Banks and the HMRC

bigadaj

fox_warrior wrote: »

I'm happy to read a story from someone with direct knowledge. I'm sorry that things went wrong for your wife. I'm not looking to make large gains just a regular monthly income that will be more than I'm currently getting in interest. It's not ideal by a long way but at the moment I feel comfortable that the risks aren't too great. It's a big thing to do and not easy to factor in all the maintenance costs etc. All these costs will bring down the 3.75% I quoted earlier. I'm not happy that it will take about 18 months to get back the stamp duty, solicitors fees etc. Then there are the ongoing agents and accountant's fees. Once I'm happy with the tenants I wouldn't bother with the agents any more. I believe I can do this after 6 months. I might have a go at doing the tax returns myself and if I get stuck then get an accountant. I do acknowledge there are risks and that's something I'm still considering. At the moment I think the risks may be worth it. If I use an agents full management option I don't think I'll need any specialist knowledge, although this is the most expensive option. I'm still looking into whether or not it's a good idea at my / our time of life but I need to give it some serious consideration. I can't get comfortable with anything to do with stock markets and the like and at the moment I've no understanding of "Unwrapped". I've Googled it but will need spend some time on the subject to learn more. If I don't go down the Landlord route I'll probably put our money in the best bond I can find in my wife's name.

Yes, that's my point, what people do with their money is up to them but it's best that they are aware if all the possible scenarios rather than consulting that fat bloke down the pub as so many do.

My father has rented out flats for many years, generally gone well though there are hassles. In my wife's case she has rented the house out for twenty years, I think originally at my suggestion, and there have been good and bad tenants over the years. One really bad tenant last year was unusual, but this was a young single bloke not paying rent, split up with his girlfriend, and then calling in the council to complain about lack of maintenance when he was refusing access. Luckily her insurance had legal and rental cover, this cost teh insurer around £6000 in paying rent, legal process for eviction and then fixing the neglect and damage the tenant had created. She how has let it to teh council, but it's generally too much hassle, she's done well from it and the capital value has probably increased four times but time to sell out without too large a tax bill.

The other negative is the cutting backon housing benefit which many tenants are reliant upon, and will lead to more defaults and rents not being paid.

It's not an easy time for many people given a decade of near zero interest rates, and even the experts often get this wrong. However buy to let has risks and can be challenging, as you say entry and exit costs are significant, and most in this board are far happier with investments in funds than property. It might be worth starting a thread over on one of the property boards to get views there also.

Good luck.

badger09

fox_warrior wrote: »

I've made a mistake with that. They don't guarantee the income. Depending on the level of management they will collect the rent on your behalf and pay it via BACs less their fees. They will monitor payments, issue statements, inform you if the payments fall behind and hold the tenants security deposit in a government approved scheme. Some agents offer "Rent Arrears Management". Not sure what that is. Good point, thanks.

Thanks for clearing that up.

fox_warrior

No problem. It was in response to a post from bigadaj. I felt I had to defend / explain my reasoning but having gone through the thread again I can see bigadaj hasn't been reading my posts properly as a lot of what he / she was questioning had already been covered and not relevant or helpful. I'd like him / her to explain how what was posted in number 18 is any use to my situation. I posted my reply from my recollections when I looked into being a Landlord sometime last year. Obviously my memory failed me on that particular matter.

bigadaj

fox_warrior wrote: »

No problem. It was in response to a post from bigadaj. I felt I had to defend / explain my reasoning but having gone through the thread again I can see bigadaj hasn't been reading my posts properly as a lot of what he / she was questioning had already been covered and not relevant or helpful. I'd like him / her to explain how what was posted in number 18 is any use to my situation. I posted my reply from my recollections when I looked into being a Landlord sometime last year. Obviously my memory failed me on that particular matter.

I've responded and commented on what is personal experience, something you don't appear to have in relation to becoming a landlord.

It is of no import what I or others think of your plans, it's your money to do with as you please. As I stated earlier this and other boards are wary of buy to let, it would probably help you more if you posted these queries on the property boards.

You appear to have confused something in your posting which obviously isn't great, I'd recommend doing more research before embarking on what could be a very expensive process for yourself and your wife. It's is certainly possible to get insurance for rental payments, though this may be expensive and reduce what appears to be a very limited yield even further.

These boards are for discussion only, if you aren't prepared to have your plans and proposals critiqued then may be best to keep them to yourself, and be successful or otherwise with your own plans, as no one here will take any responsibility or liability for investment of your money.

