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I've been an infrequent reader on the forums since we bought a BTL in 2012, and have spent the past 3 years as an expat in europe. I love how the forum community has grown and has been active in offering advice - Thank you!
Recently we have been starting to future plan and we both want to invest in building a reasonable portfolio for when we return to the UK. We have been reading and listening around and I would be interested in any advice the forum could offer here.
I'm wanting to get the best setup for structure, looking at the long term and factoring in S24 / Expat Mortgages / Longer Term Investment (10 year horizon before drawing income from portfolio).
We currently have 3 x properties which are rented (part accidental landlord part deliberate) and owned personally. Whilst expat we are under the tax thresholds, but on return I expect to be higher rate tax payer.
I expect we have 10 years to build a portfolio, with a view to getting monthly income to fund travel and retirement.
We have around £150k to push into the setup process and I'm assuming we will want to Buy, Refurb and Rent as a model. Assuming capital growth, we would remortgage and rinse/repeat. I have discounted the HMO / Serviced model as I do not have the experience to manage the management service at a distance! Likewise I typically prefer freehold houses due to resale - although I have no particular ties to a location as we have moved a lot with work.
With the increased costs of expat mortgages and even more expensive LTD/SPV with expat directors should we still consider a limited company?
My gut feel is that we should bite the bullet and go for an SPV and once back in the UK we can move the mortgages over to better rates. At least this way the income can be recycled for the next purchases. The alternative would mean personal purchases and then moving to an SPV once back in the UK to get the tax benefits. This causes any capital gains to be a tax event etc.. etc.. Does anyone have experience here they could offer / share?
Also, are there any issues expats have seen or unexpected taxes/gotchas for non residents that I may not have come across?
Thanks in advance!
PS : I will go for formal advice before execution of any plan - I just want to have my thoughts and questions straight in advance.
As a broker of 25 years and landlord of 20+ I wouldn't just dismiss HMO's so easily...a good management agent will look after things for you and you can almost as easily have major problems with single lets and see a far lower yield. I also don't necessarily find SPV loans for expat directors TOO much more expensive if all else 'stacks up'. Your plan seems sound but I would certainly chose a geographical area you are happy to at least 'visit' occasionally to monitor your 'power team' and properties...the risk imho of doing things remotely is knowing who to trust and the idea of visiting high yielding properties for example in South Wales or North East England may just not appeal to you. I am building such a portfolio (as not in a position at present to be buying myself) for an old friend of mine...largely student HMO types in Plymouth where his wife has developed a liking for the Spa at our 5* hotel....Good luck and please contact if I can help further.
Thanks Robert - Good food for thought and I'll revisit the options. Thank you very much.
Hi Daniel,You really need to take professional advice for both tax and mortgages as it is inappropriate for forum advice in this instance imho.One low risk way forwards would be to buy a "ready made" portfolio of tenanted properties. This would vastly reduce your risk imho.See - Benefits of buying a tenanted property One transaction would save you time and money and there may be tax advantages as well.You could aim to up-grade each property (if required) when it comes up for re-let, gradually forcing the appreciation across the portfolio and building up your equity, without exposing yourself too much.Have a look at the Vesta platform to see if anything catches your eye.Good luck and hope that helps?
Vanessa Warwick Landlord and Co-Founder of PropertyTribes.com **If you have got value from Property Tribes, find out how you can support it in remaining a free to use community resource**
Thanks for your reply and I understand its a complicated question to ask in the forums - I had tried to caveat it as I'm still trying to get my thinking straight.
I've not seen Vesta in any depth before and you referral there, and the idea of buying an existing portfolio will be explored. Much appreciated.
As Vanessa says, you should definitely seek independent financial & tax advice, as well as speak to a mortgage broker about the options for moving mortgages to a domestic limited company structure.
Good to hear you have a strategy in mind though and that you're willing to play a long game when it comes to investing.
Vesta Property is an online marketplace dedicated to the private rented sector, which helps landlords to buy & sell tenanted property including individual buy-to-lets, HMOs, apartment blocks and portfolios. There are a number of benefits from buying a tenanted property:
So buying a tenanted property can help to de-risk your investment strategy and can also make life easier!
As and when tenants move out you can always do some additional refurbishments to improve capital values but in the meantime you earn passive rental income.
Feel free to check us out and good luck with your research!