Buy to Let is not Dead says David Lawrenson of LettingFocus.com

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I’m afraid the public have a very warped perception of buy to let which is to some extent a direct result of the way the media has reported it.
Clearly there has been a true story about how various property clubs and developers persuaded hapless new would-be landlords to invest in flats in massive developments consisting of hundreds of other me-too flats.
At the turn of the millennium tapping this new investor class was an easy way to raise money to finance the development of many an identikit block. The promoters churned out smart marketing brochures which neatly tapped into the UK public’s hunger to “be in” on the buy to let boom and to make money as easily as other landlords already had in the mid to late 90s.
Of course, far too many of these flats were built and sold to too many would-be landlords and with not enough tenants around wanting to rent them the prices of the flats and the rents have since been flat at best or falling at worst.
Naturally, the media have (eventually!) rightly picked up on this as a story - in some cases a bit of fraud was involved on the new builds too to spiece it up - and it has coloured the public’s perceptions of the returns that can be made from residential letting.
The reality is, however, that the typical landlord of whatever size has none or very few new build flats in their portfolio. They also often have a low loan to value on their mortgage borrowings and are therefore often able to access extra funding relatively easily if they need to in order to snap up the bargain properties that are increasingly now appearing.

FALLING INTEREST RATES
Right now they are also enjoying the fruits of falling interest rates and relatively strong demand from tenants (although this has been tempered somewhat recently by a rise in the amount of stock due to many accidental landlords who are letting their property as they cant sell it.)
And demand from tenants will stay strong as long as mortgage lenders demand high deposits and high product fees from first time buyer mortgages.
Longer term, a demand for a more flexible lifestyle will also increase the demand for renting.
Certainly, house prices are falling but many landlords, both large and small, are in property letting for the long term. And as long as they are generating cash on their existing property portfolios they will be happy. Many are now using that better cash flow to dip their toes in the water to buy cheaply – if you don’t think so, just go to any auction room.
True, things look very dark today but the credit shortage will eventually end and when it does there will be lots of money chasing very little available property - a direct consequence of the lack of new house building today.
And with the ability to set off interest against rental income and reasonably generous CGT breaks residential property looks a good bet from the tax perspective too.
Come to Our Next Evening Property Event in London Evening of 18th March

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ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
I’m David Lawrenson of LettingFocus.com - the landlord and property letting advice experts. Read More Articles on Property by David Lawrenson.
I’m the author of “Successful Property Letting” which for the last 3 years has been the UK’s top selling property book - Buy Successful Property Letting - How to Make Money in Buy to Let.
The new edition is fully up to date with all the recent changes to tenancy deposit schemes, HMOs, licensing, capital gains taxes and it has new sections on sale and rent back.
I’m an expert freelance property writer and property speaker - and I run the well known property investment blog that you are reading now.
Come to Our Next Evening Property Event in London Evening of 18th March
I contribute to newspapers and a host of property websites, write a number of columns in the press and I provide general property letting advice for a fee to anyone looking to buy property for themselves or to let out. I can help private individuals with any aspect of buying property or buy to let.
What’s unique about lettingfocus.com is that we are independent property investment advisors because unlike most people in the buy to let and property “advice” business we are not linked to a property company, developer, agent or bridging loan financier and do not receive commissions from these sources.
We simply give one to one unbiased advice and are often asked to evaluate other property investments.
In my corporate consulting role I also advise banks, building societies, housing associations and web portals with their buy to let and property products and services.
You can read more of my blog & find details of my networking, advice and property training programme at my website.Copyright: David Lawrenson 2009. This blog is updated once a week.
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Tax on buy to let by David Lawrenson of Letting Focus

Amidst the excitement, worry, legal issues and general administration which go hand in hand with buying and owning property, it is easy, perhaps almost convenient, to ‘forget’ about tax .
But with the right advice, you could save yourself a lot of trouble.
Here are some simple steps to help you.

