Inherited a few rentals

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  • Flashback1966
    replied
    or just work hard and hopefully take an early retirement.

    You can't predict the future. Things always go in cycle. They want to get rid of Section 21, so you may be unable to get your property back. You may end up working and subsidising your rentals.

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  • Hooper
    replied
    Originally posted by Landlord7289 View Post

    open to potentially reducing 9-5 days per week to oversee this or just work hard and hopefully take an early retirement.
    Obviously it depends on your properties but if they and your tenants are not particularly high maintenance there is no reason that you should have to reduce your employment hours to fit in managing 4 properties. I manage 9/10. I often allow it to take up more time than it needs to - it's true that if you need a job done, give it to someone who is already busy!

    Most of my time is taken up around change overs. And then you get long periods of calm. Reliable maintenance contacts are worth their weight in gold and save you a lot of time and money as you are not reliant on agents.

    I worry a bit about where taxation and legislation are headed. But you simply don't know what's going to happen. CGT makes selling up unattractive. If that came down I might choose to sell up? (fat chance!) As far as all the obligations are concerned, as an accountant you should not have too much trouble getting up to speed on the essentials.

    Good luck with whatever is your decision.

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  • AndrewDod
    replied
    Originally posted by boletus View Post
    Different circumstances but regarding vacant possession prices from yesterdays Guardian;

    https://www.theguardian.com/politics...nistry-defence
    I think by "vacant possession" here they are not that concerned about the individual army-men but that the MoD itself has a 200 year lease. If MoD were to release those bottom-feeders who sucked out the money taxpayers have contributed then the bottom feeders would be x billion richer

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  • boletus
    replied
    Different circumstances (licence to occupy?) but regarding vacant possession prices from yesterdays Guardian;

    https://www.theguardian.com/politics...nistry-defence

    They were valued by Annington at £7.6bn last year, while their vacant possession value is estimated at £10bn.

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  • AndrewDod
    replied
    Originally posted by Piffy View Post
    I was once told that if a property is rented that reduced the valuation for probate purposes by 40% which is quite useful as I found a low valuation reduced the amount of Inheritance Tax of 40% and when I sold 8 years later I had to pay the lower Capital Gains Tax.
    I your case I would (if not already) put the properties in the hands o a Letting Agent and find out how much you should get in rent.
    I highly doubt that would pass muster with HMRC (if audited) unless it is some sort of long term tenancy from which one cannot escape.

    A small diuscount can be applied (and is sanctioned by HMRC) where there are genuine difficulties (for example in the case of jointly owned property where one has to due the co-owner for a court ordered sale - in that case 15%) - a 40% discount for having a usual AST tenant is in the joke/tax fraud category if self applied in a self assessment. Please don't encourage forum members to take risks by committing fraud.

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  • jpucng62
    replied
    Originally posted by Piffy View Post
    I was once told that if a property is rented that reduced the valuation for probate purposes by 40% which is quite useful as I found a low valuation reduced the amount of Inheritance Tax of 40% and when I sold 8 years later I had to pay the lower Capital Gains Tax.
    I think that might only be in the case of a regulated tenancy where you can't recover the property.

    Generally if you pay less IHT you will probably pay more CGT when you sell (unless it is still a regulated tenancy).

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  • DPT57
    replied
    In that case I would strongly urge you to join a landlords association and do some training, or you'll find your net profit is negative due to fines, penalties and non-paying tenants who prey on inexperienced landlords.

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  • Piffy
    replied
    I was once told that if a property is rented that reduced the valuation for probate purposes by 40% which is quite useful as I found a low valuation reduced the amount of Inheritance Tax of 40% and when I sold 8 years later I had to pay the lower Capital Gains Tax.
    I your case I would (if not already) put the properties in the hands o a Letting Agent and find out how much you should get in rent.

