So, you have a room or a flat that you're thinking of renting out. There's nothing to it, right?
Wednesday, January 11, 2017
Actually, here's what you need to know.
Renting out a room in your house or converting a portion of the house or garage to a flat to rent out is an excellent way to generate additional income on an ongoing basis.The Pros
Remember though that while there are plenty of pros, there are also some cons. Even though the flat is on your property, you need to also bear in mind that you are still subject to all of the legislation and rules that guide rentals and leasing including tenant protection.
Seeff’s agents say that the biggest benefit is the additional improvement to the property and of course the opportunity to earn a return on your asset.The Cons
Flats, cottages or rooms in a house are often a preferred choice for tenants for security reasons, but also as they sometimes offer added benefits such as access to the garden, secure parking, a swimming pool and sometimes even a gymnasium and tennis court.
On the other hand, it means that you have to share your space with someone else. You do not always have full control over how they behave and it can a bit of a drag to have someone else living on your premises, especially if it is a room in your house.The legalities
That said, it may well be the opportunity of a lifetime and if you set the room or flat up with a separate entrance so as to create minimal intrusion and disruption to your lifestyle, it could be a win-win situation.
On the legal side, remember that it is still a rented property and so all of the usual regulations and legal compliance will apply. It can be quite a cumbersome job, so it is advisable to work with a local rental agent such as Seeff who will assist you every step of the way to ensure minimal hassles, full legal compliance and maximum return on your investment.BACK TO SEEFF NEWS
Vetting the tenant. Some aspects of tenant management would include the same careful vetting of the tenant. Remember, they will be living on your premises, so you will need to do a thorough background check. It is also advisable to do an interview to ensure that you have a common understanding of what you expect from each other.
Set the ground rules upfront. Any noise rules, parking and other arrangements should also be clarified. Especially if the property does not have a separate parking area or entrance, you will want to regulate this. Also, what about guests. You need to consider how you would want to regulate visitor vehicles and noise. You cannot expect your tenant or room guest to have absolutely no contact.
What about shared facilities, internet or DSTV for example? Be sure to set the ground rules, especially for internet usage given the tendency to download or use large quantities of bandwidth. You can end up with a nasty surprise internet bill.
Declaring the income and paying tax. Remember that you will need to declare the income when you do your annual tax return and that you will need to pay tax on the additional income. You are though able to make deductions for maintenance and other costs against the income, so it is best to keep a careful record of this.
Council approval and safety. Remember to ensure that the property complies with all safety regulations. If you are for example converting a portion of the house or a garage, you may need to obtain council permission and may under certain circumstances have to submit plans and get building approval.
It is best to contact your local municipal building office to clarify, or you can speak to the builder that you are contracting about the necessary approvals. This includes electrical and plumbing certificates as well as any safety standards.