Anyone "Rent up and sail"?

[AndrewB]

Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
"renting out a house, rather than selling it maybe a better idea"

I think the short answer any financial advisor would be is "yes, it's the better option, if you can do it", and yes, that's what we do.

[/ QUOTE ]Its what we do too, but whatever your financial advisor says, its by no means necessarily the best option. On a previous occasion I did the "sell up and sail" thing and as houses did not rise in value above inflation over the next three years, with the capital plus the interest I was able to buy back into housing easily enough when it became clear prices were about to rise again. Plus (and this is a BIG plus) it was totally hassle-free compared with a rental.

So it does depend on what the housing market is likely to do in the next couple of years - generally it is not too hard to predict when a big rise is coming. Also, on whether you ever intend to return!

 

[DaveNTL]

Re: Anyone \"Rent up and sail\"?

I agree completely with everything you say.

As the thread was 'rent out and sail' I was just saying yes we do it, and yes it can work.

I would imagine if it's your only house and you can keep in 'bricks and mortar' rather than sell up it's a safety net and you haven't burn't any bridges. All those cliches!

Personally I can't wait until we only have just our 'final house' and the boat. I now find houses to be a pain in the backside.

 

[Richard10002]

Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
Cannot comment of the house v's town centre flat as I do not know where you live - but houses obviously generate more rent and are usually longer term lets.
Best to talk to a tax specialist on CGT, we've owned our property for 26 years and have minimum CGT exposure (according to the tax specialist!)

[/ QUOTE ]

I'm wondering how many years you will have actually lived in it for the specialist to say this.... and what he actually means by minimum exposure, ( with very little effort and time, he would be able to calculate your hypothetical tax bill if you were to sell it today)?

My understanding of the CGT situation if you let out your main residence is that, provided you live in it prior to first renting it out, you can have 3 years CGT free, and if you live in it immediately prior to selling it, you can have another 3 years CGT free. Between these times, you can also add the time that you actually live in it as your main residence, e.g.

You own the house for 26 years, living in it for a year after purchase and a year before sale... this gives you 6 years free of CGT, i.e six twenty sixths of the gain plus your allowance/s is not charged to CGT. For every further year you live in it, (not the first or last 3 years), you get another 26th of the gain knocked off. There should also be some improvement expenses, and taper relief, or whatever it was called before it became taper relief.

The above may not be exact, but it wont be far off.

If you bought your property for say, £15K in 1980, it could be worth £200K now, (I'm obviously guessing and you will know the precise figures), a gain of £185K, or £7K of gain for every year you are charged for the gain. Each £7k of gain represents a tax bill of £1500 at basic rate, or £3000 at the higher rate.

Cheers

Richard

 

[DaveNTL]

Re: Anyone \"Rent up and sail\"?

plus there are the annual CGT tax allowance / person which is about £8000 each. Gets complicated.

 

[Sea Devil]

Re: Anyone \"Rent up and sail\"?

I cruised whilst living mainly off the rental income from properties in London for around 10 years - worked very well indeed. In fact I avoided using agents who for the most part are expensive and inefficient and if things get difficult will only suggest costly solutions. I ran (run) my little property empire myself. The only places it became un-economical to park the boat up, fly back, re-let and return to the boat was in the South Pacific round to Phuket... Everywhere else it was much the same a paying an agent.
I would normally have a London flat re-let in 3-4 days with the new tenant moving in by the end of the week.. I would stay in the flat whilst letting it. For minor problems like broken washing machines or similar my nephew fielded those sorts or problems and was the 'person to call' for tenants. He would then filter the problems. I left a small sum of money in an account with a card to which he had access. Of course I gave him something in return.

The other side of the equation is that my little property empire is my pension - and keeps up with inflation. If I sold any part of it there would be serious CGT problems but why sell? Ever? One day when I turn up my toes the kids might have a problem with tax but frankly if you have tax problems then you must be gaining money...

To repeat the things others have said - Very difficult to make it work with only on property... recipe for disaster... Can be producing no income for up to 6 months if you have 'bad tenant' problems.. A small portfolio of easily let property is much safer. Agents charge huge sums of money to do something pretty simple - they try to hike up the rental to justify their fees. They take all sorts precautions to 'find' the right tenant but in the end - if the perfect tenants 'circumstances' change - loose their job - break up relationship -- you as a landlord will have a problem - so you might as well select the tenant yourself.

