Anyone a landlord ?Buying my first rental property

bilabonic

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Hi All

Had my eye on a second hone for a while and spotted a house near me so know the area.

It is a repossession and needs a little work. It was up for 70k then 65k and last week dropped to 59k.

After a bidding they have agreed on 55k.

My mate who is on sick and always rented houses wants to move in asap.

Is there any sites/books out there about being a landlord.

Anyone got any advice ?

It will be regarded as an income, how can i keep taxes low ?

Cheers
 
Think i will go for this one, has good reviews -

[ame=http://www.amazon.co.uk/Successful-Property-Letting-Money-Right/dp/0716030195/ref=pd_sim_b_1]Successful Property Letting - How to Make Money in Buy to Let Right Way Plus: Amazon.co.uk: David Lawrenson: Books[/ame]

Soon get to grips with it :proud:
 
It's possible that the new government will hammer landlords through indirect taxation. If your son is going to pay you cash you may just avoid any excessive taxes.

Anyway I hear the maintenance of properties is extremely high, it really should eat into any profits that you make ;)
 
receipt...receipts ...receipts!! keep them. You can offset any income against any maintenance bills and interest on mortgage (ensure you only get an interest only mortgage not repayment).

Also - any loss can be carried forward (accountant told me this).

Dont forget you also need to register with tenant deposit scheme
 
Make sure you get a tenancy agreement, an assured shorthold one should be easy emough to buy off the internet. Even though it is a friend do it properly.
My friend has started serving people with eviction papers when he signs them up on the first day. Only actioning them if he needs to. It took him 6 months to get an old tenant out they had help off shelter free lawyers etc.
As above make sure you keep any bills they can be off set against the profit you make and mean that you'll pay less tax.
Trust me there won't be much profit in the first place.... Been there done that.
The only real way to make money out of it will be in capital appreciation. But if the rumours are true and the new government shifts all of the tax breaks then the profit on this end will be chewed up too.
I personally have moved on to buying doing up and selling. Just a couple a year to bolster my income. Using mine and the wifes current tax allowance. £20,000 per year before you pay any tax. It sounds like you've bought well so I would consider looking at this. £10 grand in the bank now. Or work for 5 years and then have all the profit heavily taxed.
Sorry to be glum
Wizbit77
 
Wizbit77 may be glum but there are loads of us landlords that are not glum :)
Certainly now is the time to put money into property as its far better than having it in savings in the bank! Time to buy cheap and aim to gain extra income. Yes you can get bad tenants, but the profits are there to be made and more often will cover the odd loss.
My advice would be to never use agents, do it yourself, and yes keep receipts for everything (including your own maintenance at home). Landlords may have to pay high tax but there's lots that ends up tax deductible so you can gain a better lifestyle ;)
 
@ pinkhelmets. Not saying it doesn't pay, i'm just finding that turning a property quickly is paying better than pandering to tenants for 5 years. And I do think that Cameron and Clegg are going to come down very hard on everything taxable. There already threatening to do it, stating that "the economy is in an even more dire state than they had realised".
@ Bilabonic. Would also recommend getting a good local accountant. It will cost you a few quid (mines about £180 a year) But you'll easily save that in advice and making the most of what tax "fiddles" there are. Plus if you really do start making a few quid you'll have to start putting a tax return in anyway.
Wizbit77
 
I will be buying the cash and have no children, i could renovate and sell on but want to rent atm.

It is partially converted to flats but the previous owner ran out of cash.

I will be having a council cheque from mate straight away and he will not hassle me for things.

He will be renovating whilst living there and is a plasterer by trade.

Another mate also wants to share with him and pay me £50 cash a week.....

Just seemed like a no-brainer for me..

Wait and see, just want to dodge mr tax man, i understand to can claim 10% wear and tear ?

I hink it may be worth getting an accountant to do the income tax form.
 
Get proper landlords insurance, normal insurance is no good and they will not pay out once they find out it is a let property.

gas and electric have to be tested yearly.

you need to decide if your going to claim for petrol and car expenses or by the mile, off the top of my head it's 40p a mile. I claim mileage because I work in London and do 60 odd miles a day round trip for my work and I claim 6 miles a week round trip to visit my tenants (havn't seen them in ages though :) ).

£20 a week for an office in my house.
bought a laptop claim 33% 1st year, 33% 2nd year, 33% 3rd year, 33% 4th year then buy a new on 5th year so claim tax on 132% of the original cost.
Got married last year so will be using Goldie's tax allowance next year as will pay her to do all the paperwork.

I also run a hmo for my father who has several propertys and claim the mileage every week to collect the rents for him.

A chartered accountant is good because they will stay within the law and you won't get hassle later off the tax, I get mine cheap because he does all my fathers stuff for him.

I have attached a sample letting agreement, Just delete/change the bit's not applicable.

Councils are getting really hot now so if your going to do this in a slap happy way then don't bother because they will be over you like a rash.

When I took over my fathers hmo had to rewire the house, fit a new kitchen and redecorate from top to bottom.

They have served him with notice to do up one of his other houses and they want a much higher standard than they supply themselves as council housing. At this house my father charges £550 a month when the going rate is £750 pcm so he is going to do the house up then get rid of the tenants in August when the ast runs out and let it for £700pcm to new tenants. My father has no mortgages and the houses are his pension fund so he could afford to let cheap but now he is having to dip into his own pocket he will be charging nearer market value to recoup his losses.

He is planning on doing a few of his other ones up as well and raising all his prices to nearer market value.

