Dovey Cottages Ltd is a holiday letting agency covering Aberdovey (Aberdyfi) and the surrounding area.
Through our holiday letting agency ‘Dovey Cottages Ltd’; we can advertise your property on our websites (www.Dovey-Cottages.co.uk, www.Aberdovey-Holidays.co.uk and www.Aberdovey-Self-Catering.co.uk) to generate an income for your property and investment. We place high importance on our relationship with our owners and together we aim to form strong partnerships that provide a quality service that leads to future success and contented holidaymakers.
We are also able to offer a full management service ensuring your property is well maintained by our team of housekeepers and handymen, keeping the running and maintenance cost of your property to a minimum.
For those not wishing to rent their holiday home, we can also provide a 'Second Home Care Package' including: key holding, regular security checks on your property, property maintenance and garden up keep. We also hold a list of reputable local builders who have work for us in the past and have proven to be reliable and fastidious.
There are 3 Packages available, they are:
This whereby we only advertise a holiday let on our website, take bookings, administer guests joining instructions and pay owners any payments received. We do not administer the property or have any dealings with the property. We will only inspect the property to ensure it meets with our high standards.
We do not deal with your customers, or property and any enquiries or complaints must be handled by the owner. Including out of hours callouts, repairs and property maintenance.
The owner has full access to our booking system to administer there property, this includes the ability to update prices, can add properties, can update properties, view booking details, take owner paid bookings, view booking details and full contact with cleaners via the booking system.
The owner can use our websites as another advertising medium and benefit from our powerful online booking system. You will have your own login, control of your bookings, and an availability calendar for your own personal website.
BASIC PROPERTY MANAGEMENT & ADVERTISING
This whereby we advertise a holiday let on our website, take bookings, administer guests joining instructions and pay owners any payments received. We only administer the property only during our guests stay. Guests will have access to our emergency out of hour contact numbers.
We also deal with your property and enquiries and any complaints, including out of hours callouts, repairs and property maintenance during our guests stay only.
The owner has limited access to our booking system to administer their property, this includes the ability to add or update owner bookings only and full contact with cleaners via the booking system.
FULL PROPERTY MANAGEMENT & ADVERTISING
This covers the same as the Basic Property Management. However, we fully administer your property 356 day of the year. We are always available and can be called upon throughout the year to assist with your property.
For more information on all our Packages please do not hesitate to contact us or visit our office at: The Old Bake House, 7 Prospect Place, Aberdovey.
PREPARING YOUR SECOND HOME FOR HOLIDAY LETTING
When preparing your second home for holiday letting, which items should be removed and which are expected in your property?
Your holiday home is likely to be already furnished and decorated; however, when you begin renting it out, it's important to find a balance between personal convenience and guest comfort.
Walk through your second home and remove any irreplaceable or valuable items. Create a lockable closet in your home for storing personal items and extra supplies. The rest of your home should be relatively free of personal affects and clutter.
In addition to removing and locking away personal items, it's also important to add the items that travellers expect to find in a holiday home.
When it comes to the kitchen, guests appreciate convenience. Your kitchen should be equipped with enough plates, glasses, and flatware for double the number of people that you sleep, a tea pot, adequate cooking equipment, and a dining room table that will seat the number that you sleep. If you sleep large numbers, have a fold-up table and chairs readily available for the children.
All holiday homes should have quality and ample bedding. This means high-quality sheets for each bed, pillows with pillow protectors, duvets and covers, extra blankets, and mattress pads. Also consider supplying an alarm clock and reading lamp on a bedside table in each bedroom.
The Living Area
Your living area should have comfortable seating for at least the number of people that you sleep, a TV large enough for guests to watch from across the room (27” or larger) with basic cable or satellite TV, a DVD player or at the very least a VCR, and a couple decks of cards and a board game or two for rainy days.
Renters expect the bathrooms to be spotless. They also demand quality towels. Provide at least 1 bath towel and 1 hand towel per guest.
When equipping your holiday home, remember why renters are choosing to stay in a holiday home instead of a hotel. Consider providing items like a washer and dryer, high-speed Internet, an iron and ironing board, cot & high chair, a hair dryer, books, games, videos, and a first aid kit. Small objects like books, vases, and flowers can make the property feel more like a home than a hotel room. Also consider adding extras particular to your holiday rental market. For example, if your property is near the sea, consider leaving some leaflets from your local fish restaurant by the telephone. Please also see our Legal Obligations section.
