Stay as a landlord or sell?

Myf2001

I have a rental property that I decided to sell last year. House went on the market and has annoyingly and for no good reason fallen through twice .It is back on the market ,but the market seems to be very sluggish. I am toying with idea of giving myself some breathing space and renting it out again ( I don't need to sell) Is it worth the hassle? I suppose I am thinking I would bide my time hoping for an upturn in the market.In terms of rent ,I would be making about the same as if I put the money into a savings account ( I don't have a mortgage)
Not sure if anyone has any wise words

theartfullodger

There were good reasons why sale failed.

Find out &  do something about it!  

(Been in BTL for 25+ years).  

Good luck and best wishes.

Stubod

I would continue with the "selling" option, the market does seem to be slow, but worth continuing with your initial choice (ie to sell), IMHO....

saajan_12

Myf2001 said:

I have a rental property that I decided to sell last year. House went on the market and has annoyingly and for no good reason fallen through twice .It is back on the market ,but the market seems to be very sluggish. I am toying with idea of giving myself some breathing space and renting it out again ( I don't need to sell) Is it worth the hassle? I suppose I am thinking I would bide my time hoping for an upturn in the market.In terms of rent ,I would be making about the same as if I put the money into a savings account ( I don't have a mortgage)
Not sure if anyone has any wise words

A rental return is very different to savings interest in the time taken vs a savings account where its zero effort. Not to mention the risks over and above the regular costs (eg if the roof caves in, if a non paying tenant refuses to leave, etc. The risks are more akin to (or even higher than) a stocks & shares portfolio which likely has a higher return. 

Presumably you're feeling the loss of rental income with the property empty. However you'll likely face the same again after a tenancy as you can't be certain when a tenant will leave due to the long court process. So you usually end up evicting then putting on the market, and if the sale falls through again, you'll be in the same position. 

IMO I'd just look at whether you think the rental return + expected capital appreciaion is likely to beat other investments. Eg is there a reason the area will become more popular, is there a local housing shortage, is there work you can do cheaply to add value? If not then just sell. Yes there might be an upturn, but equally there could be a downturn, or there might be an upturn in other investments. 

dinosaur66

it is hard to sell property in december /january / i have had hardly any viewings in thoise months even in a sellers market when i have listed propertys for sale

due to all the legislation since 2016 effecting small time landlords mostly, and all the new legislation and taxes coming in unless your profit margin is above 8% i would sell

plus side rents are high and getting higher so depending on if you own outright when its a plus and you can still make a good return 

or have a buy to let mortgage ,when renting no longer makes any financial sense IMO 

minus side

epc C coming in shortly equals 15k down the drain

landlord licences IMO councils will start charging more and councils that currently do not charge will

22 to 42 % tax rate specifically for landlords,  govts will tap this up and up IMO

any time you increase the rent your tenants will be able to take you to arbitraition for free and delay the rent increase

TAX returns 5 times a year instead of 1

every year landlord insurance is increasing out of all proportion 

and biggest one imo 

we are now taxed on gross income from a rental instead of profit 

in what other of the thousands of businesses is this the case

Myf2001

thanks for replies, which confirm my gut instinct!

michael1234

This is a couple of months old now but still highly relevant.

Can't a ltd company offset expenses against tax?

And more extreme, if a director lends his company a property. Then maybe there is no tax payable whilst that loan gets repaid? e.g. if a flat costs 200k bought by a director. He loans it to his company. Then the first 200k he takes out of the company is tax free?

I'm sure this is nonsense but would be grateful if someone knows why.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81951065#Comment_81951065

With regard to the estreme scenario you posit, your intial instinct that it is nonsense is absolutely correct.

The nearest you can get to a 'tax free' refund of a director/ shareholder loan via net rents derived from a company owned property, is where the director/shareholder lends the cash to the company to buy the property in the first place.

The concept of a personally owned property being lent 'in specie' to your own company in the way you outline simply does not exsist.

There is of course the alternative possibility of entering into a formal lease with your own company to let your personally owned property to it which it then goes on to sublet on whatever terms the company think fits ( subject to any Ts and Cs in your lease with it), but of course there is double tax exposure inherent with that arrangement if you want to get the net rents back out of the company.

Never fails to amaze me how many people seem to labour under the misapprehension that a limited company is some kind of magic bullet that makes a BLT property inherently more tax efficient ( where you want ongoing access to the income stream) compared to personal ownership.

michael1234

https://forums.moneysavingexpert.com/discussion/comment/81951187#Comment_81951187

That is not correct. A ltd company does offer plenty of flexibility and direct benefits that individual ownership cannot match.

For example, the landlord lends some cash to the company for it to buy a buy2let. The company pays at the absolute maximum 19% which is vastly reduced by "expenses" such as interest payments on the original loan. Not to mention leasehold service charge, repairs and other costs which are all tax deductable. That could bring it down to something tiny like 5% or 10%. An individual would be paying at least 22%.

The only downside to doing it through a company, is complexity. Oh and reading posts with an axe to grind. 8-)

anselld

https://forums.moneysavingexpert.com/discussion/comment/81952645#Comment_81952645

You seem to neglect the issue of getting the income back out of he Company and the tax at that point.

Also, the fact that basic rate tax payers can also still get a tax credit for finance costs at the basic rate.

There are some circumstances where Company route is beneficial but it is by no means universal.

poseidon1

https://forums.moneysavingexpert.com/discussion/comment/81952775#Comment_81952775

As I also expressly pointed out in my post where investors intent and desire is to get the net rents back out of the company to fund their lifestyle.

This is a conundrum a couple of friends are now facing after jumping into limited company structures for HMOs on the back of You tube videos.