Registered with Property118.comWednesday 3rd July 2013
I would choose the 10-year rate, provided it allows overpayments. Interest rates are only going one way, which is up, over the next 10 years, and I would have thought a ten-year lock-in would be great for peace of mind if you are planning to hold the property for the long term. A lower-figure redemption penalty would help too, or consider what other assets you hold which could be sold instead during a crisis to minimise your costs.
Reply to the comment left by "Rich Green" at "10/07/2017 - 07:35":
Hi Rich - Neil is quite correct. You do not "gift" the deposit to the company - you as director make a loan, which can be repaid tax-free as the company hopefully makes profits on its BTL investment. You can even charge the company interest on the Director's Loan, which can give a small tax advantage if you do not use up your annual interest allowance.
I agree there is some risk that the Government will seek to change company taxation, if it sees lots of private landlords incorporating, even though this will bring the Government into conflict with large companies that are investing in the build-to-rent market. One useful defence against a tax raid on so-called investment companies (ones that just hold property to rent) would be to ensure your company does some related trading activities as well: getting involved in renovations or new-build development, for example, or acting as a letting or managing agent for other people's properties.
Actual property development may be a step too far for many landlords, but they might be interested in investing their retained corporate profits and capital in someone else's development activities instead, perhaps in Special Purpose Vehicles, one development at a time, to demonstrate to HMRC that they are "trading" as well as "investing".
Reply to the comment left by "Robert Mellors" at "15/06/2017 - 08:59":
Thanks Robert for your reply. As you put out, you are really in the business of providing supported accommodation, in the form of hostels for people who have been homeless or perhaps experience difficulty living on their own independently. My question was more about conventional flats and houses that just happen to have more than two unrelated persons living in them, so are defined as HMOs (and licensed and regulated and often viewed as little better than slum housing), even though there is usually very little that distinguishes their living environment from a family with adult children or a couple sharing a flat and taking a lodger.
I've been to conferences where local authorities are looking to house young single people and homeless people living in hostels and "move them on" into the PRS. It just seems bizarre to me that councils and the large social housing associations don't view the accommodation of single young people on very low incomes as in any way their responsibility or a challenge for them, or a profitable source of revenue in the "80% of market rate" new-build rental houses they are given in S106 Agreements. I studied the newspapers' accounts of whom was living in Grenfell Tower, for example, and though there was a young Italian couple, single mothers with children, some young Syrian brothers, older single people, and small multi-generational families, I could see no flats occupied by two, three or four unrelated single people, either working on low wages or on benefits. But I bet there are a good number of over-occupied private HMOs in the area or in neighbouring boroughs (including the notorious beds in sheds), all apparently without a jot of competition from the public housing sector, or any intention too either, despite all the complaints about poor standards in the PRS. There just seems to be a determination to hammer every private HMO landlord, no matter how high-quality and law-abiding, with licensing costs, Article 4 Directions and all the other weapons in local authorities' armoury, with no thought for the consequences in terms of how landlords will respond as regards the supply of such housing.
Reply to the comment left by "Ryan Whelpdale" at "02/06/2017 - 08:51":
Ryan - seek advice from your solicitor or conveyancor, but I would have thought you have to pay the SDLT. This is payable on the date of completing the purchase, notwithstanding your intentions for the two properties later.
HMRC do seem to pick and choose here - as in them allowing you to deduct the cost of a replacement built-in fridge but not a free-standing one - but if you follow their stated principles (what else can you do?), then I would say you should deduct this income. The fire alarm is not going to increase the capital value of your property, and you are being forced to install it, and it is only an upgrade to what you have at the moment, so a deduction from income seems to me to be appropriate. Of course you can ask your accountant but there can be a lot of debate amongst them too on such matters - see AccountingWeb.