Partial Exit Strategies for Landlords

by Mark Alexander

9:08 AM, 28th July 2012
About 7 years ago

Partial Exit Strategies for Landlords

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Partial Exit Strategies for Landlords

Is it possible for landlords to have a partial exit strategy without selling the goose that lays the golden eggs, i.e. their buy to let property. I have spoken to a very wide cross section of landlords over my time who have reached the point where they are saying “enough is enough”. They are fed up with tenants, letting agents, rules & regulations and of course void periods. However, for a whole plethora of reasons they don’t consider that now is the right time to sell up and are looking for alternative or partial exit strategies.

Caught between a rock and a hard place then right?

Well maybe not!

I’ve been having a good old surf around the National Property Group website this week, mainly because Glenn Ackroyd, one of their Directors, keeps sending me so many useful hints and tips to publish here at Property118. You can see Glenn’s articles here.

Landlords Exit StrategiesI think they hold one of the best kept secrets for landlords in this awkward position. They call it their Guaranteed Rent Scheme and to be honest I’ve glossed over it before thinking it was a page about RGI (Rent Guarantee Insurance). However, it’s far more than that. It’s an opportunity for landlords to pass on all of their headaches and risks over to somebody else. Not just anybody though! You see, the Directors of Glenn’s company own and manage 400 of their own properties so they certainly know the market. They also manage thousands of other peoples properties too. In other words, we are not simply talking about giving them the management of properties, we are talking about National Property Group taking on all of the risks (including none payment and rental voids). The landlord simply accounts for the rent to the HMRC and that’s the end of the landlords involvement.

There may well come a point when I want to completely put my feet up and work this way. I’ve not got to that point yet but when that day comes I know who I will be talking to.

There are several things I like about National Property Group, one of which is that they are Members of both SafeAgent and ARLA which means that any landlord can be sure that their money is fully protected and insured and also that they are dealing with competent agents. If you do pop over to the National Property Group website do make sure that you watch the video at the bottom right of their landing page. I only watched it for the first time yesterday and that too impressed me.

My Own Exit Strategies – which may also be useful for other landlords

I have another strategy which I will be sharing with you soon and I know it’s going to blow your mind. It has nothing to do with National Property Group but it is another partial exit strategy. What if I were to tell you that in 20 years time I may well be able to stop paying my monthly mortgage payments without paying off my mortgages or selling any of my properties to pay them off AND I will be able to keep ALL of the rental income?

Sounds too good to be true doesn’t it?

Well I can assure you it isn’t because I found a person in their 70’s that’s doing exactly that right now.

If I could get into this scheme now, beleive me, I would. There are two issues, 1) I’m too young and 2) I’m too highly geared. If I live long enough though and the scheme is still around then it will be my exit strategy for sure. As I don’t plan to sell any of my properties or to remortgage them to release any more cash I’m banking on inflation reducing my LTV and increasing my rents by the time I’m 70. By the way, when I do reveal this strategy in part 10 of my latest article series (part one here) I will also explain why the scheme is so incredibly tax efficient.

If, by any chance, you are over the age of 55 now and your LTV is lower than 25% (or <33% if you are over 65) then drop me an email (mark@property118.com). It may well be that you are in a position right now to palm off both the running of your portfolio AND your monthly mortgage payments AND keep your rental income by using the two schemes above in tandem. If you don’t have a mortgage or just a very small this one scheme can even be used to raise cash too.

We now have a complete section dedicated to articles, Q&A’s and discussions regarding exit strategies. For details please

Exit Strategies for BuyToLet Landlords



Comments

9:38 AM, 15th August 2012
About 7 years ago

Hi, I am gob smacked that you can re-mortgage and create tax allowable interest by transfering houses to your partner. Does this also mean that the CGT liability on the original purchase price is avoided, if your partner sells the property for the value he/she "purchased" it from you? If not who would bear the CGT liability if you had split up? Regards

Mark Alexander

15:02 PM, 15th August 2012
About 7 years ago

Hi Richard

As stated in the original article, the base cost for CGT purposes remains as per the initial purchase price, not the value at the date of transfer. Therefore, there is no CGT benefit in this unless you die, at which point CGT isn't payable but inheritance tax on the value of NET assets may be depending on the NET value of your estate.


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