Legislation catches up on let farm cottages

Firstly, consider the capital tax issues. Are you creating a liability for inheritance tax?

A farm cottage which was once part of the working farm but is no longer needed and is now let could qualify for Business Property Relief. Speak to your accountant about that.

The next thing to do is to think about what you may have to spend to bring it up to the increasingly demanding standard expected by an incoming tenant.

And remember that the cost of repairs can be set against the rent, but improvements can't.

Speak to someone who knows the letting market in your area to advise what you do and do not need to do for the best return on expenditure.

Keep records of all expenditure. When employing tradesmen you will have a duty to check they are competent.

Before letting you must have an Environmental Performance Certificate which provides an assessment of the energy efficiency of the property.

And tell the assessor about any energy saving works you have done before the inspection.

Do you need a letting agent? Not necessarily, but Government has made it increasingly difficult for private landlords.

There are regulations for deposits, for gas appliances and electrical appliances, for water supplies, for furniture, for wood-burning stoves and flues.

Over the last two years demand for let cottages in rural Shropshire has been strong despite problems in the wider economy and greater restrictions on housing benefit payments.

Remember when budgeting, however, that the gross rent will be reduced by the costs of maintenance, repair, insurance and management.

Finally, in October this year Government required letting agents to be signed up to a new code of practice. This is something we at Balfours welcomed.

However, it does mean that if you allow a friend or family member manage your cottage letting in return for some reward, they could fall foul of the law.

Tim Perkins is a partner at Balfours Property Professionals timperkins@balfours.co.uk