LEGAL OBLIGATIONS PRIOR TO LETTING
What obligations do I as Owner have to undertake prior to letting?
As you will appreciate there are certain statutory and other requirements that must be undertaken before we are able to market your property. We are more than happy to help you with these matters so please call our office if you require further assistance.
Firstly, all owners who let their properties must ensure that comprehensive insurance is effected which specifically covers holiday letting and includes appropriate Public Liability Insurance (we recommend minimum cover of £2,000,000).
All beds and upholstery must comply with the Furniture (Fire) (Safety) Regulations 1988 (all upholstered furniture purchased after 1st March 1990 should meet these requirements). The only exception to this regulation is furniture made and/or re-upholstered before 1950.
The Gas Safety Installation and Use Regulations came into force in 1994 and state that an annual safety check must be carried out by a suitably registered engineer. All appliances must confirm to the current legislation and be maintained safely. For further details please contact your local Health & Safety Executive.
All owners have a duty of care to ensure electrical systems and appliances are well maintained at all times and must (at least) carry out a visual inspection each year to check for general 'wear and tear' and other potential defects.
It is recommended that a Portable Appliance Test (PAT) be undertaken by a suitably qualified engineer on a regular basis. Any new installations or alterations must be undertaken by a qualified electrician and formally approved by a member of the National Inspection Council for Electrical Installation.
FIRE RISK ASSESSMENT
As a landlord you must ensure that your property has a clear means of escape, warning systems installed and appropriate fire fighting equipment available at all times. Statutory records must be kept to verify annual equipment tests and ensure fire certifications are always up to date.
To enable this process to be completed effectively we recommend an independent contractor undertake a risk assessment at your property, supply and install any required fire fighting equipment, maintain a log book, issue a fire safety certificate and provide a leaflet of instructions for your tenants on what to do in the event of a fire. The contractor will also carry out an annual inspection of your property to ensure that you remain compliant and will implement any changes should the laws governing fire regulations alter.
Your property will require the following equipment:
A Smoke Detection System - we recommend a 10 year lithium battery smoke alarm to BS standard - a minimum of two smoke detectors will be required.
Carbon Monoxide Detector - (Properties with gas or oil supply only) Fire blanket 2kg Dry Powder Extinguisher for small kitchen fires Water Fire Extinguisher - will only be required for properties with an open fire or properties that have a thatched roof Access statements
It is a requirement of Visit Wales that each property is assessed for accessibility to disabled visitors. An example of an Access Statement is supplied within this guide.
Owners should be aware that there are tax implications for revenues accrued from holiday letting. We strongly advise that prospective owners seek professional advice with regard to this position. There is an Inland Revenue booklet Taxation of Rents; A guide to property income (Practitioners Series, IR150) which gives more details. Your local tax office will normally supply this booklet on request.
Non-Resident Landlords Scheme (NRLS)
The NRLS is a scheme for taxing the UK rental of non-resident landlords. It applies if any owner or landlord has a "usual place of abode" which is outside the UK. If you are either live overseas, or are moving overseas, or spend more than six months a year away,
then you will be affected by the NRLS. With partnerships and jointly owned property, the "usual place of abode" must be established for each partner.
As a UK letting agent we are required to deduct basic rate tax from any rent collected for non-resident landlords, unless HM Revenue & Customs (HMRC) tells us not to deduct tax.
A full NRLS fact-sheet is available on request with further details available from the HMRC website www.hmrc.gov.uk/cnr
Withdrawing the Furnished Holiday Letting Rules from 2010-11
In the Budget on 22nd April 2009, the then Chancellor Alistair Darling announced that the favourable tax treatment available to furnished holiday lettings (FHL's) is to be abolished in April 2010. This will affect income tax, CGT and potentially IHT.
Currently a home qualifies as a holiday property if it is furnished, being run as a commercial business and available for rent to the public for at least 140 days per year. It must also be actually let for at least 70 days per year.
The Budget 2010: Furnished Holiday Lettings (Update) - Tuesday 22 June 2010
The furnished holiday lettings rules (FHL) will not be withdrawn from 6 April 2010 (1 April 2010 for companies).
Since 22 April 2009 (Budget 2009), HM Revenue & Customs (HMRC) has applied the current FHL rules to UK taxpayers with qualifying holiday lettings situated elsewhere in the European Economic Area (EEA). Such businesses can currently choose whether to be taxed under the FHL rules or under the normal rules for property businesses. These arrangements will continue to apply for the tax year 2010-11.
