chris is quite right, a decent 3 bed semi in a nice area is a sweet spot. they stay. blocks of flats can turn a good income though but are harder to dispose of and in my experience capital appreciation is less than houses. good to buy houses in the same area and not too close to your home
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Yes, the current tenant has confirmed that I don’t want to be doing this any more into retirement.
Too old for the stress. He is right royally taking the p… and knows his rights. Just waiting to see if he is claiming UC and if I can have the rent element redirected to me.
Well how crazy is this. I know someone who rents out a field and stables, subject to non domestic rates but eligible for SBRR so doesn’t actually pay any rates. She has been paid the £10,000 grant. This is more than twice the annual rental and she hasn’t suffered any loss of rent as her tenants are still paying. The world has gone mad.
Because you can offset your finance costs. You may not want to pull out any money if you have income elsewhere, so you would only be liable to the corporation tax.
Wow some interesting comments here, approx 18 months ago I decided to have a plunder into a couple of rentals by borrowing personally and some savings and run both of these through a Ltd company due to the new tax regs and being in full time employment myself so wasn’t looking to make an income now but more towards a retirement addition so to speak.
I must say I entered into it will full enthusiasm and it was something I wanted to try, I have achieved what I set out to do with 2 properties, both local so I’m familiar and comfortable with this experiment. Using OpenRent was a major god send as I was beginning to lose hope with other means of advertising, management etc so that was a big deal changer for me in the very beginning.
On a financial note as I mentioned previously it wasn’t to break any records or turn huge profits as I’m currently earning full time and personally I haven’t seen much improvement in property prices in my general area on the type of properties I own over the last decade or so but I am hopeful in years to come there will be some degree of reasonable profit?
For me personally also being full time employed although I get plenty of time to manage my own properties to a large degree and would have time to check out/attend auctions/locations etc to look at further investments I’m finding it increasingly more frustrating with the Government seemingly hell bent on making it all but impossible to turn a decent profit, with the increasing risks weighing against landlords and with an uncertain future as Governments change, I mean lets see how they are going to pay this borrowing for Covid bail outs back…CPT changes maybe??
I’m at a stage of deciding do I continue to try building my portfolio but personally I think until I gained a certain number of properties, lets say approx 15 I couldn’t make this my full time job (leaving my existing job that is), and in that middle time frame of full time working and trying to run/build a portfolio I don’t think the return to effort put in is that great if I’m honest.
Couple that with ever increasing legislation, Tax regs, general worry about what new crap will be put on Landlords etc etc I’m feeling a little disheartened if I’m honest. I truly count myself lucky so far, with great advice received and thorough checking of tenants I’ve had some great people, no real horror stories to further add to my existing concerns. I do wonder if I could have had more ROI using the borrowed money elsewhere mind, this money I wont effectively see until I sell the properties really either so some years away and if they don’t screw the landlord over further down the line?
Uncertain at this time as to which way to go personally.
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I have also been puzzled by this strategy of buying within a company where one has to pay tax twice and as you say around 38%. Perhaps someone can explain this.
Better still stop taking on all types of tenants and start living without all the hassle of renting.
Housing Benefit was superb compared to Universal Credit. With UC you will constantly be robbed with a bad tenant. I have lost 10’s of thousands on UC tenants as there is no appeal procedure and they will give you no information even if this is agreed with the tenant and the tenant signs a letter of authority allowing you access to the information.
UC is not only designed to have tenants rob you but it actually encourages this. I should know as, I have been renting to HB since 2004 and to UC since about 2015.
I started renting in 1996 and after all the ridiculous Draconian laws and establishments such as Shelter and the ridiculous amount of unnecessary paper work, I have started selling up as properties become empty and so far have three properties which are progressing with sales.
I believe very soon we will be paying for the cost of Covid-19 as the chancellor is looking to raise capital gains tax.
There are other investments out there such as precious metals and later after a big crash in the stock markets which is inevitable, you will be able to invest there.
All I can say get out of this trap where you are more than likely working all hours.
One also has to realise that they may die before they can enjoy the fruits of their labour and the tax man will be again waiting for a further 40% share of all your hard work.
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HB tenants are quite often a problem, and I will only take them now with a financially secure guarantor.
I have lost touch somewhat since I semi retired and left my portfolio in the hands of an agent, and hadn’t realised UC had changed the rules, definitely a game changer, if you focus on that sector.
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Re Clint’s query on ltd co…Depends on so many things. Eg Are you a higher rate tax payer, long term plans, potential capital gains etc. Eg if you don’t need the income now. Or if want to sell some at some point, GCT in the company would be 19%, but personal CGT would be 28% (assuming 40% band, although you’d get your £12k tax free). If you want to reinvest, or don’t need the money until you retire (when you might only be a 20% tax payer), might make sense do so it through a company. Also if you are renovating and selling, technically that’s trading income not capital gains, so you should potentially be paying 9% NI on the top if you do it personally, so a company may be better there. I’m just buying one through a company so I can pass part on to my kids more easily, although still not 100% convinced (and I’m an accountant, so don’t have the extra costs of running the company!).
Thanks Caith2 for some very interesting information. I have studied many tax strategies and there is one BICT where if you follow the trust strategy, you end up paying virtually no tax including including inheritance tax apart from corporation tax which looks excellent however, this strategy which has been going on since about 2015, has not been tried and tested and is very tempting.