I love owning property – I just really love it.
Savings and ISAs are fine. Stocks and shares are great. But none of that has the same magic as a tangible asset like a house or flat. Bricks and mortar.
For me, there’s nothing like the thrill of tracking down just the right property, full of potential. You turn down a lot of places that just aren’t right and burn through a lot of shoe leather tramping up streets in all weathers just so you can get a proper look with your own eyes. When you find the right place, you know.
You don’t let your enthusiasm show, though. You haggle over the price and maybe get a bit of a bargain if you’re willing to hold your ground. (And I’m an accountant so you know I never pay a penny more than necessary.) It’s all part of the game and for my money, beats chess any day.
When you’ve got the property, that’s when you get to put your stamp on it, increasing its value through your own hard work and knowledge of the market.
Finally, you end up with a property of which you are proud and even better, one that will provide rental income for years to come. You do the hard work once and get paid for years and years.
All, of course, while providing somebody with a home and one in which I would be happy to live in myself.
I say the stuff above all the time and I bet the team here at UK Landlord Tax are sick of hearing it. But when I’m enthusiastic about something, I can’t help but want to talk about it.
Fortunately, the great thing about doing what I do is that I get to speak to other landlords every single day.
Dealing with clients who have similar interests to me, I have the opportunity to compare notes on the experience of owning property, from dealing with tenants to hunting down the next rental opportunity. And I get to share all the tips and tricks I’ve picked up over the years.
One thing that comes across, though, is that not everyone gets the pleasure out of being a landlord that I do. And that’s a massive shame.
Sometimes it’s because people have sort of stumbled into owning a rental property, through inheritance or because they’ve moved in with a partner and have a ‘spare’ flat and just haven’t clicked with the lifestyle.
Renting property isn’t a hands-off, risk-free business. People with one property often find themselves having to go round after a hard day at work to fix a broken extractor fan or getting calls at 6am on a Saturday because the boiler’s broken.
Sometimes – not often in my experience, (I have had one mildly bad experience in 15 years) but it does happen – people have a bad experience with tenants and it puts them off for life. In fact, there’s a whole TV programme about this, Tenants From Hell, which probably puts a lot of people off even considering letting in the first place.
In other cases, it might be that someone has attempted to extend their portfolio and acquired a property that, for one reason or another, ends up being more trouble than it’s worth. I’m thinking now of one client who bought property a few hundred miles from where they lived thinking it was a bargain but found managing it remotely an absolute nightmare.
For whatever reason, people sometimes get to the point where they think, “No, it’s not for me – I’m thinking about selling.” And I’ll be honest, I hate hearing that.
In the current global economic climate, with interest rates having been at rock bottom for most of the past decade, property is one of the few ways to generate additional income with relatively little risk.
So when people talk about giving up on it, my heart sinks.
Sure, sometimes selling will be the right solution, and I suppose there might be people who just aren’t cut out to manage rental properties.
But in most cases, honestly, I think a few small changes could bring the joy of it back – and help make that property a reliable, low-maintenance generator of income for years to come.
One obvious fix is to increase the income you get from your rental property by reducing your tax bill. When you’re earning more from the house or flat your rent out, it suddenly seems a lot more worthwhile. We’re always looking to find savings for new clients and revitalise their enthusiasm for the property business in the process.
For example, it’s amazing how many people aren’t claiming all the allowable expenses they’re entitled to. Usually, it’s either because they’re doing their own tax return and just don’t know any better or because they’ve got a non-specialist accountant who isn’t paying attention to detail.
Every relief and allowance counts. I know it’s a cliché but if you look after the pennies, the pounds usually look after themselves.
Another thing to consider is the tactical use of letting agents. They take a cut, that’s true, and some of them are challenging to deal with in their own right. But the fee might be worth it if it means you can focus on finding your next property and leave the first one to essentially run and pay for, itself.
Finally, by all means sell a problem property to buy another, better one that fits in with your long-term strategy. That’s not giving up, it’s playing the game.
If you’ve got questions about property tax and the business of being a landlord, do get in touch, especially if you’ve just acquired a property and your question is “should I sell or let it out?” We’ll be able to help you run the calculations to make the right decision for you and your loved ones.
Contact us for property tax advice.