Property118 Ltd understands that your privacy is important to you and that you care about how your personal data is used and shared online. We respect and value the privacy of everyone who visits this website, www.property118.com
(“Our Site”) and will only collect and use personal data in ways that are described here, and in a manner that is consistent with Our obligations and your rights under the law.
- Definitions and Interpretation
In this Policy the following terms shall have the following meanings:
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- Information About Us
- Our Site is owned and operated by Property118 Ltd, a limited company registered in England under company number 10295964, whose registered address is 1st Floor, Woburn House, 84 St Benedicts Street, Norwich, NR2 4AB.
- Our VAT number is 990 0332 34.
- Our Data Protection Officer is Neil Patterson, and can be contacted by email at email@example.com, by telephone on 01603 489118, or by post at 1st Floor, Woburn House, 84 St Benedicts Street, Norwich, NR2 4AB.
- What Does This Policy Cover?
- Your Rights
- As a data subject, you have the following rights under the GDPR, which this Policy and Our use of personal data have been designed to uphold:
- The right to be informed about Our collection and use of personal data;
- The right of access to the personal data We hold about you (see section 12);
- The right to rectification if any personal data We hold about you is inaccurate or incomplete (please contact Us using the details in section 14);
- The right to be forgotten – i.e. the right to ask Us to delete any personal data We hold about you (We only hold your personal data for a limited time, as explained in section 6 but if you would like Us to delete it sooner, please contact Us using the details in section 14);
- The right to restrict (i.e. prevent) the processing of your personal data;
- The right to data portability (obtaining a copy of your personal data to re-use with another service or organisation);
- The right to object to Us using your personal data for particular purposes; and
- If you have any cause for complaint about Our use of your personal data, please contact Us using the details provided in section 14 and We will do Our best to solve the problem for you. If We are unable to help, you also have the right to lodge a complaint with the UK’s supervisory authority, the Information Commissioner’s Office.
- For further information about your rights, please contact the Information Commissioner’s Office or your local Citizens Advice Bureau.
- What Data Do We Collect?
- Date of birth;
- Address and post code;
- Business/company name and trading status;
- Number of properties owned;
- Accountants details;
- Contact information such as email addresses and telephone numbers;
- Proof of residence and ID;
- Financial information such as income and tax status;
- Landlords insurance renewal dates;
- Property Portfolio details such as value and mortgage outstanding;
- How Do We Use Your Data?
- All personal data is processed and stored securely, for no longer than is necessary in light of the reason(s) for which it was first collected. We will comply with Our obligations and safeguard your rights under the GDPR at all times. For more details on security see section 7, below.
- Our use of your personal data will always have a lawful basis, either because it is necessary for our performance of a contract with you, because you have consented to our use of your personal data (e.g. by subscribing to emails), or because it is in our legitimate interests. Specifically, we may use your data for the following purposes:
- Providing and managing your access to Our Site;
- Supplying our products and or services to you (please note that We require your personal data in order to enter into a contract with you);
- Personalising and tailoring our products and or services for you;
- Replying to emails from you;
- Supplying you with emails that you have opted into (you may unsubscribe or opt-out at any time by the unsubscribe link at the bottom of all emails;
- Analysing your use of our site and gathering feedback to enable us to continually improve our site and your user experience;
- Provide information to our partner service and product suppliers at your request.
- With your permission and/or where permitted by law, We may also use your data for marketing purposes which may include contacting you by email and or telephone with information, news and offers on our products and or We will not, however, send you any unsolicited marketing or spam and will take all reasonable steps to ensure that We fully protect your rights and comply with Our obligations under the GDPR and the Privacy and Electronic Communications (EC Directive) Regulations 2003.
- You have the right to withdraw your consent to us using your personal data at any time, and to request that we delete it.
- We do not keep your personal data for any longer than is necessary in light of the reason(s) for which it was first collected. Data will therefore be retained for the following periods (or its retention will be determined on the following bases):
- Member profile information is collected with your consent and can be amended or deleted at any time by you;
- Anti-Money Laundering information and tax consultancy records are to be kept as required by law for up to seven years.
