appliances.

Ms Williams, director at Midland letting agency Premier Places, has called for ‘clear and concise’ legislation after becoming concerned that some landlords could be unwittingly risking the safety of tenants – and hefty fines.

She said: “Unlike gas safety, where there are explicit regulations and checks landlords must legally adhere to, rules regarding the electrical side of a buy-to-let property are less stringent and therefore often overlooked by landlords.

“There are a significant number of buy-to-let properties which fall short of the necessary electrical certification for wiring or appliances. Their certificates have either lapsed, or never been in place and it often needs an observant agent to discover and deal with the problem.

“It is an unfortunate situation which is leaving landlords vastly exposed but one which could be helped by clear and concise legislation so there are no longer any grey areas.

“It’s obvious that some landlords simply don’t understand the need for a certificate or they place electrical maintenance to the back of the queue – something, which as this recent data has shown, could bring devastating consequences.

“As an agency we are pushing for more regulation. Through regular forums with the landlords we are also pressing home the importance and the potential benefits of periodic inspections and need for electrical appliance tests.

“Yes, landlords and agents can be fined or even worse, imprisoned, but we all must grasp that any safety certificate will ensure the wellbeing of tenants and on the other side of the coin, help widen the appeal of any buy-to-let property.

“It’s a fact that tenants are far more likely to rent a property which they see has orderly paperwork and has been subject to regular safety checks and testing. It gives them peace of mind.”

Ms Williams, whose agency recommends that landlords they represent should hold necessary safety certificates, said that many landlords are unaware that when they have a change in tenants the property’s electrical certificate is void.

She added: “First and foremost my advice to the region’s landlords is to keep accurate records of when testing has been carried out.

“But also have a trust-worthy and fully registered electrician they can rely upon and importantly, make sure their letting agent has access to all necessary paperwork.

“It’s all about covering themselves today to protect against tomorrow.”

Ms Williams’ warning comes after the spotlight was placed on properties following January’s launch of the government-led Green Deal initiative which aims to improve the energy efficiency of homes and rid the buy-to-let market of poor energy-performing properties.

A Periodic Inspection Report for a property’s electrical system, which should be carried out at a minimum of every five years, costs up to £250. An electrician will charge between £5 and £20 per appliance as part of a Portable Appliance Test (PAT).

Where should I buy is the question at the top of most student landlords shopping lists.

Now, new research from property analysts Hometrack has come up with a heat map of hot and not so hot locations for property investors.

The firm graded every region in the UK according to the strengths and weaknesses of the local private letting market – including renting to students.

Then, each area was colour coded according to rental activity –

• Red for hot

• Yellow for OK

• Green for average

The results that popped up should give student landlords a good idea of where to buy – obviously somewhere with a university or college narrows down the search, but the map whittles away a huge area as a not-spot.

The results revealed:

• Green areas add up to 38% of the lettings market but 71% of the country – and landlords with properties here can expect lower rents and longer voids

• Yellow areas make up 22% of the country and 40% of the rental market

• Hot spots – the red areas – are only found in 7% of the country and account for 29% of all rental activity.

Richard Donnell, Hometrack’s research director, said: “Landlords, developers and councils have to take in to account how the buy to let market works in their area. The intelligence also helps them set affordable rents. Renting out homes in areas with no demand is pointless.”

Hometrack says the map shows that buy to let is not profitable in most of the country, despite marketing firms making strident claims otherwise.

The firm also suggests public-backed schemes to help homebuyers by building and renting them property will probably fail in these areas as well, as demand is absent.

“People cannot afford to buy or save enough cash as a deposit for a mortgage. Developers, investors and local authorities must look at the bigger picture and understand that the rental market is not uniform and differs greatly across the country,” said Donnell.

Click here to see the map