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Joint Venture or just fixed return investment?


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At this time I have 6 investment properties and I'd like to buy more but I don't have any money left for deposits (The classic property investor story). I've already released equity in my own home and got as much out of the other properties as I can, and it looks like property prices are on a slow decline in my area so it doesn't look like there will be any more equity to release for a while. (Also note that if I were starting again now I wouldn't have invested in my local area, but 20/20 hindsight isn't going to help me now).


I should be able to save enough money for a deposit for one new property every 12 - 18 months or so (And then the hope is that the snowball effect will take over), but I'd like to see if there is something I can do now.


Getting to the Point:


My sister has a fair amount of money just sitting in the bank not earning very much, and would have been interested in investing in property like me but she lives on a remote Island in the South Pacific so it's just not practical for her (She wouldn't even be able to get legal papers signed without expensive flights to New Zealand.). I was wondering if there is something that I could do that would be beneficial to us both.


Is was thinking either:

1. One or more Joint Ventures where she supplies the deposit (Or most of it) and I find, buy, renovate and manage the property and we split the income. Or, 

2. We negotiate an interest rate (e.g. 5%) and she lends me the money long term and enjoys the interest payments. She wouldn't care what I do with the money as she wouldn't be involved in the property at all (Not that I'd keep it a secret).


However, I'm not quite sure how either of these would work from legal, tax or mortgage perspectives. For example,

  1. if we went the JV route then we'd need a mortgage. There is no way that my sister would be able to get a mortgage, so presumably that means the mortgage would need to be in my name, and if the mortgage is in my name then presumably the property would need to be solely in my name too? And that would mean that the rental income would all be seen as mine (Even if 50% of it is going to my sister) and so I'd pay tax on it as if it were my income? It's not like you do an HMRC Form 17 when the other person isn't on the deeds at all.
  2. If we went the loan with interest route then presumably the interest payments are deductible (Subject to section 24)? But what records would be required for this? Also, presumably my sister would have to pay income tax on the interest received, but as she doesn't live in the UK how would that work?


Hmmm, the more I wrote that the more I think it's a bit of a specialist problem and I probably need professional advice, but I'm not even sure who I'd need to speak to about this, an accountant or a solicitor?


Anyway, thanks in advance.



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  • 5 months later...

Hi Ben 

Bit of a late reply, but just wondering if you actually ended up doing anything with this? I'm currently in the same position and considering a joint venture with my brother. The fixed interest loan seems like the easiest way to sort it, but just wondering if you looked into it any further (or by posting on this, hopefully it will bump it up the list and someone else can share any thoughts?) 

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  • 1 year later...

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