- How and Where Do We Store Your Data?
- We only keep your personal data for as long as We need to in order to use it as described above in section 6, and/or for as long as We have your permission to keep it.
- Some or all of your data may be stored outside of the European Economic Area (“the EEA”) (The EEA consists of all EU member states, plus Norway, Iceland, and Liechtenstein). You are deemed to accept and agree to this by using our site and submitting information to Us. If we do store data outside the EEA, we will take all reasonable steps to ensure that your data is treated as safely and securely as it would be within the UK and under the GDPR
- Data security is very important to Us, and to protect your data We have taken suitable measures to safeguard and secure data collected through Our Site.
- Do We Share Your Data?
- We may share your data with other partner companies in for the purpose of supplying products or services you have requested.
- We may sometimes contract with third parties to supply products and services to you on Our behalf. Where any of your data is required for such a purpose, We will take all reasonable steps to ensure that your data will be handled safely, securely, and in accordance with your rights, Our obligations, and the obligations of the third party under the law.
- We may compile statistics about the use of Our Site including data on traffic, usage patterns, user numbers, sales, and other information. All such data will be anonymised and will not include any personally identifying data, or any anonymised data that can be combined with other data and used to identify you. We may from time to time share such data with third parties such as prospective investors, affiliates, partners, and advertisers. Data will only be shared and used within the bounds of the law.
- In certain circumstances, We may be legally required to share certain data held by Us, which may include your personal data, for example, where We are involved in legal proceedings, where We are complying with legal requirements, a court order, or a governmental authority.
- What Happens If Our Business Changes Hands?
- How Can You Control Your Data?
- In addition to your rights under the GDPR, set out in section 4, we aim to give you strong controls on Our use of your data for direct marketing purposes including the ability to opt-out of receiving emails from Us which you may do by unsubscribing using the links provided in Our emails.
- Your Right to Withhold Information
- You may access certain areas of Our Site without providing any data at all. However, to use all features and functions available on Our Site you may be required to submit or allow for the collection of certain data.
- How Can You Access Your Data?
You have the right to ask for a copy of any of your personal data held by Us (where such data is held). Under the GDPR, no fee is payable and We will provide any and all information in response to your request free of charge. Please contact Us for more details at firstname.lastname@example.org, or using the contact details below in section 14.
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- Contacting Us
Mark Alexander - Founder of Property118
11:45 AM, 27th August 2013, About 10 years ago
You are facing the exact same dilemma I had whilst building my portfolio. I was also paying tax from other earnings at the highest rate at the time.
I am not a tax adviser but I did look into this in depth and in hindsight I am convinced I did the right thing which was to focus on the outcome as opposed to focussing on the income.
The outcome I wanted can be summarised as follows - in no particular order:-
1) To produce substantial income for retirement in the most tax efficient manner possible
2) To leave a legacy for my family
3) A robust and low risk strategy which other landlords have used to survive highs and lows in property markets, interest rates and boom/bust economies for decades.
I will share my own strategy and thought process. Before I do that I also want to give a few other people a mention.
First, I had a very similar conversation with Mary Latham last week as she is in the process of writing her second book and is interested in publishing my strategy.
Second, I received the following email from a gentleman to whom I shall refer to as Michael A ....
You have a great website with a tremendous amount of information for landlords. I have a simple question regarding purchasing a buy to let with my wife. We are both in the top marginal income tax band and we are debating the following two options:
1) buy the property as tenancy in common in our own names or
2) buy via a UK limited company
The appealing aspect of item 2) above will allow us to defer the distribution of any income the company generates as a dividend distribution today would be taxed at our marginal tax rate. Further, we have taken the view that any surplus cash could be used to add additional properties to the portfolio as a form of wealth accumulation avoiding the need to make a dividend distribution.
We are interested in you thoughts and whether establishing a company would be sensible.
