Claudio Valentini

Registered with Property118.com
Monday 15th July 2013


Latest Comments

Total Number of Property118 Comments: 39

Claudio Valentini

13:49 PM, 15th March 2018
About 8 months ago

Is government thinking of disallowing operating costs, and for companies as well?

Nothing would surprise me...
After the introduction of S24 I waited before looking to incorporate. I just felt that this cynical lot would wait for landlords to jump from sole trader to limited company and then tax them again...
I haven’t bought anything for two years now as a result.
We have to remember that as a constituency, rightly or wrongly, landlords are not a loved bunch and in general not many votes will be lost if we are taxed more aggressively.
It would be relatively easy for the treasury to make an amendment to commercial/Limited Company GAAP to exclude a property rental businesses.
So now, if I have £40/£50K to invest, whereas I would previously considered property as a no brainier today I’d have to look at my Pension plans instead, which is precisely what donors to the Tory party like L&G would want, having lost a stack of cash to BTL and in order to restore the investment status quo to what it was like in the days before mainstream BTL really took off.
Watch and wait would be my advice.
Get your LTV ratios down, fix to attractive mortgage rates and then try and ride it out...
If the Tories stay or Labour get in, either way I sense they’re coming for us...... Read More

Claudio Valentini

11:38 AM, 25th April 2017
About 2 years ago

Boiler replacement costs - reasonable or not?

Glad for the happy ending...but just a thought for the future
On the choice of Boiler - Personally I would avoid Ideal Logic. I have one in my Resi which is a new build and another in a new build BTL.Both have needed a fair amount of attention for intermittent faults in under five years - in the case of the BTL, in less than two!
As a consequence I'm now good friends with my local central heating engineer! He tells me their business was close to going under a few years back and these new range are a 'make and break' attempt to regain some market traction. It's no surprise that they seem to be a choice for mass volume house builders (i.e. cheap) and the items that fail seem to be low price point internal components. Building to a reasonable price point might seem to make sense from a consumers perspective but as a Landlord I want my installations to be bullet proof and not give me any hassle for at least 7-10 years.
Interestingly enough, in my other BTLs where I've installed or inherited higher quality installations,they seem to run trouble free and the annual service seems enough to keep the hassle factor at bay...
PS Pricing the work above in the Colchester area seems a tad high - it's about a Grand for the bits so how many days work and how many people to charge another £1500? He might get away with that price on my side of Essex but not over your way. I think someone suggested getting British Gas to quote - half that price and you're probably in the right sort of ball park...... Read More

Claudio Valentini

14:40 PM, 16th November 2016
About 2 years ago

Buy-to-Let Newcomers Have Never Had It Better

I got into the business back in 2009 with a plan to buy one property a year until I got up to 10 properties then take stock. Back then I asked my accountant if I should proceed thorough a Limited Company. Their advice was to do this as a sole trader. In fairness, that was the thinking at the time and the availability of BTL finance was more readily available and cheaper then than it would have been on a commercial basis.
All was going well and I was on target and growing the portfolio nicely up until 2015 and S24. At that point I stopped to take stock of the changing landscape. I was reluctant to move too quickly as I wanted to see what Osborne did next. I was pretty suspicious of his motives and I figured he was cynically waiting for landlords to quickly move and adopt a new business model so not only would the Treasury skin Landlords if they stayed in but once they attempted to adopt a new business model they would skin you again on the way out.
Then there was Brexit and Osborne got the bullet…
I’ve decided to wait until the autumn statement and see if Hammond is more amenable toward the PRS than Osborne was. It’s put my growth plans back by about 18 months but it’s allowed me to take stock. Assuming no change to the status quo, after the autumn statement I’ll sell off one or two of the worst performing properties once they become vacant then set up a Limited company and loan the company the capital gains and carry on growing the business through that structure for the foreseeable.
My opinion: Everything I’ve ever read from any successful PRS landlord is that this business is all about the long term. In that case an 18 month delay is a blink of an eye. The fundamentals of this business are essentially sound. By and large and region specific, bricks and mortar are an appreciating asset and there is a supply and demand imbalance which will take some years to correct. Yes, for those that choose to stay in the business there will be increases in SDLT to accommodate and a more stringent lending criteria than we may have been used to. These factors will just serve to just discourage the more ‘cottage industry’ minded landlord as I feel most people tend to give incremental upfront costs more weight than the potential of future gains — in short they’re loss averse (I think that’s ‘Prospect Theory’ in practice).This is good. Less competition and a more professional body of PRS landlords left in residence, pardon the pun.
I still think there’s another 10 years or so before the large scale corporate institutional investors move in and start to fully dominate the space, meanwhile there’s a solid ‘people business’ out there looking for entrepreneurs to service it…... Read More

Claudio Valentini

13:22 PM, 5th April 2016
About 3 years ago

What Will Happen To UK Property Investment?

Long post - sorry I didn't have time to make it shorter...
On Clause 24, SDLT raise etc - I’ve lobbied my MP about the unfairness of it all as well as presenting the unintended consequences of repossessions and tenant evictions but frankly, it’s my view that politicians don’t care too much about this issue and with the exception of the Landlord community the majority of people don’t give a sh*t about all this.
I predict more pain; You boil a frog by putting it in cold water and slowly turning the heat up, and as the heat turns up landlords will get no sympathy from any quarter because everyone hates a landlord, don’t they?
I believe the Government have started ‘beating the bushes’ to see who takes flight. It’s my view if you take flight now you’re likely to get shot. I will take a long breath before I make any revolutionary changes. We are moving into a new normal.

