England, as dysfunctional as Ireland in tenancy laws
- Thread starter LS400
- Start date
TheBigShort
Registered User
- Messages
- 2,789
€50k upfront deposit to secure property. €50k (estimate) over 25yrs of the lease in maintenance, furnishings etc - much of which will be written off as business cost expenses for tax purposes.
RETIRED2017
Registered User
- Messages
- 756
Where do the government find the money the now take off LL,
If they refund tenants back the tax /prsi/usc the take off them through there LL,or re invested it in housing would it be the same thing,
TheBigShort
Registered User
- Messages
- 2,789
Who is borrowing €100K?
If you want to become a LL you need to put €50K up front. As it is a leasehold, a going concern, your business costs (e.g. €2,500pa for leasehold, say €2,500pa avr for maintenance etc ) can be used for reducing tax liability on rental income. You are not the owner of the property, you are providing furnished accommodation to tenants who cannot (i.e. they don't have €50k up front) or who do not want to purchase to property and the mortgage that goes with it.
As the property is designated a 'letting' property it is not available for owner occupancy.
This provides an opportunity for small LL's to provide rental accommodation at rental prices that are not tied to an underlying mortgage that must be paid in 25/30yrs.
The more LL's that do this, the more competition. The more competition the higher the standard of rental properties, the more competitive the rental rates.
TheBigShort
Registered User
- Messages
- 2,789
I'm not sure what this means, sorry.
TheBigShort
Registered User
- Messages
- 2,789
The person who owns the property is a developer.
The development consists of say, 40 units, homes and apartments. Of which, the planning regulations state that say, 10 of these units are for letting. These units could be managed by a property management company.
The property management company will consist of members who, having put up the €50k (or whatever the price is) will secure one of the properties for the purposes of letting it on to tenants.
Big LL (the property developer continues to get income stream – perhaps even a % of rental takings). Small LL, is involved for the purposes of making money on providing quality accommodation in a competitive market, and not, for the purposes of securing their pension on the backs of others paying down their mortgage obligations.
It is only a concept, Im not here to cross every T and dot every I. But can you see how such a concept, having detached the small LL from a 30yr mortgage obligation, may, provide an opportunity to create a real alternative to the mortgage ownership market?
Brendan Burgess
Founder
- Messages
- 52,048
I spoke to a friend of mine in the UK who responded as follows:
I sympathise with the OP. It's an all too familiar experience here in the UK. I'm a landlord based in Birmingham and let houses and flats to working tenants. I've accumulated a fair amount of landlord experience over the last 10 years operating a portfolio of between 15 and 30 properties. It's certainly true to say that if a tenant gets into arrears and is uncooperative, then obtaining possession is going to be an expensive and protracted process. So the best approach is to think along the lines of "prevention is better than cure". As a landlord I have done everything possible to minimise the risk of letting to a tenant who cannot or will not pay the rent. The good news is that I rarely have a tenant in arrears, and my bad debt is well under 3% of rent due. In case this is helpful to anyone currently letting, or thinking of letting, here's a few points to consider.
1) I nearly always let through agents. The reason for this is that the worst type of tenant, who takes on a tenancy with the intention of non-payment, will prefer to rent directly from a private landlord. So by using an agent, you screen out some of the worst serial non-payers who may be very skilled in creating a false impression of their circumstances, and highly persuasive in getting you to grant a tenancy. In addition, the other type of tenant who intends to pay the rent, but gets into financial difficulties, will be easier to manage at arm's length via an agent because there is no personal relationship between landlord and tenant when you use an agent. Letting directly can lead to landlords feeling under pressure from their tenants to enter into payment plans, and before you know it, the arrears get out of hand. Far better to be one step removed from the tenant, and to keep things business-like.
2) Letting unfurnished to families is a good idea. Tenants who bring all their own furnishings are lower risk, and typically stay longer. This is especially so if there are children at local schools. Should arrears arise, the harder it is for the tenant to "up sticks and leave", the less likely they are to exploit the difficulty landlords face in obtaining possession.
3) If a tenant does get evicted leaving substantial rent arrears, then a judgement can be obtained for recovery of arrears via an Attachment To Earnings. These work well, so long as the tenant is paid PAYE, and has stable employment with a recognised employer. So the quality of the employer, and the likelihood of the tenant staying with that employer long term is a key factor in deciding whether to let or not. That's why tenants who are public sector employees are best. At a more subtle level, the tenant who would be embarrassed if their employer was brought into the payment of arrears is going to be less likely to default on rent commitments.
