Telegraph article highlighting our own Mick Roberts

Could be a problem with mortgage lenders most wouldn’t accept a gifted deposit from the Vendor.

Reply to the comment left by Dylan Morris at 01/06/2022 - 10:09
That's what I'm wondering. And I think for it to be tax deductible rather than a gift it might have to be some kind of loan. So you'd need a solicitor to set that up and you would not only have to consider the fact that the tenants would need cash for stamp duty, they also have their normal fees plus probably additional fees to set up the loan note.

What I'm also curious about is that this is driven by the need to upgrade the properties to be more "eco-friendly". I haven't taken social housing tenants for years so I don't know much about it. The risks have been just too high since the government changed the rules such that if the tenant was found to be ineligible for housing benefit the social housing people could come back and get the money back off the landlord. And that happened without giving landlords any powers to check that social housing tenants were eligible. So that made it just too high risk.

About the only possible benefit of social housing tenants that I can think of is that some of them might be eligible for grants to upgrade their rented properties and improve the EPCs. So why aren't Mick's tenants doing it? I'm genuinely curious. Is it because the numbers don't stack up even if the tenant can get a grant? Or is it something else?

Reply to the comment left by Beaver at 01/06/2022 - 10:33
A Vendor’s loan to fund the deposit would be unacceptable to mortgage lenders as well.

Based on an average property price of £130K tenants would need not only the deposit, but also the stamp duty and whatever professional fees the lender required. And I can't quite see how Mick's going to get the deposit to the tenant so that the tenant can get it to the lender and still make that deposit tax deductible to offset against his CGT bill. There probably is some kind of legal vehicle that would make that possible although I don't know what it is and I suspect it would need professional fees to set it up and execute it.

And I'm still wondering why the tenants can't or won't apply for grants to improve the EPC of the properties if this is driven by the cost of eco-improvements.

Reply to the comment left by Dylan Morris at 01/06/2022 - 10:09
Yes Dylan, we got this March 2020 as soon as Covid hit. Got close with one tenant & they pulled the gifted deposit mortgages.

Reply to the comment left by Beaver at 01/06/2022 - 10:33
Do u know what Beaver, You've just made a very simple point that I'd totally missed. probably cause I bought most my houses before 2004 & the last of the majority in 2008, so stamp duty I don't think about. If we get close, I may have to ruddy pay that too then.

I've just had 46 free boilers fitted for tenants on Benefits.
None of us know at moment what's happening with the DEFINITE EPC & grants etc. I had call this morning, Grant assessor told me EPC C definitely in 2025, is it? I've not heard clarification yet. The homeless from this will be shocking. He said wasn't like that to an E. I said Aah that might be just needing a boiler, to a C while tenant living there in 2028 ripping floors up for insulation.......

Reply to the comment left by Mick Roberts at 01/06/2022 - 16:45
I've looked at the various options for improving EPC and the numbers never seem to work out. I don't have lots of benefits tenant so I'm ignorant in this area, I know very little about it. But if you make an investment and improve your property for many items that's capital investment not revenue expenditure and you can't offset it against rents. In my own home if I were to improve my property and increase both its thermal efficiency and value at my age I'd probably never get the money back. All that I would be doing would be to increase my children's inheritance tax bill at 40%. It would make way more sense for me to replace the solid fuel burner with something more efficient and leave the kids to do something about the house when I'm dead.

Wouldn't it make more sense if you could offset that against your IHT bill? Wouldn't it make more sense if you could offset carbon reducing improvements against your rents? If you could access grants for installing renewables without putting in CWI or dry-lining if your houses had solid walls? Or offset these costs against your tax bill?

Wouldn't it make more sense if your tenants could easily access grants?

I don't know what your solution is but I wonder if you could split your portfolio into those properties below the stamp duty threshold where neither you nor the tenant has any prospect of getting a grant with you as the landlord, and those properties where the tenant could get a grant (if it's worth it). And then sell when the work had been done and the property was improved,

I don't know though because I'm really ignorant on this subject. Whenever there's a grant around I always seem to be ineligible for it or the cost of the total works far exceeds the value of the grant. I'm on this site to learn though because other people know way more about accessing grants than I do and seem to be better at finding their way around the rules.

Reply to the comment left by Beaver at 01/06/2022 - 16:55
I'm not too concerned with the tax things. I've had enough of thinking all me life & more so with the Govt & Council Tax attacks last few years. I go on holiday when I want where I want, got the cars, just want to do that without think I'm going to prison cause someone too battery out smoke alarm.

We may be getting grants for these things who knows, lot of us have gave up till proper clarification.

Try this chap who rang me today if u want to know about grants, he seems to know about ECO 4 coming up Gary Peacock Gary 07734 070108

Reply to the comment left by Mick Roberts at 01/06/2022 - 17:56
Thanks for the tip on grants. The last time I looked you couldn't get a grant unless you earned less than £25K as a household. But if you earned less than £25K as a household then under current mortgage rules you also wouldn't be allowed a mortgage whether you had a deposit or not. Always seems to be a catch 22 somewhere.

But if you were a benefits tenant earning less than £25K per household it might be that you could get a grant towards improving the EPC. And that might at some point help you sell.

Of course you might not have the time or energy to do this if you've been ground down by the regulations anyway. You might just want to get shot of the problem and I understand that if you've spent years trying to get money out of the Universal Credit system.

If you offload these properties and they are sold to owner occupiers (i.e. it's their Principle Private Residence) then they don't have to worry about the EPC. You don't need an EPC for your PPR and you can still live in it if it's at Band E (social housing providers don't seem to have to bother with all this bureaucratic stuff either). So being owner occupiers they can just open up the chimney and burn coal. I wouldn't judge them for that; good luck to them.

Reply to the comment left by Beaver at 01/06/2022 - 18:07
PS: Not sure whether you missed that but if they earn less than £25K per household then they won't satisfy the current mortgage lending criteria whether you find some way to get the deposit to them or not. I.e., that's not happening anyway. They'll need probably the last three months of salary payments showing that they have a job and are earning £25K+ per year or if they are self-employed they'll need accounts for the last two years showing more than £25K or the relevant partnership or self-employment form from HMRC showing that they've earned £25K+ for the last two years. Without that it's just not happening.

But below £25K they may be eligible for grants.