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Scott Child

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  1. Hi guys, just a quick few questions on tax that come up less often. BTL insurance claim, if you claim on your insurance for damage to a BTL property, do you claim the insurance payout as income and claim any contractor repair costs as expenses or do you claim neither as its an insurance payout rather than earned income? If you withhold some or all of the deposit due to losses of time, work, rent, damage or whatever, either for actual contractor costs or for your own time and hard work to clean and repair etc, does this need to be claimed as income or not as the deposit is actually to counter act your losses? Many Thanks Scott Child
  2. Hi, some advice please. A tree in the back garden of a single let property has split and fallen and damaged the tenants contents inc kids trampoline, swingset, and paddling pool. Luckily no damage to house and thank god no-one was hurt. Issues to address: i have half a tree that needs to be cut down. half a tree that needs to be dispossed of. tenants personal belongings damaged. now im guessing im liable for the tree to be cut down and the removal of what has fallen. but the tenants contents are they covered by my buildings insurance? Is the tree falling covered by buildings insurance? Is this entire thing covered inc costs of tree removal and replacement of tenants possessions? ultimately its an act of god that being a tree should be covered under buildings insurance and the tree having damaged possessions should cover that also. thanks for any advice Scott Child
  3. Hi, can you claim food or meals as an expense as a landlord? Thats the main question and now for a bit of specifics. i know the wholly and exclusively thing. You can claim travel expenses such as 45p per mile for travel (up to 10k miles). I’ve read in many places that if visiting a property that requires an overnight stay then the stay and meals are deductible as long as the stay is ‘wholly and exclusively’ for attending the property. In my specific case that I'm questioning, my rental properties are an hour to an hour and a half drive away. Ive recently purchased another BTL that requires the usual pre rental visits to take meter readings, change the locks, tidy the place up, repair minor issues ‘without improvements’, maybe a lick of fresh paint and visit local letting agents etc etc. During all of this I must have driven there maybe 10 times. I shall claim mileage but due to being away all day ive had to buy for lunch and/or dinner ‘cheap’ quick meals like tesco meal deals, mcdonalds or whatever. Can the costs of these foods bills be claimed? I believe they can, im only there for business reasons, I’m having to eat out due to not being at home solely for business reasons, they aren’t overly expensive like 5* restaurants with drink etc and are reasonable and all others costs of being there are deductible such as mileage, parking costs and repairs. Many Thanks for a response guys I know this should help a lot of people. Scott Child
  4. Hi All, Update again, the company did get up and running and the proceeds from the 90% LTV main residence loan and the remortgage of our 2 exisiting BTL’s at 75% LTV has so far allowed the purchase of 2 properties in the company name at 80% LTV with enough spare to get a 3rd in the company name in the near future. So 90% LTV is possible on main residence although far fewer lenders are available and you must meet the criteria. After all your borrowing more money and the risk is greater for the lender. 80% LTV on BTL or Ltd company mortgages is also available for experienced landlords. We decided on 80% for the company to reduced deposits needed but kept with 75% LTV on remortgage of BTL’s in own name as costs, rates and fees etc were too high and not financially viable. We now have 1 main residence which grows in value and we remortgage to release equity over time to grow portfolio. 2 BTL’s in own name generating growth and income which goes directly on our tax returns but money is available for use immediately. 2 BTL’s in our company which generate growth and slightly less income (due to higher mortgage costs as higher 80% loan and higher rate of interest) but still positive income of a few hundred a month per unit. This money is untouchable and forces us to save it but we can pick and choose how much to pay ourselves each year to be moat tax efficient. (For example, i have a good year at work and get a bonus and im at the 40% tax bracket i may choose not to pay myself any dividend that year as it will be taxed more highly with the exception of £2000 which should always be taken as its free of tax using the dividend allowance). Other brackets are £50,000 as you begin to lose child tax credits and £100,000 as you begin to lose tax free income allowance and finally £150,000 as thats the 45% tax bracket. So the company allows us to control our ‘personal earnings’ that get declared on our tax returns. Another great starting benefit from the company is that as all of the start up costs for the company’s property purchases were funded by us then the conpany has actually been loaned the money by us as owners and directors creating a ‘directors loan account’. This means if we need to take money out of the company we can do so via paying ourselves a dividend (£2000 tax free after corporation tax per year per director therefore £4000 for my household) or by paying back the directors loan which is tax free. Another example: The money we raised by remortgaging our main and 2 btl’s was about £100k. We set up a directors loan to the company so now the conpany owes us £100k each year we could take out after 19% corporation tax £4000 in tax free dividends and if we wanted (and the company generated enough profit) say another £5000 as a loan repayment. We could do this then for 20 years until that loan was repaid and not pay a penny in tax personally on that £9k per year. Or take £10k loan and £4k dividend and lasts 10 years. whatever we do, its given us options and freedom to ‘choose’ how much goes through our personal taxes. I shall always take the £4k but will try to reinvest profits and growth as much as possible whilst we are both still full time employed. it would be great to hear back from others so please let me know your experiences. Thank You Scott
