Back up income - Buy to Let, Let out to Serco.

edited 11 December 2022 at 11:03PM in Savings & investments
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FlaatusGoatFlaatusGoat Forumite
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edited 11 December 2022 at 11:03PM in Savings & investments
It seems like Serco (via their contract with the Home Office) are in absolute desperate and dire need for additional housing to home new arrivals. Any mid terrace in sought after locations to fit their requirements (Midlands, SW etc) and these are relatively cheap to buy. Not here to get into the politics of it here, but I hear they cover the property refurbishment, council tax, bills and provide a guaranteed fixed rent of about 18k per year. Not a huge amount of money of course, but I would benefit from the appreciation of the asset as well as having a second income ideas which I want to provide some security should I get made redundant, develop serious illness etc.

However, for tax reasons I'd look to set up a company to hold the income rather than paying myself directly and having to declare this on my self assessment as taxable income. Or perhaps I should just put the rent into my pension.

In terms of my own situation, I currently don't own. Would be a FTB so call me mad all you want. I know the prevailing wisdom is just buy a house and move into it. Yes and no - based on past experience the properties that I could afford to buy aren't what I like and aren't in the best locations but that's probably me being too fussy. Whereas, it always seems the ones I can afford to rent are usually fairly decent. Probably no coincidence....

Any thoughts? Good/bad?
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  • Alistair31Alistair31 Forumite
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    1) this only encourages it
    2) the neighbours will hate you
    3) the rates are unlikely to be what you suggest
    4) sort yourself out with housing before worrying about Albanians 

    here’s recent Scotland rates


  • Bigwheels1111Bigwheels1111 Forumite
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    I lived near a brand new estate they built in Addiscombe, half and half.
    50% uk residents and 50% immigrants and asylum seekers.
    I wonder if you can guess which half had to be almost rebuilt 18 months later.
    I’m no saying the uk residents were perfect, but the did not use the walls as a toilet.

    Good luck with you plan, I hope it work out.
    I gave up renting 2 years ago, glad I did.
    Only cost me 25k in CGT, wait until it’s only 3k a year not 12k.
  • jimjamesjimjames Forumite
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    I hear they cover the property refurbishment, council tax, bills and provide a guaranteed fixed rent of about 18k per year. 

    Any thoughts? Good/bad?
    I'd suggest that before you even start to think about it you actually check the reality. "I hear" isn't a basis for making big investment decisions.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • FlaatusGoatFlaatusGoat Forumite
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    Adjusting for the crab mentality on here I'm actually going to assume this isn't too bad of an idea and certainly worth looking into further. Be nice if someone had more direct experience of letting to Serco however.
  • london21london21 Forumite
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    Do some research about the reality of let out to Serco.

    Do the occupants look after the property?
    the process of getting your property back etc.
    Will be good if you can check online for reviews, or speak with someone who has let out to them. 

  • edited 12 December 2022 at 12:26PM
    jimjamesjimjames Forumite
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    edited 12 December 2022 at 12:26PM
    Adjusting for the crab mentality on here I'm actually going to assume this isn't too bad of an idea and certainly worth looking into further. Be nice if someone had more direct experience of letting to Serco however.
    Not sure what crab mentality is but as someone who has several BTL properties it's interesting to see people only looking at one side of the coin. £18000 is £1500 a month, if that's a genuine amount for a mid terraced house (2 bed?) that's crazy but it certainly seems somewhat on the high side.
    You might also want to look into holding in a company and if that will make much difference. 25% corp tax plus at least 20% income tax when you remove the money. Doesn't seem so great to me but with the much reduced CGT allowance that bit will be less of an issue.

    I've only just seen the bit about not owning your own place. So yes if that is the case I think it is a mad decision, renting into retirement and without long term security doesn't seem like a sensible idea to me but that's just my opinion.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Alistair31Alistair31 Forumite
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    Adjusting for the crab mentality on here I'm actually going to assume this isn't too bad of an idea and certainly worth looking into further. Be nice if someone had more direct experience of letting to Serco however.
    Crack on and report back, then.
  • FlaatusGoatFlaatusGoat Forumite
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    Adjusting for the crab mentality on here I'm actually going to assume this isn't too bad of an idea and certainly worth looking into further. Be nice if someone had more direct experience of letting to Serco however.
    Crack on and report back, then.

    Thanks for confirming my suspicions
  • edited 12 December 2022 at 10:33PM
    kinger101kinger101 Forumite
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    edited 12 December 2022 at 10:33PM
    Ask yourself why Serko are not accepting the risk of property ownership themselves?  They'd easily raise the capital to buy 6000 homes if the returns to the property owner were that good.


    landlord forums are probably the best place to ask.
    "Real knowledge is to know the extent of one's ignorance" - Confucius
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