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View Full Version : New BTL landlord starting let in 10 days- please help



BBB
20-02-2008, 13:42 PM
Hi, I'm a newbie here and have a few questions I hope someone can answer in simple terms...

I have a BTL mortgage (interest only) on a flat I intend to let. (I also have buildings insurance which has liability insurance built in on this property).

I live with my partner in the UK (mortgage free) which is why my flat is available for rent.

I am also in full time employment and earn just under 34k pa. Will declaring the rental income (£585pcm) push me into a higher tax bracket? (Will this mean I even make a loss?!)

I've just placed an ad in the paper published tomorrow.

I'm not with a letting agent as I didn't want to eat into any profit. (was this wise?)

I've heard I might need to declare the rental income to HMRC and hold a deposit with DPS. How do I go about this? (in easy steps please - I haven't a clue what the HMRC website is talking about!!).

I'm also reluctant to give any of my details to HMRC as I don't trust them to keep them safe after their recent loss of data. And why should I put a deposit with DPS instead of keeping it in an ISA or something? Do I legally have to do these things? What are the consequences otherwise?

How can I get things sorted out by 1st March with very limited time to meet people or fill in forms etc?

Would i be better off leaving it empty?!

Grange
20-02-2008, 13:53 PM
I've heard I might need to declare the rental income to HMRC and hold a deposit with DPS. How do I go about this?

You are kidding us, aren't you?

Ring your tax office (number on your payslip) and tell them that you will have rental income this year. They will send you a tax return. Which you will do online, but that is another matter.

Then, once you eventually manage to get the place let, add up all your receipts (rent, forfeited deposits), take off your expenses (mortgage INTEREST, insurance, advertising fees, costs of arranging BTL mortgage, petrol, repairs) and then declare the resulting figure on your tax return and pay tax on it.

And yes, you do need to get into the DPS. What about selling the flat instead? And I suggest you go talk to an accountant so as to avoid storing up trouble for later.

BBB
20-02-2008, 14:23 PM
I'm afraid I'm not kidding. Tax and HMRC is something I don't know anything about (other than knowing I pay tax on my wages, I've never been self-employed either so had no understanding of tax returns etc). I'm sure I can't be the only one.

Thanks for your advice, I will call my tax office and have a chat with them (didn't realise their number was on my payslip!) I will also get set up with the DPS. I'll see if I can talk to an accountant too.

As for selling the flat - I'm intending to keep the property as something I can sell when I retire, as I don't want to solely rely on my pension scheme.

jeffrey
20-02-2008, 14:26 PM
But, BBB, letting-out a valuable asset can be very dangerous financially unless you know what you're doing. If you don't believe me and you have a week to spare, read all the posts on this "RESIDENTIAL LETTINGS" forum for armsful of horror stories.

PaulF
20-02-2008, 14:28 PM
I don't want to pour water on your enterprise but you are asking for trouble if you are so naive. Consider using an agent but make sure they are regulated i.e. ARLA/NAEA/RICS you can look on their websites to check.

Grange
20-02-2008, 14:30 PM
>>have a chat with them

Unlikely. But you might persuade them to send you a tax return.

BBB
20-02-2008, 14:50 PM
Naive? Guess I am. But we all have to start somewhere. Which is why I came here for some advice.

So, my plan of action unless I'm mistaken should be:

1. Call the Tax Office (don't chat with them, just ask for a tax return)
2. Set-up DPS account
3. Go and talk to a regulated Letting Agent

?

PaulF
20-02-2008, 14:56 PM
You should talk to HMRC as they are usually very helpful and can send you all the relevant information. Work with them and you will see it pays. It's unlikely you will have much or even any tax liability in the early years. I find them easy to deal with.

pcwilkins
20-02-2008, 15:29 PM
I am also in full time employment and earn just under 34k pa. Will declaring the rental income (£585pcm) push me into a higher tax bracket? (Will this mean I even make a loss?!)

This is hopefully a stupid question, but have you actually worked out how much of a profit/loss you will be making per month? And have you compared this figure to what you would get if you sold the flat, put the proceeds into a savings account, and earned interest on it?

Perhaps I'm being cynical but I wonder whether BBB is a troll. Surely nobody could ever really be this stupid? (Apologies if so.)

Peter

BBB
20-02-2008, 15:58 PM
Thanks for you input, althought the insults are very childish. Please grow up.

jeffrey
20-02-2008, 16:10 PM
Thanks for you input, althought the insults are very childish. Please grow up.
No-one has insulted you. You asked for advice about venturing into unknown and potentially complex legal territory.

Grange
20-02-2008, 16:18 PM
It just seems inconceivable that you have an asset worth, maybe, 100,000 or maybe 250,000. Who knows; a lot of money anyway.

And on a whim you decide to start up a business in an area where you apparently have no expertise. You want this to be your pension, yet you ask whether you're better off NOT renting it out. You have no concept of how you calculate your tax. You think that after paying the tax you might end up making a loss overall.

And then you expect to get the information you need to protect this extremely valuable asset from an internet chat forum where any damn fool can post what he likes; no checks or balances whatsoever.

You're asking to be totally utterly stuffed. Ripped Off. And probably to end up in trouble with HMRC, the TDS, HMO legislation perhaps? And whilst I'm sure you're a really nice, honest sort of chap I wouldn't want to be your tenant; novice landlords have a bad reputation.


It is almost inconceivable that somebody could be quite so naive; hence you look more like a troll than a serious person. Your questions have been answered on the basis that you need to know, but forgive us for being in doubt!

Do as Jeffrey says and go and look at some of the horror stories here of damage by tenants; unevictable tenants; 250 different ways for landlords to lose money.

jackboy
20-02-2008, 23:08 PM
Hi, letting out a property isn’t as difficult as some on here seem to make it out to be. You will need to fill out a tax return and complete the income from property section. It’s income so profits may push you into a higher tax band, but as stated you will probably make a loss or break even for first year or so. I personally use a letting agent and have only ever had problems with tenants who weren’t through them (but of course that doesn’t mean you won’t have problems!). It can sometimes be a bit of a hassle managing a property, but you will still be financially better off letting it than leaving it empty, although capital appreciation may mean you make a profit over the long term regardless. It may be a good idea to join a landlords association too. Personally I’m a member of SPLA, now NFRL, and am based in south London. They have meetings and send out newsletters etc which can be very good for anybody starting out. Any deposit must now be protected in an approved scheme and any landlord association can advise on this and has probably negotiated a discount for members with one or more of the schemes. Best thing to do would be read around the subject but you’ll soon get to understand it. I’m sure some on here can recommend a good book as an introduction.

ChrisG
21-02-2008, 00:53 AM
As for selling the flat - I'm intending to keep the property as something I can sell when I retire, as I don't want to solely rely on my pension scheme.


I would have thought that if the flat is to be used for your pension then I may, if I were you, consider a Self Investment Pension Plan as a wrapper so as to enjoy huge tax breaks and no CGT when converting to an annuity when the time came to draw my pension

TaxationPete
21-02-2008, 08:01 AM
BBB. What are you going to do about an AST, credit checks on the tentants and references. There is lot to learn prior to viewing with your first tenant. Is the property compliant, gas safety certificate, electrical P compliance ( not compulsory but advisory every 5 years) smoke detectors. Regrads Peter