Tag Archives: IHT

Barry’s story – it could have been you! Financial Advice, Landlord News, Latest Articles, Property News

Barry’s story was written by the Mark Alexander back in December 2010. It has since been updated and re-published several times. The dates, times and people are fictional but the story is based on real life events.

It’s a modern update of the classic “A Widow’s story”, this time written as a cautionary tale for landlords and their families.

Barry is 53 years old and married to Sharon. They have three teenage children; twin girls aged 15 and a 13 year old son. Barry worked as a self employed salesman in the plant hire business. Sharon had a part time secretarial job in a local school.

Barry and Sharon purchased their first investment property in 1996.

As property values have risen they have continuously remortgaged and used a proportion of the equity released as deposits to purchase additional rental properties. They also saved a proportion of the equity released for a rainy day. To accelerate the growth of their portfolio Barry and Sharon raised extra cash for deposits by remortgaging their home. The profits from Barry’s plant hire business covered the family’s commitments comfortably.

They had accumulated a portfolio of 23 properties with a combined valuation of £1,650,000, against which they had mortgages of £1,400,000.  The portfolio produces rental income of £87,000 per annum. Their rainy day fund amounted to just over £64,000. By having all of the above in place you might be forgiven for thinking that they had set themselves up with a very safe future.

On Sunday 21st December Barry had a bad day. He was on the way home that evening having just been out to fix a tenants leaking shower tray when the traffic on the M6 came to a grinding halt. Barry managed to stop his car, avoiding the lorry in front of him, but the car behind him ploughed into the back of him, wedging his car under the back of the lorry.

The emergency services managed to free Barry from the wreck and his only damage was shock, whiplash and major bruising to his legs. However, two days later Barry collapsed whilst out shopping for last minute Christmas presents. He was rushed to hospital where it was discovered that a blood clot in Barry’s leg had passed to his brain. Barry had suffered a major stroke.

He lost his speech and most of the use of one side of his body. The family were in tatters. Sharon had to give up work to care for him.

Up until having a stroke Barry had managed the property portfolio and taken care of most of the maintenance himself. Could Sharon care for her husband, her family and the management and maintenance of the property portfolio too?

They considered putting the properties on the market but soon realised that after deducting selling costs and CGT there wouldn’t be much money left over. They would also lose their income and they would be leaving their tenants in a difficult predicament too. Sharon has had to employ a lettings agent to manage the portfolio. Since then it has cost the family an average circa £3,000 a month to pay for ongoing maintenance and management.

Fortunately there has been some good news, at least financially. First, low interest rates have meant that Barry and Sharon’s mortgages have got much cheaper than when they started their property rental business. Many of their mortgages have reverted to tracker products due to their fixed rates coming to an end. They are focussing on Barry’s recovery. What will happen when interest rates go back up again though? How will the restrictions on finance cost relief for individual landlords affect them?

The real saviour for the family has been insurance. Fortunately, Barry and Sharon were astute enough to insure against these eventualities. They took out life assurance policies that pay out a regular monthly income right up to Barry’s 65th birthday. These policies were written on the basis that they also pay out in the event of a critical illness. The family are therefore confident that these provisions will see them through these troubled times and out the other side. They will then revert to plan A, which was to live off surplus rental income over and above the mortgage payments on their portfolio or to sell the properties and live off their gains.

What insurance provisions have you made for your family?

How are you investing the windfall of increased cashflow that record low interest rates have produced for your family?

Have you made similar provisions to Barry and Sharon?  If you haven’t it may not be too late, we want to help.  If you have already taken advice and put insurances into place we would like to introduce you to one of our recommended advisers to review your policies and ensure they are competitive. Most important of all, to ensure that the right person gets the right money at the right time.