4) If you are going to let directly to a tenant rather than through an agent, then get as much information as possible about the tenant to help with tracing the tenant in the event of non payment and eviction. I would photocopy ID, record NI numbers, note their car registrations, and have a record of next of kin. I would also ask for 6 months bank statements, and would scrutinise these because the information gleaned tells a story that no third party credit file information would reveal.
In all of the above, ask yourself the question: "would I sleep well having lent £5000 to this person who I have only just met?" If you can't answer yes, then best not to let.
I sympathise with the OP. It's an all too familiar experience here in the UK. I'm a landlord based in Birmingham and let houses and flats to working tenants. I've accumulated a fair amount of landlord experience over the last 10 years operating a portfolio of between 15 and 30 properties. It's certainly true to say that if a tenant gets into arrears and is uncooperative, then obtaining possession is going to be an expensive and protracted process. So the best approach is to think along the lines of "prevention is better than cure". As a landlord I have done everything possible to minimise the risk of letting to a tenant who cannot or will not pay the rent. The good news is that I rarely have a tenant in arrears, and my bad debt is well under 3% of rent due. In case this is helpful to anyone currently letting, or thinking of letting, here's a few points to consider.
1) I nearly always let through agents. The reason for this is that the worst type of tenant, who takes on a tenancy with the intention of non-payment, will prefer to rent directly from a private landlord. So by using an agent, you screen out some of the worst serial non-payers who may be very skilled in creating a false impression of their circumstances, and highly persuasive in getting you to grant a tenancy. In addition, the other type of tenant who intends to pay the rent, but gets into financial difficulties, will be easier to manage at arm's length via an agent because there is no personal relationship between landlord and tenant when you use an agent. Letting directly can lead to landlords feeling under pressure from their tenants to enter into payment plans, and before you know it, the arrears get out of hand. Far better to be one step removed from the tenant, and to keep things business-like.
2) Letting unfurnished to families is a good idea. Tenants who bring all their own furnishings are lower risk, and typically stay longer. This is especially so if there are children at local schools. Should arrears arise, the harder it is for the tenant to "up sticks and leave", the less likely they are to exploit the difficulty landlords face in obtaining possession.
3) If a tenant does get evicted leaving substantial rent arrears, then a judgement can be obtained for recovery of arrears via an Attachment To Earnings. These work well, so long as the tenant is paid PAYE, and has stable employment with a recognised employer. So the quality of the employer, and the likelihood of the tenant staying with that employer long term is a key factor in deciding whether to let or not. That's why tenants who are public sector employees are best. At a more subtle level, the tenant who would be embarrassed if their employer was brought into the payment of arrears is going to be less likely to default on rent commitments.
4) If you are going to let directly to a tenant rather than through an agent, then get as much information as possible about the tenant to help with tracing the tenant in the event of non payment and eviction. I would photocopy ID, record NI numbers, note their car registrations, and have a record of next of kin. I would also ask for 6 months bank statements, and would scrutinise these because the information gleaned tells a story that no third party credit file information would reveal.
In all of the above, ask yourself the question: "would I sleep well having lent £5000 to this person who I have only just met?" If you can't answer yes, then best not to let.
How about a PPP model?
A private investor / fund builds an apartment complex and enters into a commercial lease with the government for say 30 years at a certain rent. Nothing added to the national debt and the government can then dish out the apartments as they see fit (to either social housing or housing for the low paid) . The investor is not on the hook for non-paying tenants and is protected from eviction hassles. At the end they can either renew the lease or not. If enough of these were built then rates in the wider market would fall due to the increased supply.
A private investor / fund builds an apartment complex and enters into a commercial lease with the government for say 30 years at a certain rent. Nothing added to the national debt and the government can then dish out the apartments as they see fit (to either social housing or housing for the low paid) . The investor is not on the hook for non-paying tenants and is protected from eviction hassles. At the end they can either renew the lease or not. If enough of these were built then rates in the wider market would fall due to the increased supply.
RETIRED2017
Registered User
- Messages
- 756
We are suppose close to full employment you have to ask the question why some of these people are not building houses ,
if we bring more people into the Country to build these houses where do the live ,
if we bring more people into the Country to build these houses where do the live ,
Because in most cases they can't afford to, and those who can likely don't want to live far away from the major urban centers.