Joint landlord advice

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    Joint landlord advice

    Hi all,

    has anyone on here done a BTL with a friend, I’ve been looking for a while but now have a friend who is keen to get on board. We’ve seen a property were preparing to make a bid on. I understand about the joint mortgage and split income tax etc, I was just after any advice or tips on how other people have done it before taking the plunge.

    everything would be 50/50 from day one and were both looking at it for a long term investment.

    thanks

    #2
    I would do it formally as a company and I'd take some legal advice (both of you separately).

    The only thing that kills an existing friendship faster than doing business together is screwing their partner.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment


      #3
      I agree with JPKeates that holding property in an SPV ensures that both directors provide 100% guaranteees for the payment of all associated costs, not least the mortgage, and even if there is a breakdown in the relationship, the liability on each continues until the assets are sold, debts repaid and the division of profit distributed after settlement of all associated tax liabilities.

      I agree that before undertaking such an arrangement you definitely need the advice from separate solicitors as that also will be a pre-requisite by the lender for any mortgage(s) and also a Chartered or certified accountant,it could prove to be the best paid for advice for what is being considered.

      Comment


        #4
        You need to make sure you're on the same wavelength to prevent arguments - target market, how much to spend on improvements etc etc.

        Comment


          #5
          There is an alternative and that is to have a deed of trust document that sets out the shares, what happens if one wants to sell, division of expenses etc etc.

          Comment


            #6
            Hi, I thought about this, however, gave it little serious thought. I think it is more hassle as people can have different long-term ideas/ambitions. Also, remember you only get half of the money. I'd rather do it with a partner, assuming she wanted to. I'd also assume if doing together there is some money problem perhaps.

            However, if you both work well together and have the same ambitions why not. But, maybe there could be later issues.

            A couple of examples, a friend of mine just brought a flat with his mum and sister, my opinion is that he made an error, because if his mother becomes to ill (which is now happening) they could be forced to sell, even at not much of a profit. They have another brother and sister, so it seems something will happen.

            You need to look at the full picture of your friend. Is he going to get you into a sticky position? Not on purpose... just something unforseen.

            My brother also had this problem with a friend. They brought a flat together (around 2005) and it went up by 50k and fell back down (2008). They made zero. They both kind of wanted to move on as they had partners, but more my brother gave up than the other. The other wanted to at least make something (even if 5k). He didn't like the fact they were coming out with nothing, where as my brother just moved on.

            Comment


              #7
              I bought a property with friends twenty odd years ago. We bought two more together, sold two together, and a couple of years ago I bought their half of the final property from them. We are still friends.

              We did not do it through a company, but we had a separate joint bank account for the properties from day one so it was always clear who had put in what. I think you need to have a similar outlook on life to each other to make it work. If you get the tenant from hell and have a wrecked property and no rental income, you either both need to panic or both be laid back about it. If it's one of each, you will fall out. It is probably also more important that you each have additional spare cash to put in if things do go badly.

              You also need a plan for what happens if circumstances change. You may both be looking for a long term investment now, but in a few years one of you may need to take money out for something else. You could draw up a partnership agreement to try and cover things like that.

              So joint-landlords? The joint part is quite possible, if you know and trust each other. Of course I would not do the landlord part now. Politicians hate us, and that is not going to improve any time soon. Find something else to put your money into.

              Comment


                #8
                Originally posted by Joe Forit View Post
                Of course I would not do the landlord part now. Politicians hate us, and that is not going to improve any time soon. Find something else to put your money into.
                I am not soo sure the above is true? I do feel, it helps if you know somethings about renovating property perhaps. The current politicians are not supportive, but you can have a Thatcher type figure again in the future. I don't agree with the above. What I will say, it could seem as though the next decade maybe interesting, with rising interest rates etc.

                Comment


                  #9
                  Originally posted by chris_guitar View Post

                  I am not soo sure the above is true? I do feel, it helps if you know somethings about renovating property perhaps. The current politicians are not supportive, but you can have a Thatcher type figure again in the future. I don't agree with the above. What I will say, it could seem as though the next decade maybe interesting, with rising interest rates etc.
                  You may be right. I can predict anything, except the future...

                  Comment


                    #10
                    Thanks for the reply guys, I have considered a lot of the above already and we’re both on the same wavelength in regards to we want long term investment and potentially more properties in the future(which we may look to a business then). We’ve also said that the property and figures need to be right for both of us and it does help that we are both quite laid back characters. The mortgage is well within our financial reach should one or even both of us getting into trouble short term.

                    it’s not going to be a smooth ride all the time but it’s something we both want to do and we see it as the fact we’re going in halves on the first one we have that bit of reassurance.

                    the main thing I was getting at with the initial question was how people worked it in regards to the joint accounts and tax and any other legalities in comparison to doing it alone.

                    The plan is to set up a joint account that we are just going to leave the rental income in for the time being and any money that we need to put in will all go through the joint account. Then split the income 50/50 to declare the tax.

                    Comment


                      #11
                      I suspect that you will find getting a joint mortgage as two unconnected adults quite difficult, and I'd start by talking to a broker to see if it's going to be possible and, if so, what hurdles will need to be overcome.

                      The mortgage market has changed a lot in the last decade and borrowing for BTL is not as simple as it used to be.

                      I'm not saying that what you want to do is impossible, but that there may be structures that are better suited to what you're trying to do.
                      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
                      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

                      Comment

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