Property is still a tangible and appreciating asset and much of the debate on these forums has been about how much less money landlords will make post C24 – however, even if you are leveraged up to the hilt and your business model is not currently viable, you can restructure and still end up making money…You never make a loss on a profit!

The facts are; there is a chronic under supply of housing and supply and demand means that property has effectively become a commodity, so for particular types of property in select locations you will see demand push up the intrinsic value of the property and it’s rentable value. This will continue until the supply and the demand balances out, which isn’t going to be anytime soon. Unfortunately, property shouldn’t be a commodity, it should be someone’s home but it is what it is.

There is no coincidence that institutions want to move into rental property; an appreciating asset base and reasonable yields, in comparison to Gilts and Govt. bonds, and with a readymade and pent up demand. No brainer!

Residential property is still a great investment; I don’t plan to walk away from it. I’ll find another way; there will be demand for many years to come, and as an assets class it will continue to appreciate. No wonder the Institutions and Corporates want a piece of the action, and importantly for the Treasury, no wonder they want to encourage them. Corporations can be regulated and managed to pay their tax and from the Governments’ perspective they can also tap them up for political contributions.
First, they just need to get rid of that ‘pesky cottage industry’

So what did Warren Buffet say? “Be fearful when others are greedy and greedy when others are fearful” - or something like that.

Intuitively, here's what I’m considering my ‘new normal’ plan could look like:

1. Consolidate the existing portfolio and divest some of the worst performing properties to pay down debt and mitigate any loan to value over leveraging that Clause 24 will expose.
2. If I have cash and am minded to buy, take a view on capital growth rather than yield. I’d also make a higher down payment on any new purchase. As I’m in the South that’s easier for me than for most but In short I’ll become a property investor – because that is what the Government considers Landlords to be – and ensure the yield is good enough to get by on. Good quality property in good locations with inherent demand and Freehold properties only.
3. Increasing rents; maybe but I’m not convinced. But if so, reasonably and progressively. If you have good tenants who pay their rent on time and are no trouble it might be better to forgo a premium for a quiet life. I’m of the view that like the mobile phone industry it’s all about the contract; the handset is just the come on and although in this analogy the handset is the house and the contract is the AST, getting the right tenant on a fair long term arrangement I believe is a better strategy than squeezing short term lets for short term cash.
4. I’ll also consider re-mortgaging to take advantage of the current low mortgage rates to improve the cash flow.
5. Retaining a good cash buffer to protect against more of Gideon’s misery is good advice I’ve taken from Mark Alexander, and making the most of Personal Pension plans, as over 55 year olds can treat them as a piggy bank is advice I’ve taken from my accountant.
6. Develop an exit strategy; decide how I’d like to sell my properties, which of them and when; piecemeal or alternatively as a package - perhaps to the new corporate/institutional entrants who will enter the market once Gideon has smashed up the ‘cottage industry’ – I believe you would need to present sound business fundamentals and an operating mechanism for this sort of exit strategy to have legs. In short, I’ll need to be running a proper business.
7. Consider going Corporate for future purchases, but also consider what kind of security you’ll need to offer to support this kind of enterprise (I won’t bet the Ranch), meanwhile I’ll wait and see what Gideon does first…
8. Continue to do the right things; Offer value and good customer service. Rental business is a people business. Treat people like you would like to be treated yourself and you will feel good, look good and you’ll make a difference.
9. Finally, hold fast. Illegitimi non carborundum... Read More

Claudio Valentini

12:12 PM, 22nd March 2016
About 3 years ago

Summer Budget 2015 - Landlords Reactions

I’ve had my accountant onto s162 relief on SDLT. Here's how I understand his advice;
1. You need to identify 'true' partners and connected persons who continue to own an interest in the properties after any transfer takes place.
2. If these connected partners and parties incorporate a company owned wholly by them then a transfer of ownership can take place as effectively no interest has changed hands – the ownership is still by the same connected persons, including the company which is effectively a ‘connected person’ as it is wholly controlled by the partners.
3. One very important consideration is; are the connected parties truly partners or do they simply own the properties in joint names?
4. To have access to the partnership SDLT rules, you must be seen to be operating as a partnership as a question of fact. If not, then you might be open to a challenge on the SDLT general anti-avoidance rules which may deem that you are deliberately and artificially taking advantage of the partnership rules to gain an SDLT advantage e.g. forming an LLP with a view to incorporating shortly after is unlikely to cut it.
5. To pass the test you need to be able to demonstrate the partnership as a serious undertaking conducted on sound and recognised business principles which have a degree of substance that you can represent, with a reasonable amount of time being spent on any property related activities.
6. My accountant suggests that one or two properties with minimal management wouldn’t pass the test whereas 100 properties would do so quite easily.
7. Depending on where you are on that continuum, proceed with caution is my advice.

I only have 5 BTL so I won't bother with s162 - Refinancing with low rates with a view to paying down BTL debt is my priority and assuming a capital growth strategy moving forward. I will incorporate a company for new purchases once all this shakes out. I'm convinced the treasury is just waiting to see how LLs move before catching them on the way out...... Read More