A businesslike attitude to refurbishing rental properties needs to be at the forefront of the landlord’s mind when organising works.
Doing refurbishments to your rental property which use the space creatively can present opportunities to raise the capital value and rental value of a property.
Gas, asbestos and water management are very high priorities to consider when refurbishing.
This includes checking that electricity and gas supplies and the sanitation (drains, basins, sinks, baths and WCs) are in working order. The property needs to be free from damp, with adequate heating which ideally means controllable central heating and insulation, with equipment and the fabric of the building in good repair. The property should also be safe from trip and fall hazards and fit for general purpose.
Sprucing up your property through interior decor, fittings and furnishings should be seen as an investment as this will make the property more appealing to prospective tenants as well as sparing you future complaints when they have already moved in.
Remember always that you are preparing the property for tenants not for yourself so the decoration and standard of fixtures should be of an appropriate standard for your target market, and you should aim for a light, cheerful and uncluttered impression.
Planning is key
Refurbishing a property before it is rented out will save you time and money. Unless it is really necessary, bringing in the builders during a tenancy should be avoided as it is bound to interfere with your tenants' lives, and give rise to complaints if the work takes longer than initially expected (as it invariably does).
The best way of saving money is to not waste time while the property is empty as lost rent can be one of the biggest costs.
Tax deductions when you refurbish
All your expenses associated with refurbishing a buy-to-let property are tax deductible and will either be treated as repairs (which are deductible from rental income) or capital expenditure (which is tax deductible only when you sell the property).
Repairs. This is a complex area of tax, but generally speaking expenditure will be considered a repair if it generally restores the property to its previous condition, for example replacing an old carpet with a new one, repainting the walls or fixing a damaged roof.
Improvements. Any expenditure which improves the property beyond its previous condition will, on the other hand, be treated as capital expenditure. Clear cut cases of capital expenditure are, for example, adding an extension to a property, doing a loft conversion or putting in central heating to a property that did not have any.
One of the key ways therefore to distinguish between repairs and improvements is to consider whether the property is uninhabitable and not available to let in which case works done would be seen as an improvement rather than a repair.
Under the Deregulation Act 2015, whereas a property has outstanding maintenance issues, and the landlord has been informed, then the Landlords have generally two week to respond to the respective tenants, notifying when the outstanding issues may be likely to be resolved
All Tradesmen should be fully qualified and fully insured ( public liability indemnity )
Electricians should carry as least Part P qualifications : ( associated with a body for example: NICEIC ) (Gas Engineers. Gas Safe ) .
To include in preparations, as set out within the deregulation procedures, all smoke alarms must be in working order.
It is also a legal requirement to Provide a Gas landlord certification, and A Valid Energy Performance Certificate
Landlords need to be aware that any refurbishment to the property, regardless of how minor the work is, can affect their insurance policy.
The first question most insurers will ask is what type of work the landlord is intending to undertake, and the second is how long will the work take. Both questions give the insurers an idea of the extra risk involved and whether additional terms such as restricted cover or a higher excess should be applied. Usually if the work is of a purely cosmetic nature a standard landlords policy will automatically extend to cover this period of unoccupancy and minor works for up to 90 days.
Landlords ought to bear in mind however that even if the policy automatically covers this, there may be additional terms or conditions applied so it is essential that they check their policy carefully so as not to fall foul of these. It is also the landlord's responsibility to inform insurers when the work is completed and the property becomes occupied, and not the insurer's responsibility to keep chasing the landlord for updates.
It is recommended that landlords advise their insurers of the full schedule of works and, more importantly, make sure the builder or contractor undertaking the work has Public Liability cover in place. Apart from protecting members of the public whilst they are undertaking work at your premises landlords should be mindful of the fact that they cannot claim from their own property insurance for damage that the contractor does to their property or even a neighbouring property.