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dino v

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  1. Agree on this and the LHA impact. In our recent refurb, we got £50 more than I'd initially expected in rent, mainly because we advertised it at the LHA rate. There were a few initial comments that it was more expensive than others in the area, but they'd generally been up from before lockdown and were quickly snapped up. I didn't see a lot of reasons to rent it to a private individual for less than we could have got by taking in someone on LHA, as usually private rents are slightly higher. Especially the case as it was newly refurbished, so may have accepted a bit less if it had just been a clean following a previous tenant. May take another few months for the impact to properly filter through, but holding LHA rates for so long and then bringing in a fairly big increase is going to cause worse rent inflation than if they'd just kept to LHA rate rising in line with inflation all along. Private rent usually rises in line with wages, but the LHA change has just given it a shot in the arm regardless of wages.
  2. What I mean is that if you're buying under your own name, there will be income tax to pay on the rent after allowabe expenses. Mortgage is no longer an allowable expense but there are other allowances. Key point will be whether you are in the 40% tax bracket after you add in the rent from this property. Look up the rules on section 24 - we invest via a ltd company, so I'm not fully up to date on everything S24 related. Alternatively, if you go through a ltd company, you can claim the interest part of the mortgage as an allowable expense but will pay corporation tax on any profit (19%) and may then have tax implications when you come to get the money out. You'll also need an accountant. If your plan is to sell any properties, the CGT treatment is different whether private or ltd company. Worth spreaking to an accountant to understand the best way to go, but look on YouTube for videos by Optimise Accountants, as they've done a lot of worked examples on which would be the best route depending on your plans. Key thing is to be aware of whatever tax when working this out for yourself, particularly if weighing up returns vs and ISA/pension, as it can be a real drag on ROI.
  3. Not sure what's included in your renovation costs, but you'll probably need to pay the council tax whilst it's empty. If it's all cash, then probably no real costs, but if borrowing anything, remember to include for the finance costs of that. You'll also have another set of legal costs when you remortgage, plus survey and if through a ltd company you'll need independent legal advice. Aside from that, if you're confident of the resale costs.and your refurb costs are accurate (unless there's anything structural, they should be ok depending on the cost of the loft conversion) then you've found a cracking deal. You usually find things being sold for £75k needing a refurb will only be worth £100k when done!
  4. Are you just doing it in your own name, i.e. not through a ltd company? If so, you'd both just need to do a self assessment return. You now get £1000 allowance each, so if your costs were less than that per year, you just put in total rent (your share), claim the £1000 allowance and pay the tax on the rest. If costs are higher than that, you can record all the costs and fill them in against the correct codes. A fairly simple spreadsheet will be enough to record it. @Rob D used to have a good spreadsheet you could buy on his Property Geek website, but I don't think it's still there. It was part of a whole load of resources, a number of which are now free in the university, but included a few spreadsheets. It was about £250 but was worth every penny for the spreadsheets alone, particularly the accounts one as that puts everything in the right format to type into the self assessment return. Might be worth contacting him to see if he still sells the spreadsheet.
  5. Starting backwards, don't but student apartments with 'guaranteed' yields. What do you reckon will happen if courses are online next year and there's no students? And you can't change and put a working person in it. There will be little capital increase in value either. Go on any of the auction sites and you'll find lots of student pods available for about £10k, because the only buyer is another landlord or a student. For the rest, I'd suggest you work through the property hub university stuff. You need to become clear in your goals and strategy otherwise you'll get nowhere. If you're on Rightmove looking for anything from new build one bed flats to tenanted HMOs in any location then pretty much every property could be a deal. I'd also suggest Rob Dix's book, the complete guide to property investing to help you find a way forward.
  6. Since you know St Helens (& Leigh) why would you look to move? Accrington has no more fundamentals than those areas and isn't any cheaper, so you'll probably do a lot better specialising in an area where you know the agents, streets etc and can create your own team of plumbers etc to get work done more cheaply. If you do want Accrington, I'd highly recommend the agent we use around Burnley - RPC Lettings. They're a really good agent, know their stuff and know their tenants and as it's family run, there's very little staff turnover. They cover Accrington, so would be able to manage anything and also give some advice. Would also be worth speaking to Darren McNeil of FMP on here, as he sources and manages properties in Accrington. Other than a good chat with him, I haven't used his services but you can read about his journey in the progress section as well.
