New Landlord: How to Maximise Returns? Taxes?

ambren

So we’re about to rent out our first house which we unfortunately had to leave shortly after moving in due to issues with a criminal neighbour (assault, thefts, harassment). I’m looking for advice and help on how to get the best from renting, as our luck has been terrible so far and it’s been a big financial loss paying a mortgage for a house we can’t live in anymore.

The tenants are from overseas and have agreed to pay the year’s rent up front as a lump sum around £19k.

For context, I’m employed around £35k, my partner (girlfriend, cohabiting) is from overseas, unemployed and seeking work. We’re using an agent (council leasehold limits to only one company) at 7%. The house is mortgaged around £100k. Anything else useful please ask.

Any useful tips, tax advice would be greatly appreciated, we could really do with the help! Thank you in advance!

newsgroupmonkey_

You could possibly get quite a lot of grief on this particular forum - there are those that think Landlords are scum of the earth.

I'd suggest LandlordZone forums which are specifically setup for questions like this.

ambren

I can understand that, we've been renting for around 12 years to save up for our first home and are back to renting ourselves now after being forced out of our home. Hopefully people can be understanding of a difficult situation, it's a struggle to make ends meet paying rent and a mortgage, and I think we were just looking for advice to avoid losing more than we have to on tax, agents fees, landlord's allowances etc.

Thank you for the advice though!

Sarah1Mitty2

Sell the house is the best advice I think.

macman

So you have agreed to rent a property and found an agent and  tenant, but without doing any research as to how the income will be taxed, what allowances are available, or what your legal and statutory responsibilities are as a landlord? You can't delegate these to an agent: it is the landlord who is legally liable if the tenancy is not regularised.
Nor presumably do you have any idea of what the yield will actually be vs your mortgage payments? Do you already have a BTL mortgage, or permission to let from the mortgage provider?

theartfullodger

ambren said:

So we’re about to rent out our first house which we unfortunately had to leave shortly after moving in due to issues with a criminal neighbour (assault, thefts, harassment)..............

So you want someone to pay you for the privilege of living next to this ""....  criminal neighbour (assault, thefts, harassment)....  """

(? What happened when it got to court please??)

Can you see how this might not end well???

Pause your plans:  Do some education in how to be a landlord and in landlord/tenant law.  Then decide if you really wish to enter this minefield.  

I suggest this as when I started as a landlord in 2000 I thought (oh the arrogance, oh the hubris, oh my stupidity) that I knew what I was doing.  I didn't.  Expensive, long drawn out complex issues and dumb mistakes.  Don't make my mistake please!!

Most years I make money from renting property out: But not always:

Do you have the emotional & financial reserves for when things go wrong ??? (Tenant-from-hell, agent-from-hell, neighbour-from-hell.... etc etc etc unexpected repairs etc)

In November 1979 Bank of England base rate his 17% (seventeen per cent...).  I had a for then large mortgage.  But was "lucky" as my building society only wanted 15%.  (Mortgage had started at 10%).

I'm expecting interest rates to rise, hopefully not to 17%

This was under Thatcher's benign iron fist...

sourpuss2021

theartfullodger said:

ambren said:

So we’re about to rent out our first house which we unfortunately had to leave shortly after moving in due to issues with a criminal neighbour (assault, thefts, harassment)..............

So you want someone to pay you for the privilege of living next to this ""....  criminal neighbour (assault, thefts, harassment)....  """

(? What happened when it got to court please??)

Can you see how this might not end well???
 

It's okay, the tenants are from the cartel anyway

That's why they've paid the rent upfront, less bother while they get on with the grow.

anselld

ambren said:

So we’re about to rent out our first house which we unfortunately had to leave shortly after moving in due to issues with a criminal neighbour (assault, thefts, harassment). I’m looking for advice and help on how to get the best from renting, as our luck has been terrible so far and it’s been a big financial loss paying a mortgage for a house we can’t live in anymore.

The tenants are from overseas and have agreed to pay the year’s rent up front as a lump sum around £19k.

For context, I’m employed around £35k, my partner (girlfriend, cohabiting) is from overseas, unemployed and seeking work. We’re using an agent (council leasehold limits to only one company) at 7%. The house is mortgaged around £100k. Anything else useful please ask.

Any useful tips, tax advice would be greatly appreciated, we could really do with the help! Thank you in advance!

To address the question rather than the politics ...

You say "our first house", presumably you are therefore joint owners.  That is good news because joint unmarried owners can split income as they choose so you can direct all the income to her whilst she is otherwise unemployed in order to minimise tax.

Conversely if you own it yourself the 19k income will probably take you into the higher rate tax bracket as you cannot fully deduct mortgage interest prior to calculating the income.

Either way, whoever is taking income needs to declare to HMRC.

As for the rest, do a lot of research on your responsibilities as a Landlord because there are a log of potential mistakes or omissions which can potentially cost you dearly.  Employing an Agent is not sufficient defence because they act on your behalf and you retain the responsibility when things go wrong.  7% is unusually cheap and doesnt sound like a price for full management so make sure you understand what they are doing and more importantly not doing for the money.

martindow

I would be worried about how much information you have on your prospective tenants.  Who has found them and what checks have been made? 

Normally landlords have access to references from previous landlords, are able to check for CCJs, etc.  When tenants come from elsewhere you are likley to be unable to check anything you are told.  All may be well, but paying lump sums in advance is how cannabis growers and brothel keepers operate ...

Sarah1Mitty2

theartfullodger said:

ambren said:

So we’re about to rent out our first house which we unfortunately had to leave shortly after moving in due to issues with a criminal neighbour (assault, thefts, harassment)..............

So you want someone to pay you for the privilege of living next to this ""....  criminal neighbour (assault, thefts, harassment)....  """

(? What happened when it got to court please??)

Can you see how this might not end well???

Pause your plans:  Do some education in how to be a landlord and in landlord/tenant law.  Then decide if you really wish to enter this minefield.  

I suggest this as when I started as a landlord in 2000 I thought (oh the arrogance, oh the hubris, oh my stupidity) that I knew what I was doing.  I didn't.  Expensive, long drawn out complex issues and dumb mistakes.  Don't make my mistake please!!

Most years I make money from renting property out: But not always:

Do you have the emotional & financial reserves for when things go wrong ??? (Tenant-from-hell, agent-from-hell, neighbour-from-hell.... etc etc etc unexpected repairs etc)

In November 1979 Bank of England base rate his 17% (seventeen per cent...).  I had a for then large mortgage.  But was "lucky" as my building society only wanted 15%.  (Mortgage had started at 10%).

I'm expecting interest rates to rise, hopefully not to 17%

This was under Thatcher's benign iron fist...

17% would be fantastic on the savings pot! 

jj_43

what experience do you have to be a landlord? if none, sell.