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Everything posted by Sam_F3

  1. @michael_heyes Great initiative, but I just want to put it out there that anyone can buy 7 houses in 2 years by overpaying on each deal (and assuming they have money to burn). Rather, much better to advertise that your properties are cash flow positive, good areas and tenants, strong ROI etc and that you smartly and prudently financed your deals to enable you to expand your portfolio quickly, and do more good deals.
  2. Basically after the end of the 4th month, either of you may provide 2 months' notice to end the tenancy (6 months minimum tenancy effectively). It appears that you pay on the 10th, so you'd give notice on the 9th of the month to end the tenancy on the 10th 2 months later. If you owe any money/damage property etc ('breach a covenant' i.e. a clause in your agreement), you are still liable despite ending the tenancy early.
  3. @jon_p I'd argue that it is implied, and you are ok, but agree the language is not great. I have used the following clause in some of my ASTs: 1.1.1. Any time after four months of the initial fixed Term of this Tenancy, either party may invoke this break clause by providing a minimum of two months written notice to the other (such notice to expire on the last day of a rental period of the tenancy). At the end of such notice the tenancy shall end and all obligations and responsibilities shall cease, subject nevertheless to any claim by either party against the other in respect of any breach of any of the terms and conditions of the agreement.
  4. Not the BOE, I'm talking high street banks. In the UK we have a system known as 'fractional reserve banking' which is done deliberately to increase the money supply. If you google it you will find some good articles going into the detail of how this works exactly.
  5. @Stuart Phillips @Vineet Gupta I don't want to get into robust discussions online either, but I just wanted to lend my support to Stuart's argument, that banks do in fact create money out of thin air and do not (initially anyway) need to borrow money in order to lend money. From memory Mervin King, former governor of the BOE provided a very good overview of this process in his fantastic book The End of Alchemy. I don't have the time to go into the detail here on how it works but if you want my credentials, I also have a masters in Finance from a top 20 institution, have worked in private equity and debt for over 15 years and now manage a US$10 billion global infrastructure debt fund focused on private credit. I'll also add that Barclays was offering a 10 year fixed rate resi mortgage at 1.66% a few months ago when the 10 year swap rate was very close to 1.60% from memory... go figure... I was tempted to break my 5 year fix (2.5 years to go) and remortgage onto that 10 year rate as it was ridiculous...
  6. No need to worry. Call a local estate agent and rent something like most people do.
  7. While the agent should do the 'right' thing, and while the tenant may be in breach of the AST (which you have not seen), this does not mean the agent will do, or must do, the right thing and enforce the landlord's rights under the AST. This article https://www.dentons.com/en/insights/alerts/2014/august/4/landlord-liability-for-tenant-nuisance would support this notion that the landlord is unlikely to be liable. Note also that the agency does not owe you a duty of care as they have no contractual relationship with you. I haven't seen your review but if it is factually incorrect, you could indeed be sued. If the review is appropriately worded and caveated and you clearly explained the situation, then I imagine you should be fine and they would have a hard time suing you for misrepresentation or similar.
  8. Agree - I'd even say 3 years is too short - most funds and financial advisers recommend min 5 year horizon and ideally 10 years. I've been investing in stocks for over 20 years and note the past 10 years have seen exceptional returns as interest rates declined to rock bottom. Most analysts believe the next decade will yield much lower returns as rates slowly normalise (though of course no one has a crystal ball so anything could happen). Regardless, stocks are not suitable for a 12 month horizon as like Dino says, when you need the money, it may be worth a lot less than you put in and you'll end up potentially losing the property while you try to 'time the market'.
  9. Great longer term option but note that the fund is down almost 15% from its high at the beginning of the year, so definitely not suitable for a 12 month horizon.
  10. 0.75% is very good, is that instant access? I use Hargreaves Lansdown's cash savings facility, best instant rate is around 0.50% at the moment. Shares and bonds are too risky over a 12 month timeframe, the last thing you need is to withdraw less money than you put in when you need it! So other than a cash account, I wouldn't recommend anything else for such a short timeframe.
  11. @wendy-t Check out my response below, hopefully you find it helpful.
  12. Congrats. I looked at Peterborough a while ago and the yields on flats were really good but for freehold houses not really. I'd love to hear what the key numbers are on your flat (post code, purchase price, expected rent, ground rent and service charges). Always great to hear market updates Thanks!
  13. I haven't reviewed the government template suggested by Mark above but I'd imagine it to be very tenant-friendly. The cheapest option for a landlord-friendly template is probably Open Rent, and thereafter probably downloading the NRLA's template.
  14. ... and the removal of lettings relief which was worth £80k of tax free capital gains (for a couple) on a BTL which was previously a main residence... that has come to bite me! And let's' hope CGT stays at only 10% more than other assets (18/28%). There are proposals to increase it to the rate of income tax!
  15. Going to small claims court is not free (I think you'd pay a £50 or so) and worst case you could potentially be on the hook to pay some of the council's costs if you lose too so you might be out of pocket your £500 plus another couple hundred maybe. Best to clarify potential costs and liabilities before turning up in court - but as you say - this is classic intimidation tactics - it's very unfair!