Edit - I've just reviewed post 18, which has been thanked several times. It's relevant to your situation because your only reason for going into a property business is to gain Income that you can't now receive because of low interest rates. Most people on this board would suggest that managing investments would be an easier and more reliable method of gaining an income than going into buy to let. Its fine if you don't agree, but not encouraging that you get so defensive. Far better to be slightly embarrassed on an anonymous Internet forum than lose thousands of pounds getting involved in a business which doesn't go well.

fox_warrior

bigadaj. Looks like I'm not the only one to get defensive. Currently 1754 views and you got 3 thanks, big wow. Just because I didn't agree with your viewpoint in post 18 you started getting on your high horse. I've a funny feeling that you do a lot of trawling on MSE and copy and paste snippets you've read elsewhere without actually knowing much yourself . I'm beginning to wonder if you're the fat bloke down the pub. There are something like 1.75 million landlords in the UK in May 2016 and numbers are still growing, so it can't all be bad. You're wife had a bad experience, that's a shame. Did she ensure her tenant took out tenant liability insurance as part of the tenancy agreement. That would have covered the damage rather than rely on her own insurance. Did she have a deposit held in a tenancy deposit scheme? Having had all this experience yourself it would be a lot more helpful if you suggested ways to cover such things or do you not know about them. Nowadays estate agents are very good at getting good tenants, as I explained earlier. You don't seem to understand that. I won't be taking on any people on benefits so housing benefit is of no consequence. Suppose on the other hand I get perfectly good tenants that look after the property as I'm sure many do. Two sides to the coin. Your father rented out for many years and your wife for 20 years through much higher interest rates than are available now which only strengthens my case.

bigadaj

fox_warrior wrote: »

bigadaj. Looks like I'm not the only one to get defensive. Currently 1754 views and you got 3 thanks, big wow. Just because I didn't agree with your viewpoint in post 18 you started getting on your high horse. I've a funny feeling that you do a lot of trawling on MSE and copy and paste snippets you've read elsewhere without actually knowing much yourself . I'm beginning to wonder if you're the fat bloke down the pub. There are something like 1.75 million landlords in the UK in May 2016 and numbers are still growing, so it can't all be bad. You're wife had a bad experience, that's a shame. Did she ensure her tenant took out tenant liability insurance as part of the tenancy agreement. That would have covered the damage rather than rely on her own insurance. Did she have a deposit held in a tenancy deposit scheme? Having had all this experience yourself it would be a lot more helpful if you suggested ways to cover such things or do you not know about them. Nowadays estate agents are very good at getting good tenants, as I explained earlier. You don't seem to understand that. I won't be taking on any people on benefits so housing benefit is of no consequence. Suppose on the other hand I get perfectly good tenants that look after the property as I'm sure many do. Two sides to the coin. Your father rented out for many years and your wife for 20 years through much higher interest rates than are available now which only strengthens my case.

I've given you my opinion, you have yours. We'll see how you get on, tenant liability insurance is a very niche market as far as I'm aware, I'm not sure that many tenants would qualify for it or indeed be willing to pay for it to protect your interests, if you have no tenants you obviously have no income. It's a business, there is risk and you have to acknowledge this. Your agents won't take any liability for the tenants they source, over and above references and deposits.

With respect to interest rates then I don't understand why you'd want to take on a geared investment heading into retirement, I thought this was savings which you were redeploying? The eighties thorough to a few years ago were the peak of buy to let investing, tax reliefs are now being withdrawn and valuations through much of the country are stretched, certainly in terms of income multiples.

Probably teh majority of private tenants now receive housing benefit, you can certainly exclude those people but you may get voids and Consequently no income.

Good luck and I hope that things go well with you, but please be aware of the business you are setting out on and the pros and cons associated with it.

fox_warrior

Thrugelmir wrote: »

Banks provide the data to the HMRC on an annual basis. HMRC uses a system called Connect to trawl databases. To compare income to balances held. Not just in the UK but in overseas accounts as well. Connect can access amongst other things DVLA, Land Registry also can analyse 4 years of credit card history. In order to profile an individual fully. Also has access to commercial and business data.

Do you think that the system would flag up to HMRC if the balances of an individual non tax payer were such that a self assessment tax return should be completed?

Thrugelmir

fox_warrior wrote: »

Do you think that the system would flag up to HMRC if the balances of an individual non tax payer were such that a self assessment tax return should be completed?

Have bigger fish to fry currently. After all the penalties for non declaration of income are sufficiently harsh to make people think twice before not doing so.