The Government will publish a public consultation over the summer about plans to change the tax treatment of furnished holiday lettings from April 2011. The consultation will specifically look at a proposal which would:
Ensure the FHL rules apply equally to properties in the EEA
Increase the number of days that qualifying properties have to be available for, and actually let as, commercial holiday letting
And change the way in which FHL loss relief is given
Full details about the proposed changes will be published over the summer. Draft legislation will be published in the autumn, with a view to inclusion within Finance Bill 2011. For more information see below HMRC's announcement or go to http://is.gd/cZeO5.
After the FHL rules are withdrawn, tax relief will still be available for losses incurred through letting furnished holiday accommodation, but the way in which those losses can be used will change and it will no longer be possible to set these losses against "other income". Instead, they can only be set against profits from the property business and carried forward to subsequent tax years.
The draft legislation indicates that FHL losses arising in 2009/10 will be treated as a property business loss, which effectively means that the favourable loss treatment has been withdrawn from 2009/10.
From 6 April 2010 expenditure incurred in providing plant and machinery for use in a FHL dwelling house will not qualify for plant and machinery capital allowances.
There will be a continuing entitlement to claim capital allowances on the remaining balance of your capital allowances pool, but not on any future additions. For future capital expenditure relating to fixtures and fittings and furnishings, there will be the 10% wear and tear allowance (being 10% of gross income less rates) as for other furnished lettings.
From a planning perspective, therefore, it would make sense to accelerate capital expenditure to pre 6th April 2010 in order to get capital allowances. Claims under the Landlords Energy Savings Allowance (LESA) will still be allowed.
Division of profits between Married Couples/Civil Partners
Because the income from furnished holiday letting is currently considered to be "trading" income, it has been possible to divide this income between owners in such a way as they choose. Normally this would be to allocate losses to the higher earning partner, or profits to the partner with the lower income.
In future, for jointly owned property, owners wishing to share profits/losses unequally will need to either change the beneficial ownership or put in place a Declaration of Trust which will require the services of a solicitor. You will also have to make a joint declaration in writing to HMRC for income to be taxed in accordance with the beneficial ownership of the property. Even so, it will be impractical to alter the beneficial ownership annually just to allocate profits or losses in the most beneficial way.
Capital Gains Tax
FHL activity will be considered to have ceased on 5th April 2010 so that it will not be possible to claim any of the capital gains tax reliefs available for the disposal of business assets from that date.
Entitlement to entrepreneurs' relief may continue for a further three years from 5th April 2010 if a property is sold in that period under the normal entrepreneurs' relief rules for the sale of property within three years of the cessation of trading.
The draft legislation states that gains previously rolled over into the acquisition of a FHL property will not be affected by the repeal.
IHT business property relief applies only to non-investment businesses, where the conditions for relief are satisfied. As short-term letting of furnished holiday accommodation is primarily an investment activity it would not usually qualify. More detailed guidance on BPR can be found on HMRC website at http://www.hmrc.gov.uk/manuals/ihtmanual/IHTM25271.htm
These rules remain unchanged. If the property is available for letting for more than 140 days in the year, it will be liable for business rates rather than council tax.
Points to consider
If you currently split income other than 50;50 (assuming equal ownership) - then you may want to accelerate or defer revenue expenditure such as repairs and redecoration, to alter the level of profits arising before and after April 2010. If you intend purchasing any new capital equipment or if furnishings and bed linen etc need replacing, then this should be done before 5th April 2010 so that the expenditure is covered by the Annual Investment Allowance (a 100% capital allowance on annual expenditure up to £50,000), which will be lost after 5th April. Any major capital improvements need not be accelerated unless it would qualify for capital allowances - things like extensions, loft conversions and complete renovations would not attract capital allowances and would be carried forward until the property is sold in any event. If you let your property out for more than 10 weeks a year but less than 20 - you may currently choose to make it available for more than 20 weeks just to get the beneficial tax treatment for Furnished Holiday Letting. This also means having to pay business rates, which often worked out cheaper than 90% council tax, but this was before the revaluation for business rates, and we are yet to see the outcome of that. Some people would rather pay council tax, as this can confer certain other benefits such as free rubbish collection or preferential mooring rights. In the future, you can make this choice by limiting the availability of letting, as there will be no tax breaks to protect.
The above is not definitive and may be superseded without our knowledge; therefore you should always consult your accountant before making any decisions on letting your property...