  5. Hi guys, what is everyone doing regarding the new GDPR rules?
  6. Hi Guys just a quick update before a full update in a few months time. I did infact managed to get a 90% LTV mortgage on my main residence and at the exact value i had predicted 2 years earlier and all went to plan. I will however say that 90% was difficukt to achieve as few lenders are avaliable amd criteria is slightly more difficult but we managed. This has funded the company start up which is now also up and running so im now a director of my own limited company along with my wife. Ive spoke to Rob and Robs resident mortage advisor and he believes im in the best position possible due to still in employment, existing and experienced landlord already and good credit rating etc. So getting a 75% or 80% LTV ltd company mortgage should be no issue although 80% may not be viable due to conciderably higher costs. so right now we have startup money and a ltd company and are actively looking for new property. And we are just beginning the remortgage of the exisiting 2 BTL’s to raise more capital also. how are you guys getting on? Scott Child
  7. Hi, I wish to increase my tenants rent and every single place I look doesn't explain fully what to do in my situation. For some reason the management company that had put the agreement in place had failed to include a procedure for increasing rent within the agreement. I now no longer have a management company for separate reasons but their agreement is still in place. The tenants are currently in a 12 month agreement ending in 2 months and their rent is paid monthly and charged per calendar month. I wish to increase the rent in up to 8 months from now or less which will be 6months maximum after their tenancy agreement ends and rolls onto a periodic tenancy. I am at this moment unsure as to whether at the proposed time of rental increase (8 months from now), that the tenants will be on periodic agreement rolling on from the existing AST or if a new 6 or 12 month AST will be in place. So it should be straightforward in my opinion but can't find exact instructions. This is what the government website shows: https://www.gov.uk/private-renting/rent-increases It states ''For a fixed-term tenancy (running for a set period) your landlord can only increase the rent if you agree. If you don’t agree, the rent can only be increased when the fixed term ends.'' It also states: If the tenancy agreement lays down a procedure for increasing rent, your landlord must stick to this. Otherwise, your landlord can: renew your tenancy agreement at the end of the fixed term, but with an increased rent agree a rent increase with you and produce a written record of the agreement that you both sign use a ‘Landlord’s notice proposing a new rent’ form, which increases the rent after the fixed term has ended Your landlord must give you a minimum of one month’s notice (if you pay rent weekly or monthly). If you have a yearly tenancy, they must give you 6 months’ notice. The confusion: There is a current 12month agreement in place but I wish to increase the rent outside of this during the periodic term. (in 8 months time) It states during a periodic term a section 13 notice must be served but its within the agreement time (AST) that I wish to serve the notice. You can't serve a rent increase notice during an AST but can you serve it during that time in order for it to begin outside of that time in order to give more notice? Notice to be given, it appears that if I were to renew the agreement upon its expiry then it can be done so with an increased rental figure. Thus renewal being looked at leading up to the end of the agreement and increasing rent immediately upon renewal and therefore only giving minimal notice of 1 month. It also says that a minimum of one months notice must be given if paying rent monthly but then says if its a yearly tenancy then you must give 6months notice. This is confusing as the agreement is for 12months and they pay monthly. My understanding is when it says yearly tenancy that refers to increasing the rent during the agreement and must give 6months notice which is understandable considering the agreement for a set rent was signed for the full 12months. Can I just issue a letter to the tenant explaining the rental increase and give them 8 months notice and fall onto the periodic tenancy? And if a new 12 month agreement is signed then include in the agreement that the 1st 6months will be at the current rent and the following 6months will be at the new rent? Or must I issue a section 13 anyway and can that be served during the current term even if its for 8 months time outside of the current agreement? Many Thanks for your help Scott Child
  8. Hi Richard nice to hear from you, and from a fellow investor from Hemel. Ok so 1st update is my fiancé and I are now married! We got married only 2 weeks ago on June 26th in Cyprus. Now we can move forward even better as a team. 6 months have passed since my post and the the goals remain mostly the same but I'll try and answer your questions and give you an update. So my 2 rental properties are in Northampton, as you say rental yield is deminishing down south and prices are also getting high. When we purchased them it was march 2016 for completion. We got a 3 bed mid terrace house for £142k which needed some tlc (new carpets throughout, fresh paint throughout, a mega clean, bathroom resealed, new taps, all door hinges and handles repaired or replaced and the same with electrical sockets and switches). This work my wife and I