Tax Advice
OK, step one is before you actually buy anything, consider how you are to own it. Will it be in your sole name, in joint names with a partner or possibly via a limited company? You should consider the options as the choice will affect the amount of tax due both on the rental income profits and on any gain made when the property is sold.
Step two is record keeping.
Keep a record (preferably a sales receipt, but if lost make a note of it somewhere – be it a grubby paper notepad or a blackberry) of ALL expenses you incur which relate to the cost of purchasing, owning and renting your property. . After all, if you have not kept a note of the expense then neither yourself nor an advisor can say if tax relief is due. Also include costs incurred prior to the date that any letting commenced and those which include some element of private expenditure

Selling a Property - Tax Implications
Step three is selling.
Any gain made on the sale of the property can be reduced in many ways, including: 1) Indexation Allowance – Intended to remove any element of gain arising as a result of inflation, but now available only to companies 2) Taper Relief – Available for properties owned since April 1998. The amount due depends on the number of years owned and whether the property can be classed as a business asset. Please note that as from April 2008, this relief will be abolished. 3)Private Residence Relief – Any period of time when the property was your main home is exempt from tax, together with the last 3 years of ownership and 4) Residential Lettings Relief – If you have previously rented out your main residence, you are entitled to claim up to £40,000 as an exemption.
Property tax needs careful planning at all stages - even when you buy it.
In particular, if you are buying a property for your son and daughter to live in while at university, you should think carefully about who owns the property - as getting this right could save you a lot of money in tax. It might be worth putting it in your offsprings name.
To read more about Student Lets, check out this article: http://www.lettingfocus.com/pages/myarticles_student_lettings.html

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased
seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unreguated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

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Landlords Given a Huge Tax Windfall says Letting Focus

It’s hard to believe this but thousands of property investors were among the winners from yesterday's pre-Budget report, after the Government unveiled plans to slash the rate of capital gains tax from 40 to 18 per cent.
Currently, higher rate taxpayers are taxed at 40 per cent on any gains above £9,200 in any one tax year – although using taper relief, this rate can be reduced to as little as 24 per cent on assets held for 10 years or more (or 12% for lower rate taxpayers) .
CGT hits residential buy-to-let landlords who sell their properties, as well as wealthier individuals who realise capital gains when selling any type of share investment.
But from 6 April next year, all capital gains above the personal allowance of £9,200 will be charged at a flat rate of 18 per cent – while taper relief (and the old indexation relief for pre 1998 purchases) will be scrapped.
And this applies retrospectively, so if you are a higher rate taxpayer (and for those lower rate taxpayers who bought less than 4 years ago), the best thing to do if you are thinking of selling now is – don’t. You are best selling next year after April 6 when you will pay less a lot less CGT.
Many individuals will no longer need to hold on to their assets for many years to minimise their tax.
I can hear a gnashing of teeth from some of my good friends who think landlords should be taxed harder (including the Institute of Directors and the Guardian newspaper) who say that landlords should be taxed more not less – including having their ability to set off interest on loans for buy to let property as a cost - removed.

ABOUT LETTINGFOCUS.COM and DAVID LAWRENSON
We are LettingFocus.com - the landlords’ expert and I’m David Lawrenson, the author of “Successful Property Letting” - the UK’s top selling property and buy to let book for the last 3 years.
I have been a landlord and property investor myself for over 25 years.
At LettingFocus we offer independent unbiased
seminars for buy to let investors and landlords as well as one to one advice covering all aspects of being a landlord and investing in property.
Unlike many in the still largely unregulated buy to let and property “advice” business I am not linked to a property company, developer, estate agency or bridging loan provider.
As such I am able to give unbiased independent advice on where to buy (which areas), what type of property to buy, when to buy and how to buy property at a low price. I can also explain how to reduce the risk of getting a bad tenant.

AT OUR SITE LETTINGFOCUS.COM:
Our Events only take place twice a year.
For our NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors click here:
Next Property Investing Seminar and Networking Event
We have GREAT OFFERS for landlords too, Click here: Services and Products for Landlords to see our Landlords Resources (Useful Links) page. (Selling services to landlords and property investors and have a national coverage? You could be a partner, please get in touch!)
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
ONE TO ONE CONSULTING click here: Property Consulting
CLIENT TESTIMONIALS from past customers click here: Testimonials
BUY THE BOOK click here: Buy the Book at Amazon
THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
To JOIN our Free QUARTERLY NEWSLETTER simply send an email to david@LettingFocus.com - Please note we WILL NOT send spam or sell our mailing list to advertisers!