  16. @Mark Rocks The problem with all these guides are that they are way too generic to be of any use to an investor other than to highlight a city/town with good fundamentals that warrants further DD by the investor. Pick any location you are familiar with. Even in good areas, there will always be streets to avoid, streets that are less desirable for whatever reason, council estates which back on to a certain side of the street, schools with rough kids that scare the neighbourhood moms... I've seen it all (and in London with streets where houses sell for well over £1m). Just because a general post code has good fundamentals doesn't mean you can just go ahead and buy any property that comes up. Notwithstanding, the comments above are all good, in particular, tenant demand and tenant profile including affordability (average incomes vs average rents), how long properties sit on the market until let (and ratio of properties to let vs let agreed), and what properties are most in demand e.g. house or flat, # and size of bedrooms, garden, garage etc which will be a function of the tenant profile (you learn all this by speaking with local agents). Crime rates etc are available online, while you can look for planning applications in the street/post code you are buying (not always successfully though). Ultimately, the best information is the info that comes from locals who know the market well and can tell you what a good deal looks like in the area based on the factors above. Then providing a map and drawing boundaries between desirable parts of each post code and highlighting the less desirable parts of town where a deeper discount is required relative to comps that can be within 0.25-0.5 miles away. This then gives investors a very clear sense of where they should be focusing their search efforts.
  17. @lsaibe Let me get this straight. You bought the first flat. You found a good tenant? The rent gives you a good yield and the numbers all stack? I presume you bought the first flat with a mortgage and you had a half decent solicitor. So you have a bank valuation and you have reviewed the lease? Unless you missed a doubling of the ground rent every 10 years or cladding or some other issue with the first flat (and hence you overpaid), is there are any reason why the second flat should be substantially cheaper? If all the numbers look good, rental demand is there, you know already what the rent is and what your target tenant profile is etc, then what comfort is a desk top valuation from a third party (who probably knows less than you about the property) going to give you? You can look on Rightmove and Zoopla for sold prices (noting there is a lag, so in a rising market expect prices to be higher than recently sold) - there is no need to pay anybody to do this 'desktop valuation' for you. Don't waste your money.
  18. I'd put this back on to your solicitor. Should this have been something they should have picked up? At the very least, they should now help you with this mess (as a gesture of goodwill! not worth paying legal fees over a £500 bill)... greedy buggers these councils hey.
  19. I unfortunately don't know the answer to your query but I have found the NRLA helpline in the past pretty good. I don't know if you're a member (it's not that expensive and is tax deductible) but they may have come across this before and have alternative ideas for you. Good luck with it.
  20. @gjs The short answer is if you're after income and you're both currently and likely to stay basic rate tax payers, then there is no point incorporating a company (and assuming there will no inheritance tax issues given your overall wealth). There are plenty of articles on the subject but the books by tax cafe https://www.taxcafe.co.uk/ are highly recommended if you want to read up on it. Separately, you don't mention how much income you require and what value properties you are targeting. As you get older, obtaining mortgages may get more tricky so make sure to speak with a broker. Given how low interest rates are, interest only mortgages at a higher LTV should not cause much trouble if the tenant does not pay, plus rent guarantee insurance can help out in this situation. You may have to take on more leverage if you want to buy 2-3 properties unless you have sufficient capital from elsewhere. You really need to do the sums and see what is achievable with the funds you have available and the target income you're after - the cash on cash return (or ROI) on 50% LTV is not particularly great and may not be enough for you to live on if only 1-2 properties. Finally, 'drawing income' monthly is not a problem as tenants typically pay monthly.
  21. Not enough detail in your message to advise you (what's the rate on the 2yr, what's the rate on the 5yr plus arrangement fee, what % is the ERC?). I suspect you may be better off not exiting your mortgage because you will incur the ERC, new arrangement fee plus higher rate over the first 2 years which all up will mean that you'd probably need a pretty solid increase in 2 years to make this strategy better off (but can't say for sure without the numbers). The expectation is up to 3 rate rises this year, so work out your break even figure first and then determine whether you think it's likely that rates will exceed this figure (and even then that's not certain - what is certain though is your ERC and other charges!).
  22. Create a deed of trust and complete a HMRC Form 17? I have never had an accountant tell me there was a problem streaming 99% of the income to my wife even though we are tenants in common...
  23. @david slater Do you deduct/expense the full arrangement fee in the year you take out the mortgage?
  24. Semantics! I wasn't being literal (of course the bank doesn't 'own' 75%, I was being colloquial) but hey I see where you're coming from. The problem with your client who made that arrangement is that on a 25 year repayment mortgage at 2.5% and 75% LTV, the total repayments will exceed the purchase price. In the unlikely event the property did not increase in value (hypothetically speaking) the person paying the mortgage would have 'eaten into' the entire deposit. Anyway, no one here as offered a good way for Verity to come to an agreement with her brother, rather all we've done is shown how complicated such arrangements can be!
  25. Yes. Not that I am aware of - my accountant told me he believes the arrangement fee should be divided by the fixed term of the loan (e.g. if 5 years and the fee is £1000 then expense £200 per year) but this is a matter of opinion as HMRC do not opine on this directly as far as I am aware. My view is that if I am using the cash basis to do my return (as opposed to the accounting/accrual basis), then I should be able to deduct the full amount in the year I incurred the expense, regardless of whether I 'cash' paid it, or added it to the loan (where effectively it is cash paid but I have borrowed more to pay the fee). This is what I have done since doing my own returns and have never been challenged, but interested to hear others' views on this too.
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