Advice needed - outgoings/incomings as an owner of rental property

1978

We are 1/4 owners of a house that was passed down through a will.

For info - upon eventual sale our 1/4 would then be split 3 ways, currently any monies received through rent for our 1/4 are split in the same way.

The house is currently being rented privately and we think it is being rented at below market value.
The person who is making the arrangements for rental makes up another 1/4 of the ownership.

It's a long story which I won't be divulging, but we've just allowed the arrangements for rent to go through and accept any cheques that come our way.

We currently receive an annual cheque for our 1/4 of rental income. If I multiply this figure by 4 to make up the 4 quarters and divide by 12, this gives the figure for the monies paid out as rental income per month.
This figure is about half of what similar properties are being advertised on rightmove for rental PCM.

I appreciate that there are other costs involved and all money received as rent won't be paid out, but I was wondering as an estimate what deductions should be taken into account from rents received?

[our fault] I also guess that we should be seeing a rent book and figures for anything being paid out but before I dive in with questions.... This hasn't been handled at all well by anyone involved. My main point is the one in blue above.

Thanks!

Further info, not sure if it is of any use - the LHA rate for this property size and area is £110 a week, which is MORE than is received through the eventual cheque payouts for rent.
I'm totally ignorant as to how LHA works and as you'll gather from my post, how rentals work in general, but thought this may be useful.

BitterAndTwisted

Unless the rent is paid by the tenant weekly there is no requirement for a rent-book.

It's entirely possible that what you are receiving annually is nett of legitimate costs. Like repairs, maintenance, gas-safety inspections, agent's fees.

The only way to be certain that you're receiving what you should be is having sight of the tenancy agreement (and if the administrator can't or won't provide one is getting a copy from the tenant). If a family member or friend for that matter is administering the property then they should provide you with an accounting of the deductions being made from the rent collected.

There could be any number of reasons why they might be reluctant to provide you with the information. Perhaps a solicitor's letter once verbal negotiations break down, might be in order?

Foxy-Stoat_3

Possible costs of renting would be:

Repairs
Maintenance
Agent fees
Landlord insurance
Income Tax (are you declaring this income on YOUR annual tax returns?)
Missed or void months

Do you KNOW what the monthly rent is or have you assumed the rent amount?

Who is the Landlord, private person or company?

I don't think a solicitors letter is the way forward.

1978

BitterAndTwisted wrote: »

Unless the rent is paid by the tenant weekly there is no requirement for a rent-book.

It's entirely possible that what you are receiving annually is nett of legitimate costs. Like repairs, maintenance, gas-safety inspections, agent's fees.

The only way to be certain that you're receiving what you should be is having sight of the tenancy agreement (and if the administrator can't or won't provide one is getting a copy from the tenant). If a family member or friend for that matter is administering the property then they should provide you with an accounting of the deductions being made from the rent collected.

There could be any number of reasons why they might be reluctant to provide you with the information. Perhaps a solicitor's letter once verbal negotiations break down, might be in order?

Thanks, I guess it's in our hands to ask these questions.

It's difficult to approach as they are family (it should be easier if they are family)!
I feel like we're on the cusp of an argument over money, which is the last thing I want.
And as I say we've just accepted the cheques in the past with no questions.

There are no agents involved as far as I know.
The person living there is known to the administrator/family member making the arrangements.

1978

Foxy-Stoat wrote: »

Possible costs of renting would be:

Repairs
Maintenance
Agent fees
Landlord insurance
Income Tax (are you declaring this income on YOUR annual tax returns?)
Missed or void months

Do you KNOW what the monthly rent is or have you assumed the rent amount?

Who is the Landlord, private person or company?

I don't think a solicitors letter is the way forward.

00ec25 wrote: »

you have not given one bit of useful data to allow anyone to guess how long is the bit of string you have in your hand
- how long has current tenant been in place and when was the rent last raised
- what the current advertised rate on rightmove is has limited bearing on what your current tenant pays
- the LHA is capped at the lowest 30% of rents charged in the area so 70% of the rents charged in your area are more than £110pw

as for typical cost categories you could have simply googled that, patently no one can tell you actual figures
http://www.towergateinsurance.co.uk/info-zone/home-property/costs-of-being-a-landlord

Total cheques paid out per annum are £3.6k (so £300 month)

No idea how much they are paying in rent.

Current tennant been in 3 or 4 years, cheques received haven't gone up.

Rentals for similar builds on rightmove within 1/4 mile are between £600-£700 pcm.

No idea on any of the rest...

Thanks.

BitterAndTwisted

I suspect that if the property hasn't needed expensive repairs then the family-member who is administering the rental is charging their time against the income. Or deducting whatever legitimate expenses against only your rental-income, or similar.

Unless you have sight of actual paperwork it's difficult to say what's going on.

I think the first thing to do would be to ask the tenant for sight of their rental-agreement and go from there.

RAS

OK

Explain that you have to sort out the HMRC situation ( you have been declaring the income?)

To do this you need to have a copy of the full accounts for the property ( and frankly the administrator should have provided them without asking).

If you find that the property is being rented out at less than the market rate, you need to ask the adminstrator why they are not maximising the income?

Ask for a copy of the tenancy agreement and make sure that the deposit has been protected and the tenant given the prescribed information within the required timescale (you can check this relatively easily once you know the rent).

Is there Gas? If so is there a Gas Safety Certificate?