Allowable expenses when you have LEASED a house to estate agent

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    Allowable expenses when you have LEASED a house to estate agent

    Hi All

    I have a property I would like to put on rent. It was a second home for a while, but have just renovated it and made ready to rent. A new BTL mortgage secured on it.

    However, both my wife and myself have very busy day jobs and managing it would be a nightmare. We have loads of estate agents around here that have full management scheme; whereby I give them my house and they will find tenants, do any up keep work, do inspections, maintenance etc.

    They would deduct any costs from the rent, so the money that lands into my account is after any agency fees, and repair fees etc. They will cover the rent if there is a gap in tenancy.

    My question is, will I have any allowable expenses I could claim, seeing as the upkeep and sourcing etc is done by the agent?

    I am thinking...
    - I cant claim mileage, as I wont be travelling to the property for any call outs or to collect rent.
    - I cant claim for any materials such as paint or furnishings as, again I am not responsible for them.
    - I cant claim for using part of my home as an office, or claim against part of any bills, as I am not in my "office" sourcing tenants etc.

    Only expenses I can think of are:
    - Mortgage interest relief
    - Personal rental allowance (£1k?)

    Thanks In advance!





    #2
    Such a lease to agent won't be (can't be, legally impossible to be) an AST. Even if paperwork said it was. Very very unlikely that any mortgage or landlord insurance would permit that. Check first!
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      Originally posted by trademark2k6 View Post
      However, both my wife and myself have very busy day jobs and managing it would be a nightmare. We have loads of estate agents around here that have full management scheme; whereby I give them my house and they will find tenants, do any up keep work, do inspections, maintenance etc....

      My question is, will I have any allowable expenses I could claim, seeing as the upkeep and sourcing etc is done by the agent?
      There are two ways this can operate, and I think you might be confusing them.

      Conventionally, full management is what it says on the tin. You are the landlord, the agent finds the tenants, arranges repairs, evicts poor tenants, advises utility companies and councils of changes in tenant and protects the deposit.
      Or various combinations of these services.
      I use an agent for full management and I protect the deposit, for example.

      The other type of service is rent to rent, where the agent is your tenant and they sub let to their own tenants.
      That type of scheme is appealing to some people because the rent is guaranteed by the agent, if they have no tenant, they still have to pay you.
      Which isn't normally the case with full management (although if it's a competitive market in a big city, it might happen).
      There are lots of downsides to these arrangements and most landlords won't touch them, but they are all hands off.

      In both cases, costs incurred for the sole and exclusive purpose of the business (the agent's fees and repair deductions) are allowable against income tax.

      Your mortgage conditions almost certainly precludes rent to rent.

      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


        #4
        BTL Mortgage setup fee ( if any )

        Maintenance bills incurred before first tenant moves into property.

        Tax Return fee

        Comment


          #5
          And the personal rent allowance - is not an allowance. It is a provision made for folk with a very very very low rental income.

          Never ever ever get involved in arrangements that sound like the one you are asking about "They will cover the rent if there is a gap in tenancy".

          Comment


            #6
            If you enter into an arrangement such as a Rent-to Rent, it is important to note that creating such an arrangement breaches your agreed mortgage terms as only AST’s , Formal Let’s to a Limited Company for the provision of accommodation to its employees or to a Housing Association for a period of 3 /5 years. Any variance not only puts your mortgage at risk because of failure to comply but also would invalidate your Landlord Insurance.
            Re-Reading your post I genuinely believe that that you have confused what the agent is offering, As already articulated by other posters , A landlord appoints an agent to act in the sourcing of a tenant , undertake the referencing and possibly arrange the holding of the tenants deposit. Any works undertaken are deducted from the rental etc.
            As the owner any repair / maintenance costs associated with the rental are used by yourself when doing your self assessment along with the deductions for insurance premiums and managing agent costs.
            If they are offering you something entirely different walk away since they cannot be considered as professional in failing to know the criteria by lenders for letting property.

            Comment


              #7
              I was told that if you have lived in a house and are about to rent it out you should get it valued by 2 or more estate agents to "fix" the value before you rent it. Say for instance the house is valued at £250,000 when you rent it out, and after 5 years you sell it for £300,000 Your Capital Gains Tax will be based on what it was worth when you started renting it out to what you sold it for.
              But say you bought it 15 years ago for £100,000 pounds and when you sell it for £300,000 you then have an argument about what it was worth at the date you moved out, if you had not got it valued.

              Comment


                #8
                Piffy,

                Unfortunately, whoever told you that was wrong.

                The Capital Gains Tax is simply apportioned over the period between purchase and sale, and the proportion of time you lived there (currently plus 9 months) treated as non-taxable.
                Having the property valued before letting it will make no difference to the tax paid.
                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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