long term lease to Local Authority

Tebbit

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I am considering this as I want to move. I won't even cover the mortgage with it I'd say but at least its a way to move on. I just wonder are there any negatives? What are the experiences of those who have done this and gone through the process? I can see the application form online - do you meet with someone after that? Is the house inspected? Have there been any issues afterwards regarding the house or tenants?
Just any information on the process.
 
There are a number of different schemes whereby a local authority gets involved in renting a house, and not every rental under these schemes is the same. Different councils have different contracts and even any given council changes their contract over time.

Are you looking at the RAS scheme, the HAP scheme, or something else.

I have a house let under HAP. And I am very happy with it. Rent paid into my account every month on time.

I choose the tenant myself, I think that is important, as if there was a bad tenant, the council would see that as your problem rather than theirs. My tenant had been renting from me for more than a year and we had a good relationship before I suggested that we apply for HAP.

If you let the council select the tenant, they may be glad of an opportunity to house a difficult case.
 
Tebitt,
Have a ten year lease with SDCC. I had the property in the RAS scheme previously to this.
Yes they do inspect your property before agreeing to a contract.
A few hoops to jump through. Electrician has to sign off all is good. Tax clearance cert .BER cert and a few other bits and bobs.
I get 80% of the standard rent in the area.
Advantages--I handed over the keys and do not have to deal with tenant.
I got tired of dealing with the odd bad tenant over the years calls for this calls for that. When you take into consideration that my rent is been taxed by over 50% I find the hands off is the way to go. No hazzle no calls.
 
DCD its what your doing that I'd like to do. Who suggested the rent. ? Did u put in a price yourself first? And what does it mean your rent is taxed at 50%? My rent def won't cover the mortgage no matter what I get. I'm going for this as I wouldn't want to deal with the tenants.
 
You will be taxed at your marginal rate on the profit.

The profit is calculated after deducting 75% (under some circumstances 100%) of the interest. That is just the interest, not the capital repayment.

You should be able to get more than 80% of market rent on a new letting these days.
 
Cremeegg has outlined how you will be taxed.

When I signed up for the 10yr lease in November 2015 80% was what was on offer.
This is arrived at by looking at three similar properties in the same area and taking the average rent. Take a look on Daft.ie to arrive at a figure.
I can and will have this looked at again after an agreed two year review.
The most important thing to me is no repairs no calls and property handed back to me after 10yrs in same condition.

Do remember if you go this route you are tied into contract for a long period.

Do not get into any contract unless you fully understand all financial implications.

Best of luck.
 
I don't expect to make a profit if this makes any difference to the tax. I won't cover the mortgage for def. and will have to top it up by a small amount to cover the full amount I owe each month. Along with renting elsewhere. Could anyone show me an example of the tax works? Say the rent I get on long term lease is 700 and the mortgage itself is 800 = how would it work? I m not much good at tax etc and haven't rented out previously.
 
Cremegg stated how rental income is taxed.

Net rental profit is gross rent less allowable mortgage interest less other allowable deductible expenses.
 
For example Mortgage 200k paying back 1000pm. Interest 700. Loan repayment 300pm.

Interest for year 700x12=8400 per year. You can deduct 75% of this sum off your tax bill=6300. Add on wear and tear insurance etc say total 3000.

You rent for 1500 per month 12x1500 for year=18000 for year. deduct your expenses 18000-9300=8700.

You will then pay tax, usc etc on the 8700 which unless you are on a very low income will be over 50%.
So you might clear just over 4k per year.

The fact that you are in negative equity does not really come into it.

The above is very rough and vague but an attempt to explain to you.

What happens if you get a poor tenant I have?
What happens if you get a tenant who will not pay I have?

Unless you are well aware of the pit falls of been a landlord stay clear. There are many threads on this site explaining how difficult now days it is to be a landlord.

I am trying to be helpful and honest with you. You seem at this point not to have the knowledge to go down this road presently.

Dont make any such decision until you fully understand what you want to do. Again good luck in the future.
 
Thanks DCD this made it all a bit clearer, I'll work out my own situation but looking at that it doesn't look very good. You're right I don't have the knowledge unfortunately.
 
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