VAT related Renting Questions - can anyone help?

ChinUp_2

Hi there,

I am planning to rent my house out via a letting agent who runs her business from home. The business is NOT vat registered so I will not have to pay tax on top of the management charges.
If a company is not vat registered is this a good/bad thing? The business is only 9 months old and is family run. Is this risky at all? The business is in my local area, has a website and the lady running it is very proffesional and has a lot of experience/knowledge.

My second question is I have heard that I can claim vat back on items I have purchased to get my house ready to rent, e.g. paint, wallpaper, outside decking. How do I go about doing this? Can anyone recommend a website for me to look at?

thanks in advance

G_M

ChinUp wrote: »

I am planning to rent my house out via a letting agent who runs her business from home. Bad idea unless YOU are VERY experienced yourself The business is NOT vat registered so I will not have to pay tax on top of the management charges. You will not pay VAT to the agent but you will pay other taxes: income, CGT etc
If a company is not vat registered is this a good/bad thing? Are they a member of a recognised professional body? ARLA? I bet not!The business is only 9 months old and is family run. Is this risky at all? Yes.The business is in my local area, has a website and the lady running it is very proffesional and has a lot of experience/knowledge. Maybe, but still risky.

My second question is I have heard that I can claim vat back on items I have purchased to get my house ready to rent, e.g. paint, wallpaper, outside decking. How do I go about doing this? Can anyone recommend a website for me to look at?

thanks in advance

For details of tax payable and allowances see the gov website here

ChinUp_2

Thanks GM.
I am not experienced with renting, the agent has 50 properties on their books (not all ones that they manage). I don't know if they are a member of a recognised body, I will have to ask.
In what way is this risky for me? What could happen?
Thanks

G_M

ChinUp wrote: »

In what way is this risky for me? What could happen?
Thanks

They might not know what they are doing to the extent that you believe.
They might become overworked and not provide the attention to detail needed.
They will not have a code of conduct that goes with membership of a profesional association.
You will have no comeback via a professional body if things go wrong.
they might go bankrupt owing you money.
they might simply cease trading (as 3 out of 5 new start up businesses do in their 1st year) leaving you out of pocket
They will not have the same marketing coverage of a larger company to attract tenants
They might be tempted to get a tenant installed fast in order to earn tenant-find fees, and subsequent management fees, rather than waiting and selecting a good,reliable tenant
they might... oh I could go on for ever. Just browse old threads on this site and read some horror stories of landlords having difficulties with their agencies.

the bottom line is
a) anyone can set up a letting agency - no training, no supervision, no controls, no standards and
b) as an inexperienced landlord yourself you are in no position to judge/assess them so

Pay a bit more and go for an established agency, with a track record and reputation, which has membership of ARLA or similar to provide some reassurance and if necessary come-back.

G_M

ps - whatever they are charging you, I will find you a tenant, and manage your rental, fo 0.5% less. They charge 7%? I'll do it for 6.5%.

Anywhere in England or Wales (sorry - I'm not familiar with Scottish law).

JasonLVC

Renting a domestic dwelling is always exempt from VAT.

Exempt means you are not allowed to charge VAT on your rental fee to the tenant and you are not allowed to reclaim any VAT on costs associated with the dwelling such as reclaiming VAT on whiote goods/painting, etc.

A letting agent which is not VAT registered is a GOOD thing because it means they will not be adding an extra 17.5% on top of their fees - but it also suggests they have turnover less than £70k which may mean they are small, have insufficient income streams, etc.

clutton_2

just because a business is small and newish does not mean it is necessarily worth avoiding.... i manage others properties and work from home so can afford to be cheaper as i dont have huge overheads...

if you are considering using her - ask for a few current landlords as references and to talk to them at home and ask all the questions you want .. this wil not stop her being useless with other landlords, as she is not going to give you poor quality clients.. but then life is full of risks....

give her a go.. ask for her Landlords pack and read it very thoroughly... if there is anything in there that you are not sure of come back here and ask us..

if she does not have a LL pack.. go somewhere else as there will be no definition of what service she is providing you with and so disputes will be difficult to settle as there will be no parameters


you cannot join ARLA till you have been proving your business history for a while anyway

good luck

tbs624

ChinUp wrote: »

Thanks GM.
I am not experienced with renting, the agent has 50 properties on their books (not all ones that they manage). I don't know if they are a member of a recognised body, I will have to ask.
In what way is this risky for me? What could happen?
Thanks

Even if you use an LA, it's wise to fully familiarise yourself with what letting out property entails. Join the NLA/RLA/Landlordlaw and start reading. (Fees tax deductible, discounts on LL insurances) Don't accept at face value anything that emanates from an LAs mouth. Newbie LLs are at the mercy of greedy LAs and "professional" Ts, both of whom will be only too happy to take advantage. An LA works for you, in your name - you need to understand what it is they should be doing and be knowledgeable enough to ensure that you comply with your legal obligations as the LL. Pay particular attention to the vexed issue of "renewals/admin fees" payable by both you and your T.

You don't need to have any qualifications, training or specific knowledge/experience to set yourself up in business as an LA handling thousands of ££s worth of LLs and Ts property/money.Wrong, isn't it?

What could happen, when using an LA?

Have a look here & here (same LA, different reports) here , here , here , here , here , here and here , here , here.........