Owning your own home

I've ran the numbers on similar situations before and I can't see how an average rental in London makes any profit unless you bought it 10 years ago or have already paid off the mortgage

Completely agree - in full knowledge that I am headed to the golf club thread I almost became an 'accidental landlord' a few years ago when my sister moved out of our flat. I did the maths and at best it is a low-cost option on long-term capital growth, i.e. zero yield but your costs are just about covered when you have a tenant in.

The thing is, there is a huge swathe of the boomer population that doesn't trust the IFA / asset management community, doesn't understand the equity market and believes that property is the only safe place for your pension over the long term. Given the number of investment scandals in the 80s and 90s (Allied Dunbar, Equitable Life, endowment mortgages etc etc), as well as the performance of property over that time period (particularly the golden years of BTL under Blair) I do understand it.

Are you not making 1800 a month in profit by someone else paying your mortgage even at 0% yield, just into an asset not cash? I accept there is some cost to maintaining the property everywhere but you're essentially taking on debt for someone else to service?

No, because most of it will be interest unless you've had the property for a long time. All that's happening is that the tenants are paying the bank for living at the property.

Depends if its a repayment mortgage or not. But most of it will be paying off interest, so you come away with largely nothing (except having to unblock your tenants' toilet and making sure you comply with all sixteen gaglillion new regulations added every week whilst praying that the new build flat you bought isn't stuffed to the gills with flammable material).

Silly question but is rent you get taxable

Other financial advice is available :’-D

Actually the three quarters at 1.34% up until then should mean that in reality I’m not worried

Yes, at your top income tax rate (whereas mortgage interest is deductible at 20%). Of course, it is suggested that not all landlords declare it properly.

But doing it properly would be through ltd company, make no profit so no tax.

Thanks, just curious. As a higher rate taxpayer I would have to make any money from selling the property after a few years, hoping for house prices to rise....

Oh yeah, I had forgotten that. Don't you still have issues if you want to get the cash out of the LTD though?

Something I hadn't even though about. Our flat in Glasgow has some cracks opening up that look like they might have been there previously, but proper decades ago, all flats seeing same cracks in same places, small but consistent, so either place is deciding its falling down or more likely do with with the heat/dryness/groundwater changes I guess. In the 10 years we've been there not had any movements to note.

Our building (8 flats in a sandstone + steel cored 3 storey job, connected to a row of others) costs around £300-500 a year shared between 8 units for 'buildings and rebuild insurance' through a factor. Down other end of the street which also has no underlying problems they changed factor last year and new one wants near £800 off each of them (so 8x £800 total!) suggested that was complete robbery. Apparently its because another block of flats (built a street away, different builders, different decade, different construction but same post code) had a massive claim for subsidence in around 2015 which they only finished in around 2018/ or 19, had to underpin it, resin injections all over the place, dig something out, replace all the services, roof, point the whole thing and do something to stop the gables blowing out. Probably IMO a lot more to do with the ZERO working gutters, drains and very saggy roof that stands out a mile away when first saw that particular building in about 2010, but what do I know!

Pay yourself a dividend, shares etc Im pretty sure there are ways for most of it to never see income tax though maybe some cgt

Don’t forget capital gains tax if you make a profit.

Depending on how you put the money into the limited company in the first place, you could draw against the loan that you as the director have given the company to buy the property.

If you’ve loaned your business £100k, a lot that you could get back out before personal Income tax comes into play.

It’s not necessarily the best option for all though, as additional admin costs, higher mortgage rates, no personal capital gains tax allowances can be used on sale.

sorry another vent post:
fuck me i didn’t think there would be any more cock-ups but literally 1-2 days from exchange and a must complete by Thursday next week the seller has just dropped a stinker with an undisclosed section 20 of about £8-9k that was not mentioned before?!?
If we had exchanged as intended a month or so ago we would never have known (sure somebody up thread mentioned this and the vendor had to cough up for a new roof)
spent all day studying the documents and rang the managing agents (dulwich estates) and got sent a copy of the letter to all leaseholders dated last December outlining the work involved/tender process/amounts!? plus further communications from recent months.

dont’ know if we should chip them 4k (half)/walk away/cry/kill somebody.
either way we just want this shit over with now.

Surely if they didn't reveal this during the process, up to and including exchange, then they're liable for the costs??

What does your solicitor say?

She’s gobsmacked, is going over the documents tonight as i guess tomorrow we have to make some decisions.
I’m not going to go into detail but somebody really dropped the ball on this.

Similar here. When my flat sale fell through I had a long look at keeping the flat and renting it out to stop our purchase falling through.

It was too much of a stretch anyway but even on a flat I'd bought ten years ago it needed pretty much 100% occupancy to make a return on the rent.

Assuming the solicitor has not cocked up I'd be wanting at least half the forthcoming bill off the purchase price. You'll need to get your mortgage offer amended tho which will take time.

its not ours that have missed this.

I think you'd prob just be subject to interest at HMRC statutory rate for late payment - 2.75% above base I think, accruing daily (but not compounding).

You could maybe try and seek clearance through the HMRC non-statutory clearance service if you were unsure?

That’s useful, but will clarify with them. Still no closer to deciding if it’s worth the risk - appears to be down to whether or not a lockable door provides sufficient privacy or not.

Obviously this isn't advice & the full facts do matter, but I think HMRC do accept that individual units in student accommodation can each form a dwelling (provided they have enough facilities in them) and they would have doors joining the units.

Tbh if your facts are good I'd be surprised if the downside risk (interest) outweighs the upside risk (multiple thousands saved?)

Advantage of taking advice is that it can help mitigate penalties as shows you gave due care and attention. Not a complete magic bullet but helpful

Again, really helpful, thank you.

I hear you regarding the professional advice, but would cost us about 20% of the 10k we could save. I will explore this fully though.

Given the number of investment scandals in the 80s and 90s (Allied Dunbar, Equitable Life, endowment mortgages etc etc), as well as the performance of property over that time period (particularly the golden years of BTL under Blair) I do understand it.

Property going up and trad pensions failing are two sides of the same falling interest rates coin. Pisses me off when boomers* (no, I'm not one despite how it looks to young-uns) complain about the latter without acknowledging they also benefitted from the same mechanism via property. Thinking they could have had both is having your cake and eating it.

.* the ones that own property anyway