    Leave a comment:


  • Landlord7289
    replied
    Originally posted by Turbine Terry View Post
    1. Net profit (so after all costs and tax) – if this is low are you happy with the long term rise in property prices being your main reward?
    2. Do you have existing tenants – are they long term, decent and so not too much trouble? Or, whilst you are learning the ropes will you/ your agent have to find new tenants (finding good tenants is one of the most important things a landlord needs to do IMO)
    3. Are the properties currently managed by a lettings agent or not? Either way you will need to use a lettings agent due to location, and you should get detailed written confirmation of exactly what their service entails. It is vital that you still research and learn about what being a landlord entails in a similar manner as if you managed your properties yourself. That way you can be sure that your lettings agent is doing what they should do. You don’t have to use the lettings agents tradesmen if you don’t want to and not doing so will certainly save you cash. You don’t have to live locally to find your own local tradesmen to have on speed dial.
    4. How happy are you to have the properties so far away from you? If you find and use a diligent lettings agent and some trusted tradesmen it is totally feasible, if not ideal, to have properties located far away. Many people with holiday lets run them from a long distance and holiday lets require much much more work as the tenants/guests are turned over normally on a weekly basis.
    5. The Inheritance Tax (IHT) position and Capital Gains Tax position.
    6. What EPC grade are they – potential new future EPC regs may mean that you could have a £10k cost cap liability around 2026/2028 if they are not already a grade C – read around the forum, one link below.
    7. Are the properties mortgaged? – what type of mortgage (bound to be fixed rate) and when does the fixed rate period end.
    8. Do you have an accountant – if not you will likely want/need one with 4 properties.
    Thank you to all people who responded but thank you for a more balanced view. I am in no rush to sell all as the properties are quite low maintenance whilst running on interest only mortgages I'm in the process of transferring to me. To answer your questions...

    1. Net profit - happy with this being low for now whilst it services the mortgages
    2. All existing tenants - all long term, most are decent, some are trouble
    3. Not managed - have local tradesmen my dad was connected with but open to having them managed
    4. Having them far away isn't too much of an issue, my mum lives locally there and there are people I can call on
    5. Have some IHT to pay. Not looked into CGT but will. Any advice?
    6. Not a clue on EPC - will look into this, thanks!
    7. They are mortgaged on interest only. LTV is about 50% for the portfolio
    8. I am an accountant - used to help my dad with bits

    I like the idea of continuing my dad's legacy and open to potentially reducing 9-5 days per week to oversee this or just work hard and hopefully take an early retirement. Thank you for all responses, I am taking a measured view for now and no knee jerk reactions. I made need to sell one to cover some IHT though.

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  • AndrewDod
    replied
    Almost everything is telling you to sell them - far away, no experience, higher rate taxpayer, current environment

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  • Flashback1966
    replied
    With regards to keep or sell. Those 4 properties are not just assets, but you need to see them as say children, which need looking after. You can't switch off because you are busy. It is 24/7 responsibility, as you are responsible for the property and the health and safety of the people living. If the bath floods out, you need to send someone asap. you may be in the middle of a meeting. Even with agent, they are all different when it comes to their service.

    People have said to sell. I would suggest you wait until the tenants naturally move out or may be offer them to buy it off you. No need to evict someone when not convenient to them.

    Property has been a good investment, but it may not be so in the future with more regulation and taxation.

    Whilst you are in the 30s, may be sell one to enjoy one, but invest in something else other then property (although returns are lousy in a lot of places). You will never be young as you are today.

    Even if you build up a property portfolio, you end up loosing 40% via inheritance tax.


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  • Flashback1966
    replied
    Almost anything beats working for a living.

    Running a portfolio is just as demanding and stressful. If someone worked in an office, it is a 9 to 5 job. Their taxes are paid by their employer.


    Running a portfolio of properties, can be demanding. Even with agents in place. People need to be organized. Having bought Freeholds, people need to remember the ground rents are and when the share of insurance. Chasing up Leaseholders. Fighting greedy Freeholders. It is a multiple of skills everything from book-keeping to being a surveyor. Trying to keep up with the latest regulation. Dealing with builders who don't show up and trying to keep a tenant when they have taken a day of work. Or dealing with a tenant who think it is fair game to be abusive to a landlord.

    The question really depends if people 'enjoy' property work. I know of good letting agents who have left the sector, as they found it too tedious and paperwork oriented.

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  • jpkeates
    replied
    Almost anything beats working for a living.

    Becoming a landlord because you've inherited some property makes about as much sense as inheriting several cars and setting up a taxi business.

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  • theartfullodger
    replied
    Well, unless one was a masocist. Been retired 14 years now, those memories of work fading also....

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  • Turbine Terry
    replied
    Originally posted by theartfullodger View Post

    ... I can just about remember having that sort of view on landlording......
    Yes, perhaps my implication that landlording was "joyful" was a bit of a stretch. Joyful was not the best choice of word to use to describe being a landlord. IMO it's more often than not still better than doing a 'proper' job though

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