user_14547

Registered with Property118.com
Monday 24th July 2017


Latest Comments

Total Number of Property118 Comments: 59

silversurfer2017

A month ago
Landlord GDPR policy - Short version

I may be a little naive or not fully understood the GDPR regulations but from what I have read, landlords do not have necessarily have to jump through any hoops to comply with GDPR regulations if they are only keeping paper documentation to satisfy HMRC requirements to keep fully documented accounts for at least 6 tax years. If you keep computerised records with tenants personal details then you may be caught under this legislation otherwise it shouldn't really be a problem for you. One of my properties is a holiday let business and the invoices/payment slips from my agent show the name of each guest making the booking, his/her home address, phone number and email address and of course the amount of the payment made. We will keep these paper invoices for at least 6 years to comply with HMRC regulations. No real personal details are given like nationality, race, sexual orientation etc. We do not intend to register this business for GDPR either as just doing the minimum to comply with HMRC regulations should not make it a requirement for almost every business in the country to comply with GDPR.... Read More

silversurfer2017

2 months ago
Resolution measures?

The idea has some merit but older people are already paying into this pot. Many of them already paid huge amounts of income tax and national insurance during their working lives. It is also mostly the estates of older people that have died that are paying the £5+ billion each year in inheritance tax. Let the government use some of this cash to fund the £10,000 to deserving young people. Presumably the government would need some safeguards to make sure it was spent to buy a property to live in and not for a new car or holidays instead.... Read More

silversurfer2017

2 months ago
Ground rent school boy error?

Hi Rizzo – as promised here are the figures. Firstly the figure for the reversion, being the compensation for the landlord having to wait to get the property back, is only £283. The biggest part of the premium is to compensate the landlord for the loss of ground rent income if you extended the lease by 90 years and got a peppercorn rent. (A Statutory Lease Extension). I have assumed a starting valuation date of 1st May 2018 and therefore 12.33 years of the lease have expired at that date.
The income streams for the landlord are:

£150 for the next 7.67 years
£300 for the next 10 years but delayed 7.67 years
£600 for the next 10 years but delayed 17.67 years
£1,200 for the next 10 years but delayed 27.67 years
£2,400 for the next 10 years but delayed 37.67 years
£4,800 for the next 10 years but delayed 47.67 years
£9,600 for the next 10 years but delayed 57.67 years
£19,200 for the next 10 years but delayed 67.67 years
£38,400 for the next 10 years but delayed 77.67 years
£76,800 for the next 10 years but delayed 87.67 years
£153,600 for the next 10 years but delayed 97.67 years
£307,200 for the last 5 years but delayed 107.67 years

The figures for the premiums at the different yield/capitalisation rates are:

5% : £55,360
6% : £27,742
7% : £15,257
8% : £9,245
9% : £6,137
10% : £4,407

So how best to advise you? With a property value of only around £70,000 it is not going to be worth your while spending a lot to improve the lease.
If it were me I would first get a couple of estate agents around on the pretext that you are thinking of selling. Be brutally honest with them and explain that although the lease is still a good length the ground rent doubles every 10 years reaching £300,000 per annum ground rent for the last 5 years of the lease. They will realise that the buyer’s solicitor will almost certainly pick up on this. Ask them what your chances are of selling? I think they will tell you that only cash buyers might be interested.
So far you will have spent nothing but just clarified your situation. I don’t really think it’s worth your while serving a S42 notice on the landlord for a Statutory lease extension. I think the very best you would get the premium down to is around £15,000 and then you need to add on another £4,000 - £5,000 in costs.
The other thing you can do of course is to do nothing for the next two years. The Law Commission is undertaking a major review of the leasehold system and should report in two years time. They may provide some practical help to leaseholders in your position. They may suggest, and the government may enforce legislation such as leaseholders have the right to extend their leases and pay zero ground rent for a premium say of just 20 x the present ground rent. In your case this would cost you £3,000.
Notice that I have used the word ‘may’ several times. It depends in how much you trust governments to do the right thing? However your landlord will probably also know about this leasehold review and may be more amenable to do a deal. You could approach your landlord directly and see if he is prepared to alter the lease to an indexed linked version. See if he will accept CPI linked rather than RPI linked which is usually up to 1% cheaper. (March 2018 CPI index 2.5%, RPI index 3.3%).You could offer the carrot of being prepared to accept a slightly higher starting ground rent than your present rent. This would give him an immediate uplift in his present income. He then may come back with a CPI/RPI offer with ground rent starting in the £250 to £350 range. This will still be high in relation to your property value but should still be affordable to most buyers. If he comes back with a reasonable figure and you can negotiate him down to £5,000 or less, including his legal fees, then I would take it unless you are a gambler. If you reach agreement with the freeholder then before proceeding further I would strongly recommend you engage an ALEP solicitor for you to check over and negotiate the terms of the new lease before you go ahead, to make sure no new ‘nasties’ are included in the new lease. It should not cost you more than £500 - £600.
If you have not got the money then I would think your present lenders will fall over themselves to lend you the money at reasonable terms. When your new lease is complete you will be providing them with valuable security for their loan rather than a property which is almost worthless. Good luck!... Read More

silversurfer2017

2 months ago
Ground rent school boy error?

Reply to the comment left by Rizzo at 23/04/2018 - 23:00
Hi Rizzo. I have got a busy few days ahead but will produce the figures for you before the weekend. As you probably realise you are in a difficult situation, and it must be a worrying time for you. Your ground rent is already above the 0.1% of your property value that some lenders regard as a reasonable maximum. You will realise that for the last 5 years of the lease starting in 2126 the ground rent will be £307,200 p.a. Even in about 40 years time in 2056 the ground rent will be £2,400 p.a. Although I'm not an expert, I think if you asked a local estate agent and told them about the lease terms, then they would tell you that your property was virtually unsaleable. You might get a cash buyer interested at a very low price but a cash buyer would only be thinking of the rent he could recover before the ground rent gets too high and probably would then just let the property revert back to the freeholder. (he forfeits the lease). I don't know when you bought the property but did you solicitor warn you explicitly about the doubling ground rent terms? If not you could make a claim against them on the grounds of professional negligence. If you search the internet you will find some legal firms taking on these cases on a 'no win - no fee' basis. I will have the figures for you by the end of the week but I know now that it will not be good news for you.... Read More

silversurfer2017

2 months ago
Should I invest my pension lump sum in another buy to let?

I have a completely different take on this. If you want a secure income which will let you sleep at night and is paid quarterly, then look at investing in a high quality investment trust. City of London investment trust is on a yield of 4% and has increased its dividend every year for the last 50 years. The dividend this year looks like increasing by about 6% so we are now looking at around a 4.2% yield. You and your wife can each put £20,000 into a self-select share ISA. A £40,000 total investment will give you an initial income of £1,680 per annum paid quarterly. This income will be completely tax-free. This will at least match the after-tax income of a buy-to-let and no tax return is needed. You should also get long term capital growth of your investment with no capital gains tax to pay if you realise part or all of your investment.... Read More