Understanding the legal, financial, and tenancy rules for second-home ownership in Dorset.
There are many benefits to second home ownership in Dorset; it can provide a good source of income as a rental property.
The average rental yield in the UK is between 5 and 8% which is likely to be more than the interest paid on regular savings accounts. However, there are also several things that have to be taken into account on both purchasing a second home and then letting it to a tenant.
Financial Considerations for Second Homeowners
On the purchase, you will pay a higher rate of stamp duty, and you must seek financial advice from your accountant on Capital Gains Tax on disposal and income tax on the rent. It is vital that you seek advice in respect of letting the property. If you do not get the paperwork right, it can be very hard to regain possession of your property should you need to.
Legal Requirements for Letting a Property
At present, there are two options to gain possession of your property: ‘no fault’ on the part of the tenant (i.e. you may simply want to sell the property) or relying on ‘fault’ on the part of the tenant. Both procedures (particularly no fault) require you to have had in place at the start of the tenancy the correct paperwork (the correct tenancy agreement, EPC certificate, How to Rent Guide, gas safe certificate).
You will not gain possession of your property if the tenant refuses to leave if everything is not in order.
Upcoming Changes – The Renters Reform Bill
The Government intends to introduce a new law, ‘The Renters Reform Bill,’ which should come into force at the end of this year and will provide greater protection for tenants and abolish the ‘no fault’ S.21 option for landlords currently in place.
Speak to Our Dorset Property Law Team
If you’re buying a second home or letting a property, it’s important to understand your legal and financial responsibilities from the outset. Our property law solicitors in Dorset advise clients across the county and neighbouring areas, helping you protect your investment with clear, fixed-fee advice tailored to your situation.
Contact your nearest office today:
Or call us on 01305 771 000 to speak with a member of our team.
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