completed ourselves driving up there every single night and all weekend for about 3 weeks whilst we were waiting to find tenants. This hard work stopped us losing any money due to unnecessary voids and probably added about £8k in value just due to us buying the poor condition place from another investor and now being worthy of sale to an owner-occupier. We rent it currently at £750pcm with approx £210pcm interest only mortgage. The other property is also Northampton only around the corner and was a 2 bed fully refurbed to a high standard Victorian house which we bought from an owner as as such bought at market value. But due to its lovelyness and new renovation it will rent easily for a higher sum and be more attractive to tenants aswel as not require updating for many years. This rents at £850pcm and Interest only mortgage is about £250pcm. Both were purchased at 75% LTV as this was the maximum for a new landlord. (About £42k invested on each). Id like to have bought in Hemel but as you said yields are worse. For the same total (£142k + £160k) in Hemel would only have bought us 1 house and the rent from that would be at least £500pcm less than the total of our 2. Hemel does have higher growth currently though. over 2 years in adeyfield you should have gained around 20% in growth to what you purchased at. the figures for my property since the remortgage in January 2016 are: at that time we took a 80% loan to value repayment mortgage based on a £300k value. £240k loan. By January 2018 now only 6months from our next remortgage I believe the value will be approximately £360k. So if I can get the 90% loan and at the higher value of £360k that will be a £324k loan leaving £94k after repaying the existing mortgage as we will have paid off around 10k based on last years yearly statement. You said you could only achieve 85% loan to value so wether I can get 90% remains to be seen but my broker believes it's possible and my credit rating and earnings are good. The 2 BTL's also have grown by about 7.5% last year and should be similar this year and as such will be worth about 45-50k more combined. My broker has checked and believes we can get 80% loans now as we are classed as experienced so we can pull more from the 2 due to the growth and the additional 5%. Stamp duty whilst it is entirely an additional cost, essentially it just means that future properties cost more to buy. And more needs to be outlayed. But it's only about 4K on the values we are looking at and at least it reduces the capital gains tax when selling and ultimately once it's paid, does not affect the rental margins. We are all in the same boat. Northampton is good, it has reasonable growth, reasonable yield, it's only a 50min drive if required, close to M1, big city with plenty of fundamentals such as schools and transportation and jobs. It has the university too which is expanding and plenty of private rental properties as investors like the place. listening to the podcast you realise that where you should invest does change and also changes according to the 18-year property cycle. Rob and Rob have said that London was great inthe 1st half following the recession and now it's time for the 'northern powerhouse' to take over for the 2nd half as London slows right down. So I'm concidering buying the next 4-5 properties in potentially Manchester and Leeds or at least that area to capitalise on the even stronger yields and projected growth during this 2nd half. After the next recession it may be advisable to move money back to London. We we have decided the same as most people now that the best way to move forward is to start a LTD company and purchase all future assets through that. So yes, I think you might have to look further north for the yield and the affordability. I'll update this when I find out the answers on the future mortgages and if I achieve the 90% LTV on my own home. In order to achieve I at least need to hit most of the figures (90% on own home, 80% LTV on both existing BTL's and then achieveing good new mortgages on the new purchased properties. In total we are gunna have 3 remortgages and 4-5 new BTL company mortgages all within a 6 month period and so it's scary as we don't know how good a deal or how high LTV's we can get. Scott
  9. Thanks Paul, I thought I could do one myself if necessary. Im a builder and supervisor and have to carry out risk assessments and conduct method statements occasionally. Most of the time they are done by my office. I'm also competent in most trades. However my risk assessments are more specific to building works. I know what increases the risk of legionella and ways to help prevent it but I don't have a risk assessment template specific to it, is that something you might have? Scott
