House prices are rising as confirmed by the Land Registry in their report 29 April 2013, the annual change is 0.9%, rent is increasing again after a drop in 2009 according to the English Housing Survey, in 2011 it went up 3% to a mean rent after housing benefit of £132 per week. So let’s see who the tenants are (English Housing Survey 2011):
| social and private renting households receiving Housing Benefit | ||||
| all social renters |
all private renters |
all  renters |
||
| percentages | ||||
| age of household reference person | ||||
| 16 to 24 | 6.3 | 11.9 | 7.8 | |
| 25 to 34 | 12.6 | 26.9 | 16.5 | |
| 35 to 44 | 18.1 | 24.0 | 19.7 | |
| 45 to 54 | 16.3 | 15.8 | 16.2 | |
| 55 to 64 | 14.1 | 9.0 | 12.7 | |
| 65 to 74 | 15.8 | 7.8 | 13.6 | |
| 75 and over | 16.7 | 4.4 | 13.4 | |
| marital status of household reference person | ||||
| married1 | 16.9 | 18.4 | 17.3 | |
| cohabiting2 | 5.5 | 9.7 | 6.7 | |
| single | 33.2 | 37.6 | 34.4 | |
| widowed3 | 17.1 | 7.5 | 14.5 | |
| divorced4Â | 20.9 | 17.0 | 19.8 | |
| separated5 | 6.4 | 9.9 | 7.3 | |
| household size | ||||
| one | 50.5 | 31.7 | 45.4 | |
| two | 23.2 | 28.7 | 24.7 | |
| three | 11.5 | 18.0 | 13.3 | |
| four | 8.2 | 12.3 | 9.3 | |
| five | 3.6 | 5.8 | 4.2 | |
| six or more | 3.0 | 3.4 | 3.1 | |
| household type | ||||
| couple, no dependent child(ren) | 11.5 | 8.0 | 10.5 | |
| couple with dependent child(ren) | 10.1 | 19.2 | 12.5 | |
| lone parent with dependent child(ren) | 20.9 | 35.1 | 24.7 | |
| other multi-person household | 7.1 | 6.0 | 6.8 | |
| one person | 50.5 | 31.7 | 45.4 | |
| length of residence | ||||
| less than 1 year | 8.4 | 27.7 | 13.6 | |
| 1 year, under 3 years | 15.4 | 32.5 | 20.0 | |
| 3 years, under 5 years | 13.2 | 15.5 | 13.8 | |
| 5 years, under 10 years | 20.7 | 12.3 | 18.4 | |
| 10 years, under 20 years | 22.2 | 8.0 | 18.4 | |
| 20 years or more | 20.1 | * | 15.7 | |
| economic activity of | ||||
| household reference person | ||||
| full time work | 2.7 | 13.1 | 5.5 | |
| part time work | 9.5 | 18.1 | 11.9 | |
| retired | 36.4 | 16.0 | 30.8 | |
| unemployed | 13.8 | 17.4 | 14.8 | |
| full time education | * | * | 1.5 | |
| other | 36.4 | 32.9 | 35.5 | |
| total | 2,395 | 890 | 3,285 | |
| £ per week | ||||
| mean gross weekly income | ||||
| of household reference person | 206 | 237 | 215 | |
| (and partner) | ||||
| sample | 1,945 | 690 | 2,635 | |
Yields are looking good, its possible to achieve 8% to 10%, take a look at the examples on http://investors.assetz.co.uk/property-listing.htm
Lending rates are low with Bank of England base rate stuck at 0.5%.
So we should see Buy to Let coming back into fashion with investors, with that in mind here are my top tips to minimise your tax:
1. Claim allowable expenses
- Mortgage or Loan Interest (but not capital)
- Repairs and maintenance (but not improvements)
- Decorating
- Gardening
- Cleaning
- Travel costs to and from your properties for lettings or meetings
- Advertising costs
- Agents fees
- Buildings and contents insurance
- Ground Rent
- Accountants Fees
- Rent insurance (if you claim the income will need to be declared)
- Legal fees relating to eviction
2. If the property is furnished claim for Wear & Tear, you can claim 10% of the rent each year
3. Claim for repair and advertising expenses incurred in getting the property ready for renting
4. Consider how the property is owned for example your partner may pay less tax or if you own it 50/50 you could use their capital gains tax exemption on sale of the property
5. Consider whether owning the property within a limited company might be better, Corporation Tax is 20% for small companies in the UK which can make dividends more tax efficient than personal income.
6. Make sure any borrowings you have are on the Buy to Let so that you can claim tax relief on the interest
7. Claim the Energy Saving allowance for energy saving work and save £1,500
steve@bicknells.net
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