Financial Advice – how do you pick an adviser? Buy to Let News, Financial Advice, Landlord News, Landlords Insurance, Latest Articles, Property Investment News, Property Investment Strategies, Property News, Tax & Accountancy, Tax and Accountancy

All landlords require financial advice from time to time, I’ve listed some of the many reasons below. My question to readers of Property118 is how do you select an adviser? Do you want to be able to meet them or do your prefer to communicate by phone or internet? Do you prefer to work with people who are landlords themselves? Is age, sex, cultural background a deciding factor? Continue reading Financial Advice – how do you pick an adviser?


Rightmove doubles 2013 forecast for house prices Latest Articles, Property Market News, Property News

Rightmove doubles 2013 forecast for house prices as it reports ‘aggregation of marginal gains’ fueling a predicted 4.8% annual growth.

There have been seven monthly rises on the trot and two consecutive record months as the price of newly marketed property increases by 0.3% (+£860) in July boosting year-on-year growth to 4.8% (+£11,561)

Rightmove’s 2013 forecast has been increased from 2% to 4% as latest increases fuel recovery of the housing market.

There are signs finally of a broader-based recovery with all regions up year-on-year for the first time in nearly three years contributing to the positive national picture. Confidence in the market is said to be on the up with the proportion of people expecting average prices to be higher a year from now doubling compared to this time last year, now at 62% from 31%.

Rightmove reports an increase in movers and predicts more to come as property transactions are already up 5% year-to-date and lead indicators suggest more in the pipeline. Email enquiries to agents and developers are up 18% on 2012, new sellers up 5%, mortgage approvals up 6%.

It has already been reported that Surveyors are struggling to cope with the increase in demand with waiting lists for surveys pushing up into weeks. This is however also due to the number of Surveyors who have left the market since the Credit Crunch.

Rightmove along with many financial analysts predict a positive borrowing window as markets do not expect a base rate rise for three years. Funding for Lending competition is easing rates and availability of finance, plus the ‘brick-shortage success’ of Help to Buy!


Oven Cleaning is one of the biggest issues in a rented property Landlord News, Latest Articles, Property News

ovenOven cleaning is one of the biggest issues and this article is to help Landlords present this particular item in their property in its best condition for an inventory inspection and help tenants bring an oven back to its initial clean state when leaving the accommodation.

Let’s put it into perspective, the cleanliness of a property makes up 51% of tenancy deposit disputes and some of which can be attributed to people forgetting or missing an item to be cleaned, another is that differing people have differing ideas of what is clean. Let me give you an idea how we all think the same but differently.

Picture a cat in your head,
How big is it?
What is it doing?
What colour is it?

While we have all just seen a cat in our minds eye, some cats will be small, medium, large. It might be sleeping, sitting, jumping around and any colour you want. Nevertheless, it is still a cat. The same is true for cleaning, someone might have actually worked very hard to clean a property but yet it is not you to your high standard. Maybe they just don’t know how to do the task correctly and yes some are just simply too lazy to do it. It is a rare situation that we know which of these statements is true for a given household and it might be a combination of all of these factors.

There is a continuum for the level of cleanliness form: never been cleaned, attempted but still dirty, cleaned to an average household standard up to what we call in the inventory profession “cleaned to a high domestic standard” and “cleaned to a professional standard” the best of course being a professional clean.

Here is a list of key phrases I use when describing the cleanliness of an oven from best to worst:
1. As New
2. Cleaned to a professional standard
3. Cleaned to a high domestic standard
4. Clean to a domestic standard
5. Partly cleaned
6. Needs finished clean
7. Not clean.

I must add that fortunately, most inspection I do I only have to decide if the cooker/oven has been cleaned to a domestic or professional standard.

If you look at the picture below, this is an oven an oven cleaned to a high standard but its condition is excluded from our discussion on cleaning. This is a worn oven and unless you have prior information, to this picture, it is not possible to say if this is through damage or due to age and fair wear and tear.

 

This oven is clean but through age and use, it is marked and even rusted at the sides.

Then we have the oven that is clean to a high domestic standard that is to say it is grease free but there are still baked on marks.

