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I would like to be a little self indulgent and ask how am I perceived?
I will assume that most contributors are aware of my posts so won't go into great detail but in summary:
I have purchased a mixed use retail/residential unit which requires a modest refurbishment/development. The total spend will be around £200k and the end value around £300k. Gross income will be in the region of £23k and it will provide me with a 2/3 bed personal accommodation.
I'm actively viewing other properties with potential for letting as either a short term let or a supported living unit. There is local demand for both and I can achieve a gross yield of around 10% on a modest £50k to £75k property plus a little forced appreciation.
I have incorporated. I won't use an AST. I don't want to leverage. I intend to always operate within the law. I won't pay any income tax (although there will be a small corporation tax bill on retained profits).
I'm fully accept that I may be perceived as rogue by some landlords and greedy by others and I'm not seeking affirmation of my choices. I am increasingly surprised by reactions when I explain my strategy and would appreciate any comments, positive or negative.
A good teacher must know the rules; a good pupil, the exceptions.
Martin H. Fischer
You have become a business person, entrepreneur, provider of housing, more knowledgeable, more financially literate, stronger, wiser, and more connected.Why do you think others would perceive you as a "rogue"? I can't see any reason why myself.Why do you care what others think of you anyway? I subscribe to "what other people think of me is none of my business!". It saves me a lot of time from worrying about something I have no control over!
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**
The perception of rogue comes from not following the standard rules. I can understand a negative reaction from those affected by S24, S21 and licencing as I appear to be side stepping these issues.
I'm not prone to worrying, but people's perception has a direct effect on cooperation. Its interesting to gauge reactions. Compliance and finance can be very emotive.
I agree with Vanessa, there's no reason to think of you as a "rogue" or "greedy" landlord, quite the opposite IMHO. You have gone for a different business plan than most other landlords I know, I personally think it's a very good plan, well researched.
I enjoy reading your posts as they often have little snippets of information I deem useful.
Good luck to you
Thank you Fred,
There is a fine line between confidence and arrogance. There can also be a fine line between legitimate and rogue.
I find the reaction to my strategy interesting when people realise I am not trying to achieve the general buy to let model, more so when it is from professionals that have far more knowledge than myself.
I won't pay any income tax (although there will be a small corporation tax bill on retained profits). Sorry you are a " ROGUE" if everyone did this who going to pay for the NHS, Schools and everything else. One day you might need the NHS on the back of others taxes.
This is the perception that I find interesting Douglas, and have experienced on several occasions. Although everything I do, and will do, is legitimate and does not require payment of Income Tax or NI, there is a debate on whether or not this is morally fair. Dependant on beliefs, rather than facts, it can influence the decisions of others on how they interact with me.
It seems that the only consistent legislation is the requirement for a CP12 for gas appliances. Rights, responsibilities, licencing and taxation all vary dependant on the landlord strategy chosen.
I see no problem provided the rents are declared by the company
when eventually the scheme is wound down either on death or on the need to extract the retained profits tax on the dividend will have to be paid. Or if the share capital is sold the CGT on the sale of the shares. Or if held on death the value of the company ie the retained profits will attract IHT
I probably won't take any dividends (maybe the £2k tax free allowance). My income from the company will be from the interest on the director's loan (up to £18.5k pa tax free). I'll receive a small company pension at the age of 60 and may start paying down the director's loan at this point from retained profits, again tax free. I'll receive the state pension at the age of 67, which will take a large chunk of the tax allowance, and then my income will need to be taken from paying down the director's loan.
I only have one share in the company, my daughter already has the other 99. I believe this will help when it comes to IHT.
I don't plan to sell, but if I do the profits will be subject to the usual taxes.
Sorry Gary could not resist the rogue part. We are probably all rogues in one form or another depending upon ones perception of us. Rogues are a versatile class with a large variety of skill proficiencies.
What have I become ?
Only joking. Your strategy is completely kosher, probably non-scalable, but perfect for what you're trying to achieve.