When you let the house to friend or strangers always plan for the worst when they go or you may get a few expensive shocks.

If you get a decent (chartered accountant) and claim for everything then your tax bill should be negligable anyway without the need for lying and scheming. The only people that get screwed by the tax are people on paye and numptys that try to be clever and outfox themselves.
 
How thorough are they on claiming expenses ?

Do you need a receipt for EVERYTHING ?

The house is fully rewired and has meters on gas/elec.

It is only a 5 min drive for me so what expenses could i claim, should i tell friends/family to keep their reciepts...lol

How do chartered a/c work, is it a set fee, do you just see them at certain point in year when you need to do tax form or is it ongoing ?

When do these forms have to be in by or will a/c sort it ??

What prices do they charge approx?

Cheers
 
By they I presume you mean the VAT man. We run two businesses and used to have 5 HMO's. We've only had 2 VAT inspections in 20 years. From the looks of things if you don't go mad and make sure your paying something each year they don't mither you.
As a rule you can't claim if you don't have a receipt. You can put down a certain amount for casual labour but I think that this is one of the figures that may attract attention if you get carried away. A good accountant will be of help here.
If you are doing it officially you will have to get the wiring re-checked by a proper electrician registered with NICI or something like that and a landlords gas safety check to cover every gas appliance. Depending on current regulation you may have to change the doors to fire doors with a self closing mechanism and also have a permanently wired smoke alarm. Although the regulations seem to be getting more and more each year. There are also regulations on how many bathrooms needed per person and you may have to put sinks in the rooms. It all depends on how many floors you have and how many people in the house. This article explains hmo's Houses in Multiple Occupation (HMO) - A Guide for Landlords
Don't think the mileage aspect would work for you, but again speak to your accountants. I used to put in some of the invoices for work carried out at home. Be sure and get the correct addres put down on the actual invoice. In my opinion there's no harm in putting a few extra invoices in as long as there are feasible. e.g. not 3 different sets of double glazing and an outdoor spa pool :)
Think that your accounts would normally be in for April. This is usually the tax year end. I see mine about once a month and get great advice, but we do run a couple of businesses through them so there quite happy to talk to me.
My personal accounts on their own cost me about £180. They are a small local firm but they have a really good rep.
Hope the above all helps
Wizbit77
 
I have been put in touch with another mate who i have not seen in years, was a bit of a bum tbh back in the day.

Anyway he now has over 200 houses and sorted one of my other mates out when he owed 36k to the tax man.......
 
@ pinkhelmets. Not saying it doesn't pay, i'm just finding that turning a property quickly is paying better than pandering to tenants for 5 years. And I do think that Cameron and Clegg are going to come down very hard on everything taxable. There already threatening to do it, stating that "the economy is in an even more dire state than they had realised".
@ Bilabonic. Would also recommend getting a good local accountant. It will cost you a few quid (mines about £180 a year) But you'll easily save that in advice and making the most of what tax "fiddles" there are. Plus if you really do start making a few quid you'll have to start putting a tax return in anyway.
Wizbit77

Is it not mandatory for me to do a tax return regardless ?

It is an income so tax is applied at relevant rate ??
 
To the original poster

Property is my field and can see the opportunity you have here. With regards to the conversion works, make sure planning permission has already been granted for the conversion works else you may find yourself clobbered with unauthorised building notices.

If so, you should also check for Building Regulations notices and consents for work already done. These will also help offset against tax because you can substantiate work done.

With regard to HMOs, if the property is habitable over 3 storeys and has 5 or more tenant's you will need a licence form the local authority although from what your describing I don't think this is the case here.

Also if you get students in, you can prevent any council tax arrears by getting a letter from the University confirming they are students as students are exempt from council tax.

I would suggest you get the conversion into flats completed so they become self-contained. The reason for this is that any money you spend finishing will be tax deductible in the short term and in the longer term, if planning permission hasn't been given you can get a Certificate of Lawful Use. Also if you come to sell the then flats you can do it individually in subsequent tax years spreading your profit across two tax years and therefore getting two tax allowances. You could also buy in joint names (if not already) so you get two persons allowances.

Good luck

Enticy
 
Well it's all in motion and got 16 days to pay for property and should be completed in 2 weeks.

It does not have planning for flats and the last owner has made such a mess of it i will turn it back to a standard 3 bed accommodation with little effort/spend.

I have a mate ready to move in, but still not got a clue with regards the council cheque payment, he has always rented and had the cheque (£90 odd a week) goto himself and then payed his landlord.

I would prefer it to go straight to me.

It also has gas/elec meters, but both are turned off, who is responsible for putting them back on, does he just contact a company ??

Think this is going to be a steep learning curve but you have to start somewhere and looking forward tbh....:proud:
 
Had the house for about a week now and have virtually turned it back to normal, so no HMO.

I have two tenants who are willing to pay cash, month rent upfront for bond.

I am a bit confused as what happens to council tax and who is liable ?

Anyone know ?

Cheers
 
Middle bit here:

http://www.mspi.co.uk/Landlord/CouncilTax.htm
 
Had the house for about a week now and have virtually turned it back to normal, so no HMO.

I have two tenants who are willing to pay cash, month rent upfront for bond.

I am a bit confused as what happens to council tax and who is liable ?

Anyone know ?

Cheers

Your tenant is liable for Council Tax when they move in. You will be liable for the period of time you have owned the property however you will (We do in Scotland) get a 10% discount if you tell them you are a Landlord and were decorating before new tenant moved in.
 
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