Hidden Licensing Fees Property Investors Should Know About
Of course, there are different licensing fees and taxes that apply to specific properties in specific lands. It is a bit difficult to pin-point standards taxes and fees for every single property market in the world. But be that as it may, there are still some common fees and taxes that even the most seasoned property investors fail to account for when making their purchases. This is either because they are ignorant of them or because they are so minuscule that they do not register on most people’s radars.
In the UK alone, a study estimated that buy-to-let property owners should factor in about £8,359 every year for various expenses such as letting fees, marketing fees, repairs, maintenance, mortgage interest and other miscellaneous fees. In your typical market, here are the licensing fees and various expenses that most landlords are failing to add into their accounting.
Annual land tax
Okay, maybe it is not easy to forget this mostly because your local government won’t let you forget it. Even though this does not apply to many investors, it is always good practice to run a quick search on your locale to find out if there are any land taxes/rates associated with your owning a property there at all. If there are and you fail to realise so, you could find yourself facing a financial mountain in the form of ‘late payment penalties’.
Rising mortgage interest rates
If the mortgage crisis of 07/08 taught us anything, it is that your interest rates can skyrocket to a point where you can no longer sustain or keep up with your payments. Most people took a hard lesson in overextending themselves back then, but as the good times come back around, we tend to forget. Be careful when it comes to rising mortgage interest rates. You should always have some cash in reserve to cover such uncertainties and try not to overextend yourself when borrowing.
Immigration checks penalties
As things stand, landlords in Birmingham, Dudley, Walsall, Sandwell, and Wolverhampton must check to see if their tenants are immigrants or face a penalty of £3,000. This rule is to be observed in a Tory-led Government. Logically speaking, illegal immigrants can slip through the fingers of trained immigration agents and as such, most landlords are wondering how they are supposed to detect this fact without the proper training. £3,000 is a hefty fine and any landlords who fails to account for this might find themselves in a financial pickle.
Local authority licensing fees
Landlords are increasingly required to license properties with their local authorities or face a fine of up to £20,000. Every local council sets this fee at a different rate. Newham, for example, charges £500 for every new licence and £850 for any additional property. It is imperative to find out what the situation is with your local council before finding yourself ladened with a £20,000 fine.
In many cases, your chosen solicitor should be able to give you a comprehensive list of all the necessary licensing and additional fees associated with each and every single one of your properties. Do your homework on this because those penalties can be quite hefty.
If you need help in finding solicitors, one of the easiest ways to get referrals is in property network events. Many investors would have worked with different solicitors and they’ll be able to tell you their experiences, who were reliable, who were hard to reach etc.