My SOA

phoenix001

HappyMJ wrote: »

You still need to register to fill in a self assesment tax return each year even if the profit is zero. Tax is due even if the annual profit is £100.

What are you claiming as an expense for the property's mortgage? What was the mortgage amount when you purchased the flat? What is it now? What is the interest rate?

You say in your SOA the mortgage is £315 a month. Is that just the interest? Is the interest rate 5.04%?

Why don't you just sell the property? It looks like a liability to me.

Yes Im paying interest only. This property was an attempt to get on the property ladder and was hoping this to be a long term investment. Looking at property prices it has only increased by around 5k so this profit will get swallowed up in legal fees to sell. I would rather have a least one thing I own that may make some money for me in the future.

Googlewhacker

£850 a month on rent...ouch! Time to find a house share me thinks!

HappyMJ

phoenix001 wrote: »

Yes Im paying interest only. This property was an attempt to get on the property ladder and was hoping this to be a long term investment. Looking at property prices it has only increased by around 5k so this profit will get swallowed up in legal fees to sell. I would rather have a least one thing I own that may make some money for me in the future.

You only get £415 in rent. It's not making a profit and is unlikely to. The interest, service charges, buildings insurance and maintenance outweigh the income. Can the rent be increased? Even by a small amount. £40 a month now and another £40 next year.

phoenix001

Thanks for your advice
I will increase rent slightly when next tenant moves in, I think £40 may be a bit too much for the town its in but reckon I could increase by £25.
Why do you think it will never make any profit? i.e wont prices have gone up in 10 years?

Googlewhacker

phoenix001 wrote: »

Thanks for your advice
I will increase rent slightly when next tenant moves in, I think £40 may be a bit too much for the town its in but reckon I could increase by £25.
Why do you think it will never make any profit? i.e wont prices have gone up in 10 years?

I still don't see that to much as the issue, the issue is your rent is 45% of your income.

Could you maybe live in your house on the south coast and journey in?

HappyMJ

phoenix001 wrote: »

Thanks for your advice
I will increase rent slightly when next tenant moves in, I think £40 may be a bit too much for the town its in but reckon I could increase by £25.
Why do you think it will never make any profit? i.e wont prices have gone up in 10 years?

This is the reason to fill in tax returns. You can then carry forward your losses each year and offset future profits. Property prices will have increased in 10 years...by what amount and what will interest rates be? I cannot see the property making a profit for a long time if the rents are limited by the local market to a low level.

Googlewhacker wrote: »

I still don't see that to much as the issue, the issue is your rent is 45% of your income.

Could you maybe live in your house on the south coast and journey in?

OP did mention in first post the idea of going into a flat share.

Googlewhacker

HappyMJ wrote: »

This is the reason to fill in tax returns. You can then carry forward your losses each year and offset future profits. Property prices will have increased in 10 years...by what amount and what will interest rates be? I cannot see the property making a profit for a long time if the rents are limited by the local market to a low level.

OP did mention in first post the idea of going into a flat share.

EDIT: think I am seeing things...apologies

phoenix001

Thank you, the monthly season ticket to and from South coast (Hastings) monthly is £480 and that doesn’t include the travel from London terminal to my office (so an additional zone 1 oyster card).
I have to be in London for work events at least 4 / 5 times a month in the evening as I work in the music industry so travel home would be a issue or I would have higher petrol bills if my car was used.

I can go into a flat share if need be – To be honest it’s not something I really want to do as I’m getting older and cherish having my own space (and dread another flatshare) is but if this is the only option then I will do so!

HappyMJ

phoenix001 wrote: »

Thank you, the monthly season ticket to and from South coast (Hastings) monthly is £480 and that doesn’t include the travel from London terminal to my office (so an additional zone 1 oyster card).
I have to be in London for work events at least 4 / 5 times a month in the evening as I work in the music industry so travel home would be a issue or I would have higher petrol bills if my car was used.

I can go into a flat share if need be – To be honest it’s not something I really want to do as I’m getting older and cherish having my own space (and dread another flatshare) is but if this is the only option then I will do so!

It's an option...you should be looking to spend about 30-35% of your take home pay on rent and certainly no more than 40%. You could get quite a reasonable flat share for that. Normally the agency would exclude you from applying for the property if your annual income is less than 30 times the monthly rent so has your income gone down? I'm guessing it has so you now have to trade down property as well.

phoenix001

HappyMJ wrote: »

It's an option...you should be looking to spend about 30-35% of your take home pay on rent and certainly no more than 40%. You could get quite a reasonable flat share for that. Normally the agency would exclude you from applying for the property if your annual income is less than 30 times the monthly rent so has your income gone down? I'm guessing it has so you now have to trade down property as well.

My income has stayed the exactly the same and the agency that found me the flat didnt mention anything at the time when I disclosed my income and finances.