  10. Hi all, I need your opinion on what my management company have said to me. They have stated that health and safety legislation has changed and landlords are now required by law to carry out a legionella risk assessment. They have advised that a professional company come in to do the assessment at nothing short of business busting fortune. So what is your opinion having read all below and what are you doing about it? Many Thanks my opinion is that this is not strictly true if at all and so I done some research and came up with this: What it is and landlords responsibilitys http://www.hse.gov.uk/legionnaires/legionella-landlords-responsibilities.htm Letting and managing agents misinterpretation http://www.hse.gov.uk/myth/myth-busting/2015/case357-consultants-letting-agents-exposure-to-legionella.htm These are from HSE website and also state: Who can assess the risk? In most cases, the actions landlords need to take are simple and straightforward so compliance does not need to be burdensome or costly. Most landlords can assess the risk themselves and do not need to be professionally trained or accredited; but if they do not feel competent, or inclined to do so, they can arrange for someone who is to do it on their behalf. Most landlords are able to understand the set of risks of running a hot and cold water system in a way that provides the above conditions; and would also be able to implement cheap, simple and effective physical control measures required to minimise the risk of the system becoming colonised with Legionella and other microorganisms. Keeping a record of the assessment Landlords are not necessarily required to record the findings of the assessment (this is only a statutory duty for employers where there are five or more employees), but they may find it prudent to keep a record of what has been done for their own purposes. Reviewing your risk assessment The law does not prescribe that the risk assessment be reviewed on an annual or biennial basis. It is important to review the assessment periodically in case anything changes but where there are difficulties gaining access to occupied housing units, appropriate checks can be made by carrying out inspections of the water system, for example, when undertaking mandatory visits such as gas safety checks or routine maintenance visits. Are domestic properties proactively inspected? HSE and Local Authority inspectors do not proactively inspect domestic premises or ask for evidence that landlords have undertaken a risk assessment. However, if a tenant were to contract Legionnaires’ disease from the water system in their home, the landlord may be liable to prosecution under HSWA, and would have to demonstrate to a court that they had fulfilled their legal duty, so it is important that they assess and control the risks (see www.hse.gov.uk/press/2010/coi-e-05.htm ).
  11. Hi Aidan, On item 3: I own shares in a number of companies in a stocks and shares ISA. This enables me to pay no tax whatsoever on any dividend income or CGT on any growth no matter how large. The only drawback is the maximum limit you can invest into an ISA per annum. However all share purchases incur a stamp duty charge of 0.5%. I believe that if any shares were sold then stamp duty at that rate would be paid on the value of shares. The property as you said will not be exchanging hands and the owner of them will still remain as the company.
  12. Hi my name is Scott, I'm 28 years old and live in Hemel Hempstead, Hertfordshire. I'm a demolition contractor and work in London. I'm also handy at most other trades. Me and my Fiancée bought our 1st house in August 2011 (aged 23) half as a refurb project and half to be our 1st experience of living together. We had saved £17k each and spent the whole lot on the deposit and purchase costs. Original plan: To renovate the property ourselves bit by bit as we saved money from working and whilst living in it using minimal contractor help to reduce costs and sell approximately 18-24 months later with a profit £20-£30k then move on to whatever we see fit afterwards. There would be no tax implications either as this was our main residence and this was just a small interest. New/Current Plan: The House has been fully renovated and we have decided to stay here. We have remortgaged and dew to 5 years growth and major improvements we have managed to pull £116k equity from the property still leaving 20% equity and purchased 2 BTL properties. 1 had been newly renovated and the other needed a good clean, full redecoration, new carpets throughout and pretty much everything to be repaired. We fixed it up and let it out after 4 weeks. Both are now let and earning approx £900pcm pre tax profit plus capital growth. One year has passed and all is well and next year all 3 mortgages will be due for renewal and we plan to refinance our main residence again and this time after 2 more years of growth too, plan to leave just 10% equity to raise more money and refinance the 2 BTL's. This should give us approximately £150k to invest and move forward. We would love to be financially free and do property full time one way or another but our 1st realistic goal is to equal my Fiancée's income from property income and therefore when we hopefully start a family in a few years there will be no additional pressure on me for more financial security. Goal 2 would be to equal both our incomes and become completely financially free and goal 3 would be to run a property business doing both flips and BTL's. I also have other finance that would potentially allow us to purchase another BTL this year too. we could purchase approximately 5-6 more BTL's within the next 12-18months vastly increasing income towards goal number 1 and then growth and income on 8-9 property's would greatly aid the future. Or I could use the £150k to buy somewhere cash to renovate with no mortgage and then mortgage once complete at a higher value in order to pull most if not all the invested money and then add it to the portfolio and let it out and move on to the next one which again we would have the cash for. This strategy is risky though as would involve quitting my job but I would absolutely love it. Anyway that's my story thank you very much. Be great to get involved in this community. Scott
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