Jeremy C

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About Jeremy C

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  1. I have engaged an accountant for the first time to prepare my 2016/2017 tax returns and I am not 100% convinced that their advice is correct on a particular aspect. The situation is this: 1. When I remortgaged my home, I borrowed an additional sum to invest in my first BTL. You could say that the total loan comprised two parts: Part A - the part needed to repay the existing mortgage on my home; and Part B - the additional borrowing to fund the BTL. Part A is about three time larger than Part B. All of Part B is being used to fund the rental property business. 2. It is a fixed rate repayment mortgage at 3% (give or take). I pay the same amount each month which comprises interest (X) and capital (Y). Clearly, as I repay the capital, each repayment comprises a slightly bigger Y compared to the X. 3. The question is how much of the interest is deductible from the rental income. Clearly it is only interest on the Part B borrowing and not the Part A borrowing. 4. My accountant has taken the total amount of interest paid on the mortgage (i.e. the total of X throughout the tax year) and apportioned that between Part A and Part B and is telling me I can deduct the amount of X apportioned to Part B. As a formula I think it looks like this: Deductible interest = (X * Part A)/(Part A + Part B). 5. But is this correct? Can I not say that the Y (capital) payments are going to repay Part A first, and that all I am paying in respect of Part B is interest? On this basis, until Part A gets to a certain level, I would be able to deduct 3% * Part B from my rental profits which gives a higher deduction. The accountant seems to think that this would count as income on my "personal" account which would be taxable but I cannot see how that is. Is my interpretation reasonable/acceptable? Apologies, this is a bit complicated, but if there are any tax techies who understand what I am getting at and can answer the question, I would be very grateful. I doubt I am the first person for whom this is relevant! Many thanks.
  2. Not entirely sure. Think it's up North - I want to say Leeds or somewhere in that direction, but don't know if that's right.
  3. I've passed on to my friend the very helpful information people have posted on this thread. He did not know there might be the possibility of selling the freehold. He is considering what to do but is in no great hurry as this is not a particularly pressing issue for him right now. Many thanks to all for the feedback. Jeremy
  4. I bought a property recently via a sourcer and ended up getting the mortgage from the bank with whom I have a current account. They offered me a better deal than the mortgage broker recommended by the sourcer and there was no issue with the fact that the purchase was through a sourcing company.
  5. Many thanks for all the suggestions, that's really helpful.
  6. Slightly odd situation - I'd be grateful for Hubbers' views: A friend has inherited the freehold to a block of flats which his father built. The leases are all 999 years from the early 1970s and provide for an annual ground rent of £15 per flat. With 24 flats this totals £360 per year. There is no provision in the lease for increasing the ground rent, so as things stand it will just continue at that level. Not sure who manages the block, but it is not something my friend is interested in taking on. He has asked whether there is anything he can do. Over time he sees the income as more trouble than it's worth and, unless something can be done to increase the ground rent, he would rather just get rid of the freehold. Any thoughts?
  7. Knight Frank have published their forecast for house price growth for the next five years: It predicts the North West as being one of the poorer performers cumulatively over this period, with the best region predicted to be the "East" (I presume that means East Anglia). Of course, it's all crystal-ball gazing, but interesting nonetheless!