  7. He carefully mentioned 'main residence' in his speech, so it definitely won't apply to the additional 3%. Assume the standard rate on something between £125k & £500k would be zero though, so only 3% in total.
  8. I currently use two local only agents and one national chain (came with house with existing tenant) and am just about to let a new property with an online only agent. The local ones are great - staff turnover is low; they know the area and can help with the property and one in particular has been basically a sourcer for further properties. One of them has a pretty good online system, the other is still emails with attachments but both systems work because of the people. The national chain has a local office that is both sales and lettings. When I first bought the property, I tried to build a relationship with the letting manager to say I was interested in similar properties in the area that they would take on as manager. Within a month, he'd moved to another branch. Started contacting the new lettings manager. Couple of months later, she'd left and someone new again. What's been more of a problem has become evident over the last few months. Although they've got a local office, the management is done by someone at the other end of the country. I've then agreed something with them only for the local manager to discuss something different with the tenant. The accounts department is somewhere else, so they started chasing the tenant for late payment despite me agreeing with the remote manager that they could have a holiday. For 14% incl VAT, useless. I'm trying an online only agent for the next one, as it's not local to the agents I like and they were a lot cheaper. So far, not impressed. It's clear there's no one local and no one knows the area. I suspect viewings are done by Viewber or similar, so no idea what the prospective tenants really think and if anyone is answering any questions. Whilst they have fancy property management systems, my property has still not been added, I suspect as they don't have enough staff to keep costs down. I'm also having to constantly chase to find out what's happening and suspect if I stop chasing, they'll ignore it. I'll see what it's like once the tenant is in, but currently wouldn't use them again. So from my experience with 4 agents, find a good local one and use them, they're worth every penny.
  9. It depends why they went into arrears. If they were furloughed, they may well not be back in work yet or only going back part time from next week. They may also be at one of the many companies at risk of redundancy. They still owe it and it works so no harm to speak to the agent to see why they got the break in rent anyway, as that may give a better idea of whether they are likely to be able to pay it yet. That they've already paid back half suggests they're aware it's still due and will pay it back when they can, so be careful not to start putting pressure on needlessly as it won't help the relationship. They sound like a decent tenant and they probably view you as a reasonable landlord.
  10. Gold has absolutely no intrinsic value, other than people have been attracted to it for years. In the event of total Armageddon, clean water is likely to be worth more as one will keep you alive, the other will make shiny trinkets. Plenty of people invest in gold, so you're not alone, but you're betting on a total crash of the system. If that doesn't happen, you'd have been far better off with a tracker fund and property. If it does, well your gold will be worth more than Apple shares and a terraced house in Middlesbrough, but there's every chance the future would bleak there was nothing you could do with anyway. Although I suppose you could fashion a crown for yourself
  11. Difficult to work out exactly what's needed from the photos e.g. couldn't tell if windows were aluminium or just dirty UPVC. Again, didn't look like it needed a DPC but always impossible to tell from EA photos. Some of the prices then seemed almost reasonable, assuming the work needs doing e.g. £1600 to replace a flat roof. We've had one replaced recently and the quotes were around that, although ended up paying a couple of hundred more to change it to a tiled pitch roof for less future issues. That said, on the grounds they would already be on site, I'd expect them to be cheaper than someone turning up.to do just that. Then I saw the price for the heating system! Are they planning on replacing next door's as well? Again, it should be even cheaper than a normal quote since the rest of their schedule requires them to be doing a lot of the work that would be needed for just the heating. It's like they've priced each job up as if you were just getting that trade in to do their work and then put it right afterwards. And then added about 20% mark up. It's always difficult to put a price, as it depends on the finishes required, but windows aside, that looks like it needs new flooring, painting, tile the kitchen splashbacks with something trendier, possibly a new bathroom suite (looks beige on photos). That's probably about £5-7k depending on quality of carpet etc. Roof probably just needs a bit of work unless it's visibly gone, so then just the windows. Never done them on a bay, so could easily be a few grand. Even then, you're talking £10-12k all in. Full refurb (back to brick) I'd expect to be around £20k, maybe towards £30k if it was a £500k+ house in London. For £50k+ I'd be expecting an extension as well.
