As a new landlord - bypass letting agent?

HappyMJ

solidpro wrote: »

I would have thought most letting agents use direct debit over standing order, but that could be a naive assumption, as I am mainly used to business to business transactions rather than with individuals.

The ability to direct debit I felt was important because it streamlines an otherwise troublesome process that the letting agent may often use as a reason for them to exist.

Yes, the tenants are covered, but whilst we can do our best to protect ourselves from unscrupulous individuals, we also have to assume that people are good payers and the direct debit process is a useful asset to us as a business.

Most of the agents we vetted said their involvement is as long as the initial tenancy, and then the contract expires and goes directly between us and the tenant. Is that likely to be untrue?

Thanks!

Direct debit is not recommended to collect the rent.

Tenants can ask for "ALL" of the rent back from the bank and you then have to find and chase the tenant for payment. If that tenant has left you'll have a difficult time finding the tenant.

solidpro

What is your time worth?

I'm prepared to rate my time very low in this work because that I feel I could learn a lot by forcing myself to do it rather than offload it to an agent.

The £912 is an expense you can use to reduce the tax payable on your profit. If you're a non taxpayer it's going to cost £912 and most probably well worth doing it yourself.

Yes, it's a business expense and will be accounted as such.

If you're a 20% taxpayer the net cost to you might be £729.60.
If you're a higher rate taxpayer the net cost would be £547.20 and well worth considering outsourcing the task to someone else as you can earn more doing what you normally do.

Neither of this matters - the company owns the property and receives any income from it.

If you get a call at 8AM do you have the time during the day to leave your place of work and go to the property to see what is wrong.

Yes, and all of the below I am prepared to do...

Thanks!

thesaint

solidpro wrote: »

Thanks for your input, but I'm confused why you're confused? Unless you're just a troll and then your post makes perfect sense. Until I feed you. Bah!

What an odd response.

You said you are running a property company and you have time time to invest to manage your lettings.

You also say you are about to become a landlord for the first time.

I shan't be replying to any response you may have. Good luck.

HappyMJ wrote: »

Direct debit is not recommended to collect the rent.

Tenants can ask for "ALL" of the rent back from the bank and you then have to find and chase the tenant for payment. If that tenant has left you'll have a difficult time finding the tenant.

Tenants would need to show the DD guarantee was broken.

solidpro

I have never paid rent using direct debit, it was always standing order. If you polled people on the forum I think standing order would be the number 1 way rent is collected. If you are determined to use direct debit though then knock yourself out.

Nearly 99% of posts on here seem to be by people letting property as individuals or assuming I am an individual letting property. An individual would never have the ability to direct debit, which is why hardly anyone would do it.

I don't think it's because of a 'choice' landlords make because most of them don't have the option.

solidpro

You said you are running a property company and you have time time to invest to manage your lettings.

I've setup a new real estate company. This is the first property it owns and lets.

Tenants would need to show the DD guarantee was broken.

Good point!

Pixie5740

thesaint wrote: »

Tenants would need to show the DD guarantee was broken.

There was a thread a while ago where one of the joint tenants moved out but didn't end the joint tenancy, continued paying the rent and then months later did a dd indemnity and claimed all the rent back. The LL was then out of pocket but I don't think he ever came back to tell us what happened in the end. I'll see if I can find the thread.

Edit: Then again maybe I won't waste my time looking for it since the OP has decided DD is best.

theartfullodger

solidpro wrote: »

....
Yes, it's a business expense and will be accounted as such.
...

That's up to HMRC to decide, not you.

Rules for expenses are different for different types of business....

And don't forget for human landlords there are at least 10+ taxes they may pay so presumably more for a company... be careful what you account against which taxation class....

IMHO being a landlord is massively a "people" business: Prompted by your earlier posts, perhaps a course in that area?

Ever done any training as a landlord? Assuming not, join NLA or RLA (presumably as the company?) and do one of their intro courses.

Yes it costs - time & money: But if you think education is expensive try ignorance....

solidpro

Edit: Then again maybe I won't waste my time looking for it since the OP has decided DD is best.

Haven't!

That's up to HMRC to decide, not you.

https://www.gov.uk/renting-out-a-property/paying-tax

Residential properties

You or your company must pay tax on the profit you make from renting out the property, after deductions for ‘allowable expenses’.
Allowable expenses are things you need to spend money on in the day-to-day running of the property, like: letting agents’ fees

Rules for expenses are different for different types of business....

I know.

Ever done any training as a landlord? Assuming not, join NLA or RLA (presumably as the company?) and do one of their intro courses.

Thanks - I'll check that one out.

Yes it costs - time & money: But if you think education is expensive try ignorance....

. That's why I'm 2 months away from beginning the task, and doing research now. I also believe that in 25 years running my own businesses that if you have motivation, a good grasp of accessing credible existing knowledge readily available on the net, time and persistence - that's many times better than any course.

I've also met a lot of other businessmen who don't have a clue, can't be trusted and on a wing and prayer. I am wary about paying a 'letting' agent to do something I could do better.

HappyMJ

solidpro wrote: »

I've setup a new real estate company. This is the first property it owns and lets.

Have you taken tax advice?

You don't get any capital gains tax relief on capital gains held inside the company and have to pay corporation tax 20% on all profit.

That may be cheaper than 28% CGT but the company won't get the £11,100 individual relief.

If you make a £100,000 gain the company would pay 20% tax and you would have to pay 32.5% tax on the dividend of £80,000 leaving you with £57,600 but if you held it in your name you would pay just 28% leaving you with £75,108. That's a huge difference.

benjus

solidpro wrote: »

Nearly 99% of posts on here seem to be by people letting property as individuals or assuming I am an individual letting property. An individual would never have the ability to direct debit, which is why hardly anyone would do it.

There are companies out there that will set up direct debits for private landlords (but not manage the property), so it's definitely an option. Having said that, I never paid rent by DD when I was renting, including when I lived in properties rented through letting agents.