  8. I recently attended a training session at work on data protection (yes, it was as thrilling as it sounds) and it got me thinking, as a landlord who holds information digitally, what my obligations were and whether I needed to register with the Information Commissioner's Office (ICO). I did a bit of Googling and also saw that there have been a few posts on the Hub about this but could not get a definitive answer so phoned up the ICO to ask for their advice. This was the result: 1. In my case, I use an agent on a fully-managed basis and the only information I have about my tenants is their names, address (obviously!), phone numbers and email addresses. This information by itself is not enough to require registration. 2. However, if I was ever to receive electronically/digitally any personal information about my tenants, I would need to register. Such information would include any financial information or reference checks. 3. If you self-manage and carry out your own reference checks then you need to register with the ICO if you receive or store anything digitally. Maybe this is something everyone who self-manages does anyway but it was news to me! 4. If you use a letting agent but receive digitally anything more than basic contact information about your tenants then you may also need to register. Apparently this even applies if you receive something by email and then delete it. 5. Registration is only necessary where information is received or stored electronically. If you do everything in hard copy then there is no need to register, but I doubt many people do this these days! 6. Registration costs £35 - not going to break the bank, but a mildly annoying expense. Apologies if this is all common knowledge amongst Hubbers, but I thought it was worth mentioning. Cheers Jeremy
  9. PS consultation document can be found here: Public Consultation_taxation of rental income_3.pdf
  10. The Irish government has just launched a consultation on how landlords are taxed. Measures suggested include:  Tax relief similar to pension contributions for rental income  Reduced tax rate (e.g. 25% corporation tax rate) to apply to rental income  Tax relief targeted at ‘accidental landlords’  Improved deductibility of expenses, including: Restoration of 100% mortgage interest relief Deduction for cost of personal time spent managing / maintaining property Up-front deduction for full cost of furnishings and fittings Increased tax relief for refurbishment works Deduction for Local Property Tax, potentially tied to longer term leases I don't know how the Irish and UK property markets compare, but might we dare hope that the UK government follows suit...?
  11. Interesting point here is that there has to be an intention to realise a gain on a sale. Does that mean HMRC has to provide evidence that there was an intention to sell on acquisition? That could be difficult, especially if you subscribe to the "buy and hold forever" school of thought. It's sneaky, to be sure, and creates uncertainty, but may not be that bad in practice. Glad the Law Society has responded, though. Hopefully this will result in a change or a clarification.
  12. Hi everyone I'm considering the possibility of buying a furnished holiday let somewhere on the Norfolk coast - I've chosen that area because it's within relatively easy reach of home (2-3 hours drive) and would be a good place to take the family for holidays. My plan would be to outsource all the bookings and management as far as possible and so, as a first step, I would like to have some initial conversations with local specialist FHL agents. Does anyone have any recommendations as to good agents to contact? Many thanks Jeremy
  13. Thanks, Paul - no, not conducting policy research, just a newbie investor (hopefully completing on my first BTL in the next week or so) who is a bit paranoid about what the future may bring! I'm intrigued by your comment that building more homes causes prices to rise. Would that mean that, if the government did meet the recommendation that 250,000 homes per annum are built, prices would still only go up?
  14. There have been a few stories on the BBC this week regarding the unaffordability of housing generally, not just to buy but also to rent. Whilst the big problem is the lack of housing/failure to build over the past few years, the government have shown over the past year or so that they are very happy to go after landlords (SDLT changes, restrictions on mortgage interest relief, etc). If the government further discourages landlords, a side effect of this could be to reduce the supply of rental property which might result in rents rising. To stop this occurring, one solution might be the introduction of rent controls. This could discourage landlords (with the stated aim, probably incorrect, of freeing up housing for purchase by owner occupiers) whilst keeping rents down. Do fellow Hubbers think that this could be a risk? It might make no economic sense (for a start, it probably would not make purchases by owner occupiers more affordable), but it would mean the government being seen to be doing something in the face of these stories. (Policy by media? Never!) I would be interested in views. Jeremy
  15. Really interesting episode, thanks guys. One question I have is where, if at all, the dividing line falls between serviced apartments and furnished holiday lets. Both can be advertised on e.g. AirBnB or Tripadvisor and seem to me to be very similar. Are there any material differences and, if so, what impact does that have? One of the things mentioned on the podcast was planning and possible change of use. Again, is there a particular difference here between serviced apartments and FHLs? Suppose I own a flat in London and a flat on the Norfolk coast and I want to let both of them as holiday lets/serviced apartments. Would there be a difference? (I did listen to the FHL podcast episode a while ago but have forgotten whether planning was covered - apologies off it was!) Many thanks Jeremy