  12. A bedroom has to have a window, so you'd need to allow for that which would impact the outside of the building and may require planning permission. No idea what the price is like for the area (I'm mainly laughing at the idea of paying that much for a studio), but is it the right price? Everything will sell if it's priced right but depends how keen you are to sell. Don't know the area, but Zoopla is advertising one beds for less on your advert, so feels expensive unless it's in a much better area or is a lot bigger. In terms of moving the kitchen, the boiler could stay in there. It's not ideal having a boiler in a bedroom, but it's pretty common. Make the cooker and hob electric and the only issue is the waste from the sink. If there's no drains on the left side of the building from the floorplan view, then it could be difficult to get the pipework in. The only other thing I can think of is to put a sliding wall in the main room, so that the bedroom can be closed off to provide privacy and a better look when in the lounge area, but it's still technically a studio flat
  13. Speak to your mortgage broker - you may find that many lenders wouldn't lend due to the unit. Even if it's ok at the moment, it could become anything in the time you own the house, which would make the lender nervous as it could devalue the house.
  14. That assumes that gold, or silver, has an inherent value, which it doesn't. The only value it has is in what other people will trade it for. People will buy gold either to display their wealth or because they believe it is a good way to store it. But you can't eat it, you can't live in it, you can't even make much with it (apart from some bits in electronics). It's only value is because it's rare - Napoleon used it for his 'cheap' cutlery, saving his aluminium cutlery for his distinguished guests. I personally go for cashflow as well, but not because I don't believe that property is a store of wealth. I just don't want to speculate on it beating inflation and then having to sell the asset to realise it. I'd rather have the cash each month that I can trade for what I want/need. If you believe the economic system is liable to collapse, even cashflow is pointless, as there's no way rents would rise quickly enough in hyperinflation and if property values plummeted, why would anyone rent? At that point, rent to rent is the only strategy that would have made sense, as you'd get the cashflow now with little investment and them walk away when it all collapses. I think if you want the growth, an ISA/pension is probably better, as it'll generally outstrip inflation as well and doesn't have the purchase costs or CGT liabilities. You don't get the leverage, but I suspect they win anyway.
  15. They may be all different, but we've had one with Barclays for about 20 years now (included a move, so technically 2) Basically there's two bits to it. The first is a standard mortgage, where you borrow an amount and it's on a repayment for 25 years or however long. The main advantages are that you can offset other accounts against the balance, so current account and savings pots. You don't get any interest but you save the interest on the mortgage, which is usually better. As it's saving rather than earning interest, there's no tax to pay either. You can use the offset to either reduce the amount you pay each month or reduce the term. The second part is that you have a mortgage reserve account. That allows you to draw against it up to either the maximum you wanted against your property or the maximum they'll lend you personally at the same rate as your mortgage, so a lot cheaper than a personal loan. So say you had a house worth £300k with a 90% mortgage, they'd lend you £270k. If your salary is £100k and they'll lend you up to 3x salary, that would be £300, so the maximum would only be £270k, the house value at 90% LTV. If when you bought the house you actually had a £100k deposit, your mortgage would only be £200k (£300k purchase minus deposit). You would therefore be able to draw down the difference in your reserve account i.e. £70k. They review it every few years, but it increases as you pay down your main mortgage. The reserve amount needs to be paid back by the time your mortgage term ends, so you need to consider how you'll do that. You can pay into the account monthly or drop lump sums in to pay it down as you wish, but it would be very easy to borrow, blow it on a car and then have a problem. Use it for a BTL deposit or cheap bridge for a BRR though and it's a great way of getting started.
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