 

You should also watch out for chemical residue, many of the excellent oven cleaning products on the market leave residue marks on surfaces if you don’t wash off the product fully, which technically means the oven is still partially dirty, need a finish clean.

There are several very good cleaning products on the market. But there is one that I prefer to use it gets the job done and is fairly easy to use and normally takes a clean to domestic standard to a professional clean level. It is a strong chemical so you have to be careful and follow the manufactures instructions it is “Oven Pride”. Please note that I don’t have shares in the company and I am not getting any benefit for mentioning this product my motivation for mentioning it is to   help anyone who reads this article in particular Landlords and Tenants.

About the author of this Post

Sydney Lewis A+ Inventories

Syd Lewis has been a private landlord for over 20 years, he is an accredited member of the National Landlords Association (NLA), Residential Landlords Association (RLA), Sponsor of the Good Landlords Campaign, a full member of the Association of Professional Inventory Providers (APIP) and a Certified Electrical Portable Appliance Tester (NIPIT). He is passionate about what he does which is providing residential inventory services, PAT testing and marketing floor plans for Agents, Landlords and Tenants. Inventories start from £56.00 to find out more see:-


Landlords Tax Planning Strategy Landlord News, Latest Articles, Property Investment Strategies, Property News, Tax & Accountancy, Tax and Accountancy, Tax News

Landlords Tax Planning Strategy“Milking the Buy-to-Let” is a Landlords Tax Planning Strategy which is very much under utilised. The strategy applies only to married couples and Civil Partnerships and is used to offset mortgage interest against rental income, regardless of whether the amount borrowed exceeds the original purchase price and also regardless of how the proceeds of the finance are used. Continue reading Landlords Tax Planning Strategy


Life Insurance for Landlords – IFA readers letter Buy to Let News, Cautionary Tales, Financial Advice, Landlord News, Landlords Insurance, Latest Articles, Property Investment News, Property Investment Strategies, Property News

Howard Reuben

IFA Howard Reuben

As an avid reader of Property118.com I was very interested to read a couple of recent articles 1) Should landlords buy life insurance and 2) What happens when a landlord dies –  both of which touched on the subject of what happens to the BTL mortgage contract if a borrower / landlord dies and also what happens to the property(ies) in this situation too.

What caused me to carry out some further detailed research in this matter, however, is that it was quite clear, not only from the comments left by readers but from my own experience as a Financial Adviser with 20 years business practice working in the BTL mortgage and insurance sector, and also as a portfolio landlord myself, that different people think different things will happen to their estate when they die. Continue reading Life Insurance for Landlords – IFA readers letter


House price crash triggers tax windfall on inherited homes Financial Advice, Latest Articles, Tax and Accountancy, Tax News

Falling house prices has meant up to £90 million has been overpaid in inheritance tax by families and friends who have been left a home in a will.

Insurance firm NFU Mutual reckons the tax is reclaimable under a special rule called sale of land relief. Continue reading House price crash triggers tax windfall on inherited homes


Hush-hush Chancellor Quietly Puts up CGT and IHT Latest Articles, Overseas Property, Property Investment News, Tax & Accountancy

Property investors will pay more inheritance tax and capital gains tax after the government changed the basis for calculating index-linked increases in reliefs.

The back-door move will increase the amount of tax collected on all transactions from April 2012 despite Chancellor George Osborne promising CGT rules would remain the same during the life of this Parliament. Continue reading Hush-hush Chancellor Quietly Puts up CGT and IHT


Loophole that beats HMRC’s IHT tax grab Latest Articles, Property Investment News, Tax News

House on CalculatorTaxpayers who have fallen foul of HM Revenue and Customs policy of checking out property valuations targeting larger inheritance tax payments from estates can fight back with a little known loophole.

Refunds on overpaid inheritance tax (IHT) can be claimed for homes that are worth less than the value on the deceased owner’s date of death. Continue reading Loophole that beats HMRC’s IHT tax grab


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