I am grateful for the system... Took me round the world.

Michael

 

[DaveNTL]

Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
In fact I avoided using agents who for the most part are expensive and inefficient

[/ QUOTE ]

Also true.... 'money' and 'old rope' comes to mind too, unfortunately, like taxes, they are often unavoidable.

If, for example, you want to rent to multi-national companies, who are the best tenants (you are able to rent for 2 or 3 years at a time as it is for their senior employees here on contract - they also tend to respect the property more, it being provided by their employer), they will only deal with an agent through their own agent.

They do save you running backwards and forwards too, or depending on family and friends, and most importantly, their fees are tax deductable.

 

[davidbains]

Re: Anyone \"Rent up and sail\"?

I have given up on agents for my let flat.
They produced the only non payer I ever had.
I now advertise myself on the nearby hospital notice boards which produces reliable tenats very quickly. It's now relatively easy to copy/make your own letting contracts.
I find a reliable plumber and electrician and give their phone number to the tenants for when I am away. With mobile phones the tenant can usually contact you unless you are mid ocean which I never am!!
As Michael says, don't worry too much about CGT, the beauty of property is the income and appreciation. No one sails for ever and you need to be in the market somewhere.

 

[Richard10002]

Re: Anyone \"Rent up and sail\"?

[ QUOTE ]
In fact I avoided using agents who for the most part are expensive and inefficient and if things get difficult will only suggest costly solutions.

The other side of the equation is that my little property empire is my pension - and keeps up with inflation. If I sold any part of it there would be serious CGT problems but why sell? Ever? One day when I turn up my toes the kids might have a problem with tax but frankly if you have tax problems then you must be gaining money...

Agents charge huge sums of money to do something pretty simple - they try to hike up the rental to justify their fees. They take all sorts precautions to 'find' the right tenant but in the end - if the perfect tenants 'circumstances' change - loose their job - break up relationship -- you as a landlord will have a problem - so you might as well select the tenant yourself.


[/ QUOTE ]

Michael... I take your point on agents, but I seem to have found one that is worth its' weight in gold. They charge 10% + VAT and, in 3 years, have never charged for finding a tenant, nor do they charge for arranging repairs etc.. I also find that they are extremely practical with solutions. Touchwood... their tenants have been the best... so far.

i also know that I am absolutely useless at keeping on top of things like collecting rent, arranging repairs etc.. Horses for courses.

I agree with your point "why sell... ever?" I tend to take the view that, as long as the rent keeps coming, why should I consider doing anything else to generate an income. It also doesnt matter if property values fall... even if they become worth nothing, (unlikely???), if the rent keeps coming, so what?

On CGT..... my quite detailed research suggests that if you are non-resident, you are not liable for UK CGT, although the safest thing is to be non resident for 6 years, during which period the disposals should take place. Having said that, you might get caught by the French tax system for CGT.

 

[temptress]

Re: Anyone \"Rent up and sail\"?

We sold and went sailing last time. Family reasons forced us back. It was very painfull to buy back into the property market! We are now in the process of aquiring a second property and will "rent and sail this time". ETD - next Autum.....

 

[Sea Devil]

Re: Anyone \"Rent up and sail\"?

Richard hi,

I do actually have one agent as well, that I used when in the South Pacific.. Little independent business with a list of reasonably honest trades people and charges two weeks rent -- I still handle the dosh part of it myself.. and sadly he was only close to a couple of the properties...

Very interested in your statement. [ QUOTE ]
if you are non-resident, you are not liable for UK CGT

[/ QUOTE ] I have been trying to think of ways of 'releasing the equity' of one of them to bring it here..... How did you reference that info?

Michael

 

[Richard10002]

Re: Anyone \"Rent up and sail\"?

Michael

I've just spent ages putting together my web references on CGT and reidence but, as I clicked to post, it all dissapeared and I couldnt get it back - I hate it when that happens.

Anyway... I'll do it again later, maybe tomorrow... It's been a good refresher and made me think about a few things I need to do.

Cheers

Richard

 

[robind]

Re: Anyone \"Rent up and sail\"?

The Hiscocks rented out their house while they were away but remarked, in one of their books, on the need for a good agent and that there was often lots of work to do to it when they got back?