We do have other properties in our own names so we have experience in the buy to let market.
We look forward to receiving your thoughts."
The following words pretty much summaris the nub of my strategy - FOCUS ON THE OUTCOME - NOT THE INCOME
There are several reasons I chose to avoid limited companies. The first of which is reduced appetite for lending and hence reduced competition from lenders. If you buy in your own name and put the properties into trust the ability to raise finance subsequently is reduced to less than a handful of lenders and may well be in breach of the original mortgage lenders terms.
Other problems associated with owning buy to let property in limited companies and trusts
1) Limited companies are immortal, therefore, tax on gains will always be payable at some point
2) Getting the money out in a tax efficient manner. You will either need to take the money out on the form of dividend, salary or bonus, none of which are tax efficient.
My entire financing strategy is documented here >>> http://www.property118.com/the-roots-of-my-property-investment-strategy/1744/
There are 16 separate articles, all of which are linked. Part seven is particularly important. Please read it and feel free to come back here to ask questions or post them on the articles as you read through them.
1) Own properties half in your name, half in your wifes name.
2) Borrow as much as possible and offset interest against rental income
3) Retain 20% of the value of the debt in liquid assets
4) Release equity by refinancing whenever possible
5) When you get to the stage of borrowing more than the purchase price swap assets, i.e. wife buys yours, you buy hers. There is no CGT between spouses. New loans are for purchase of investment property, hence all interest can continue to be offset against rental income.
6) Never sell - the CGT clock stops ticking when you are dead.
Also read this article to understand my exit strategy >>> http://www.property118.com/exit-strategies-for-buytolet-landlords/
13:13 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/08/2013 - 11:45":
Hi Mark, your response is useful to a degree and I am going to investigate further the re-finance issue and will of course read those recommended articles but there are other ways to take money from the business which is tax efficient, such as paying into a pension (which can be accessed from 55) or taking back money which was a directors loan (the deposits came from somewhere) and this is all tax free plus other legitimate expenses such as office space etc.
Further, if I do decided to take some money out via bonus, dividends or salary, ultimately I am only pay severe tax on that portion of the income rather than 45% on all income. Finally, I am sure my current situation will not always be the case and there may be periods where I have no other income at all and can draw dividends at a lower tax rate which is very tax efficient.
I am very much focused on my outcomes rather than income, hence why I am happy to consider a limited company to shelter revenue for re-investment into more property.
I am unlikely to have kids and therefore once I am dead, I don't really care if I pay CGT or some other punitive tax.
Thank-you for your response and I hope other people post who have actually done this.
All the best
Mark Alexander - Founder of Property118
14:18 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Terry Whitehead" at "27/08/2013 - 13:13":
I do understand where you are coming from but I still think individual ownership with high gearing and strong liquidity to counter balance risk is the way to go.
Whilst I was building my portfolio I accumulated substantial rental losses which I am now using in my retirement. However, the actual cash position continually improved due to building my portfolio in a rising market and consistently refinancing. It was the mortgage lender fees which created the retained losses and as these were added to mortgage advances they didn't affect cashflow. What I didn't factor into the equation was divorce at the height of the market in 2007 but hey ho, that's all part of life I suppose.
I'm now at a stage (and so is my ex-wife) where rental income is my only income and therefore, I will use the retained losses to live tax free for many years. Interest rates will go up and reduce my profits at some point but the plan is that that will only happen following a period of capital appreciation which will afford me an opportunity to refinance and raise extra liquidity again. Therefore, my strategy is based on taking advantage of tax legislation and the fact that history tends to repeat itself.
Good luck with your own investigations, I fully understand why you would want to ask the questions and not rely on the first answer you get. I did exactly the same thing 😉
15:28 PM, 27th August 2013, About 10 years ago
I have to say the kind of advise you need goes beyond what should I do for property, you need 'complete' tax advise that will cover not only what you want to achieve with a property portfolio but also the wider issues concerning IHT and your current tax arrangements.
