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“Buy-to-let” is not a new idea, although it has grown in popularity following the reduction of tenants’ security in the 1980s and low interest rates since the 1990s. Investors seek both rental income and a prospect of capital growth.
A buyer of already let property must find out about the existing tenancies to check what security the tenants enjoy. A written tenancy agreement cannot be taken at face value if the tenant’s occupation began previously. Security deposits should be transferred to the new owner.
Landlords of residential property cannot escape liability for structural and external repairs, utility services, sanitation, heating and gas appliances. Legislation invalidates any attempt to make the tenant liable for these repairs, except under a lease for a fixed term of 7 years or more, or where prior approval is obtained from the Court. Additional regulations apply to “houses in multiple occupation”.
Capital gains tax is a concern for investors: exemption applies only to the principal private residence of an owner or of certain trust beneficiaries.