UK Landlord Forum / Life

Hi - I am currently overseas and am likely to return to the UK soon.  I've been renting out my flat in London though a letting agent etc.   I also have a full time job - salary of which places me in the 40% tax bracket in the UK (just).  Up until  now, I've not had to pay any tax on my UK income (I have consent to let, the flat has a selective license, I do declare it and HMRC know that I am a non resident landlord)  - its a very small flat and the rent is 1050 pound sterling a month.

Moving back to the UK will mean paying tax - which is fine - but it seems my salary will mean I pay around 3 grand a year.  Does that sound right?  Given the property is mortgaged (it was my place of residence before I emigrated) and comes with a sizable service charge (dont ask!) - I wont be making any profit and indeed could find myself losing money whenever I pay for for repairs etc.  This, and the fact that I know Labour is likely to come down hard on landlords makes me want to sell - but then theres the CGT to worry about. The property was brought for 112K and is probably worth around 200K now.

I'm very much an accidential landlord. I have enjoyed creating a happy home for people (I have had horrible experences as a tenant in London in the past so wanted to "do it right").  I'm just wondering - is it worth holding onto it? Or should I sell? I am keen on selling but people around me keep telling me its a great investment and I should hang onto it. I dont need to move into the property myself again as I'd be living with my partner.  All opinions appreciated.

If you don't need to sell it right now, and have good tenants, I'd be tempted to hold on to it.

Whatever changes Labour plan to make to Capital Gains Tax (which will increase) are most likely to happen in October. And you won't have time to sell the property before then, so that's a given.
If you're determined to be a decent landlord, I'd guess that whatever Labour plan, you'll be OK. The one thing I'd look at is what the EPC rating of the property is. If it's below a C that might possibly be an issue (but Labour haven't actually made it clear what they're planning).

How much tax you'll pay depends on a number of factors, but £3k doesn't sound wildly wrong (but it might not be right).

As to affordability, either increase the rent to give you some headway (rents are increasing all over the city and you've probably got room without making your tenant too unhappy - they'll know this too). Or change the mortgage to an interest only BTL mortgage, which will reduce your outgoings.

I've just sold all of my own rental properties, but the increases in value of property in London are remarkable and make your decision different.

You don't sound very interested in being a Landlord - no offence intended, merely an observation - so I would get out of the game and bank what certainty you can right now. Those who consider themselves an "accidental Landlord" (there's no such thing) shouldn't perpetuate the situation.

You might need those realised funds to quickly get yourself a new place if it goes wrong while living with your partner.

I am with JPK, keep the property, I know many Chinese investors who did not like Landlording but they are not selling, they realise that over time the returns in London are phenomenal.

It might be that you prefer to move to an AirBNB model which would mean renting for less days but with greater income and more admin.

There may be an argument on selling the property to a company you or a family trust own, then doing repairs and energy improvements, that is what some clients tell me but they have tax accountants, I don't.

If you do want to stay in the game then use the main site to get clear on all the obligations of Landlording

https://www.propertyinvestmentproject.co.uk/

Quote from: David on August 03, 2024, 09:39:03 AMI am with JPK, keep the property, I know many Chinese investors who did not like Landlording but they are not selling, they realise that over time the returns in London are phenomenal.

It might be that you prefer to move to an AirBNB model which would mean renting for less days but with greater income and more admin.

There may be an argument on selling the property to a company you or a family trust own, then doing repairs and energy improvements, that is what some clients tell me but they have tax accountants, I don't.

If you do want to stay in the game then use the main site to get clear on all the obligations of Landlording

https://www.propertyinvestmentproject.co.uk/

It's very likely the headlease prohibits airbnb.

If you are really torn between the two options, then tossing a coin is as good a method as any.  If you are really eager to accrue serious money for later life then probably hang onto it.  If however you would like to enjoy the very nice bit of bunce you already have ( CGT will be lessened due to the time you lived there I think)  then sell up. I agree with Hippogriff, why have additional stresses in your life if you are not that motivated ?

My own achievements as a landlord could have been much more impressive, but a combination of laziness and fear of risk stopped me, and I am really fine with that. Being contented with what you have is good too.