I know it's not an answer to your question, but as a qualified accountant I would not be allowed to give more of an answer by Institute rules that are there to protect you from being given wrong advise based on limited details.
One of our Chartered Tax Advisers specialises in property clients and what we have seen from other accountants and also those who don't take advise is shocking, believe it or not I am not trying to get you to contact us but please find an experienced and qualified tax adviser to give you a wealth checkup.
Sorry to hijack the thread Mark but I felt it very important to bring this up.
Mark Alexander - Founder of Property118
15:55 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Jason Holden" at "27/08/2013 - 15:28":
Thanks Jason, I think it is a very good point very well made.
My own tax advisers would say exactly the same thing I'm sure.
I see you are based North West from your profile.
My accountants are in East Anglia - member profile here >>> http://www.property118.com/member/?id=452
I offer this on the basis that Terry has a choice of at least two specialist advisers, who regularly contribute here, to chat further to if required.
16:55 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/08/2013 - 15:55":
Bit concerned that the professional advisers and property gurus do not realise companies do not pay CGT but corporation tax on chargeable gains.
Mark Alexander - Founder of Property118
17:01 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Peter Simpson" at "27/08/2013 - 16:55":
Which professional advisers and guru's are you referring to Peter?
19:20 PM, 27th August 2013, About 10 years ago
Reply to the comment left by "Mark Alexander" at "27/08/2013 - 14:18":
All very interesting and I agree always run it by the accountant or tax adviser
I feel personal investment and using a Ltd company can both have advantages
I did some private property dealings in the 70s but set up a limited company in 1980 and used it to buy property, renovate and sell and also buy property for letting.
I agree one problem with borrowing as a limited company is you don't have the choice or variety but once you got going they would lend money against the portfolio based on total value although only to 65 - 70%. If you added value to the properties and were in a rising market you could get additional finance as you went along.
Following the recession in the late 80s I worked for other people as a higher rate tax payer and didn't draw any money from the company for 15 years. It paid little corporation tax as the rental income and interest payments balanced out. At one stage HMRC actually gave the first £10 000 tax free for limited companies. If I had paid tax on the profits in the company it would have been at a rate about half the 40% tax if they were in my own name.
As has been said if you take the money out as a salary then it becomes less attractive, particularly wen NI payments are included.
At the same time you can invest in property in you own name or with your partner and make use of easier mortgages and higher L/V and also if you flip a combined CGT tax of £10 900 x 2 (figures from memory.) This is not available in a limited company.
One advantage to me of the limited company is that I can distribute shares to my children, and so reduce my CGT/inheritance tax from my owned share value, but still have control of the portfolio.
Also as the Ltd company is a separate legal entity when I die it can continue providing the bank are happy with the other shareholders - this isn't the same for the mortgages are in my own name, as when I die the contract terminates - in short I find it has advantages for continuity.
Over the years I have transferred some properties into the company and this is now loan capital which can be withdrawn without incurring tax.
I enjoy property and money is not the overriding factor for me but do feel that both private and limited have their respective advantages.
19:46 PM, 27th August 2013, About 10 years ago
You need an excellent accountant but as far as I know the answer to most of your questions is Yes. Particularly the first one: the lender will want the mortgage assigned to the legal title holder and your deed of trust will not cut the mustard between yourself and a limited company. You will also have to give a personal guarantee for the loan as well as the limited company so if the company should default you cannot just write off the loan.
What Mark says about CGT is true but what he does not say is that IHT takes over when you die although there are ways of mitigating it.
Your last 3 Qs are not really relevant but you would need a commercial loan and they are much more expensive than B2L at the moment plus need about 50% deposit based on a complex formula.
At least that is my experience, if you find otherwise I should be interested to know.
19:51 PM, 27th August 2013, About 10 years ago
PS. You will still have to pay Corporation Tax.
Also you say office space etc. - how big is your portfolio? Unless it is huge and you manage it yourself you will find it hard to justify more than a nominal amount to HMRC.