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Copyright: David Lawrenson 2007.

Flat Conversion Allowance - How to Make Money from The Space Above a Shop - and Get the Taxman to help out too.

Here is some useful property tax advice.
Did you know that under the Flat Conversion Allowance scheme you can get income tax relief on the cost of converting or renovating the empty space above a shop, café, office or surgery and turning it back into use as residential flats?
However, as always with such a nice tax break, there are some rules.
In order to qualify for the allowance, the money spent has to be on things of a “capital nature” so whilst you can claim for the cost of dividing the property to create separate flats or installing a new kitchen or bathroom, you won’t be able to claim the cost of providing furnishings.
There are also rules about the type of building that qualifies.
The property that is being converted must be in a shopping street, have no more than 4 storeys and the building must have been built before 1980 with the original intention that the upper floors be used as residential accommodation.
The space above the shop or office must have been either empty or used only for storage, for at least the last year.
When the conversion is complete you must let the flats out to tenants and the ground floor must continue to be used for business purposes both during and after the conversion.
Finally, each new flat has to be self-contained and access to the street from the flats has to be separate from the ground-floor premises.

More Rules
The rules say that expenditure does not qualify for he allowance if any flats created are "high value" flats, which the Revenue defines as flats which, “when the conversion or renovation work starts would be expected to achieve rents above set limits.” This is approximately £350 per week in London and £150 outside London.
You have to own the property and let it out for seven years after conversion because the allowance can be withdrawn if you sell the flats or the flats stop being used for letting during this period.
Making a claim is easy though.
You simply claim for the flat conversion allowance in the tax return for the year in which the conversion or renovation money is spent - and there are no special requirements beyond the usual self assessment.
The allowance is 100 per cent in the year in which the expenditure happens or if you prefer, you can claim a lower amount, with the balance of the cost spread over later years.
It’s possible to set the allowance against other income from property and if you don’t have enough property income in that year, the excess capital allowance can be carried forward and set off against future property profits.
Alternatively, excess capital allowances may be set against the person's other income for the year, or the following year.

ABOUT US

At LettingFocus.com is the home of landlord information.
Hello, I’m David Lawrenson.
I have been a landlord and property investor myself for over 25 years and am author of “Successful Property Letting” – which has been the UK’s top selling property and buy to let book for the last 3 years.

We help landlords and property investors make money in property by coaching them in ways that work, which are ethical and which involve minimal risk to the investor.
We pride ourselves on giving independent unbiased buy to let advice on a one to one mentoring and coaching basis as well as through occasional group seminars.
Unfortunately, in the UK today, property advice in the UK is still largely unregulated and what counts as “good advice” is too often more about making the promoter money than giving useful information to the investor.
With no links to property firms, developers or bridging loan providers we can advise on where and what type of property to buy for investment and when to buy it.
We also show you how to manage tenants properly.
We also do consultancy for banks, local authorities and social housing providers – helping them with their landlord facing or buy to let product strategies. We also write for property websites and are regularly quoted by the media.

AT OUR WEBSITE LETTINGFOCUS.COM:

THE HOME PAGE OF THIS BLOG click here: Blog
THE HOME PAGE OF OUR MAIN SITE click here: LettingFocus Home Page
ONE TO ONE PRIVATE CONSULTANCY click here: Property Mentoring
NEXT SEMINAR AND NETWORKING EVENT for Landlords and Property Investors:
Next Property Investment Seminar and Networking Event
We have OFFERS on a range of services and products for landlords too; click here including landlords insurance, tenant referencing, tenancy agreements and more: Services and Products for Landlords
For general info on our SEMINARS AND CONSULTING click here: Property Seminars, Networking Evenings and Consulting
TO READ CLIENT TESTIMONIALS – both commercial and private click here: Testimonials
BUY “SUCCESSFUL PROPERTY LETTING” click here: Buy the Book at Amazon plus anything else you fancy at Amazon.co.uk

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Copyright of Blog: David Lawrenson 2007. This blog is updated roughly once a week usually on a Monday or Tuesday.

WANT TO BE KEPT UPDATED WITH OUR LATEST BLOGS?
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TO VIEW RELATED POSTS select a “Category” at the bottom of this page.
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