Investment
Owning a property portfolio presents many opportunities, Capital Appreciation or Passive income and is often talked about but few have the confidence or belief in their own entrepreneurial skills to make it happen. What stops them? Not knowing the markets or pitfalls, fear of bad tenants or losing money, never having that investment deposit, not wanting the late-night repair calls or the hassle generally. If they don’t have the knowledge base or skills, they don’t have someone they know or trust that has. Is this why rich people get richer and middle class or poor people struggle to break out of this cycle.
This is where Lilac Lets can help. Being financially literate in relation to property investments is a good starting point.
Our consultancy process is designed to assist you on your property investment journey from start to finish with careful guidance and support. Each investor will have different aims and interests when building their portfolio, whether it is for Capital Appreciation or achieving a reasonable yield.
Consulting and advising
Knowing the significance of property rental yield and possible capital appreciation can be the starting point of any consultation. The correlation of both is generally not direct. It generally doesn’t follow that the more you spend on a single investment the greater yield you achieve. How to make your Capital go as far as possible by accessing borrowing is important. Remember you retain all of the Capital Growth (subject to CGT) of a property not just the percentage of your deposit. A single investment of £200,000 in one property could achieve 10% of the return of 10 investments of £20,000 each.
Under the new Section 24 rules, this tax relief is gradually being reduced to the basic rate of income tax (currently 20%), with relief being given as a reduction in tax liability rather than a reduction to taxable rental income. This means landlords will declare their rental income, pay income tax on the full amount, then claim back 20% of their mortgage interest costs as credit.
It is when you fall into the higher tax brackets of 40% and 45% that a real difference might be seen in your final tax bill under the new rules. The aim, according to the government, is to try and stop the biggest earners from property investment from claiming the biggest tax relief. For lower earners, often people with just one rental property and “accidental landlords”, the effects should be minimal.
Section 24 only applies to individuals, not limited company landlords or those with furnished holiday lets, for example.
Getting the structure of your property buying vehicle is vital before you start. Should I set up a limited company? There are many pros and cons to running your rental properties through a limited company, so professional advice from an Qualified Chartered Accountant should always be sought. Recent research has indicated a rise in the number of landlords operating through limited companies.
While limited company landlords will not be affected by Section 24 under current rules, if you were to transfer your existing properties into a limited company, this would count as a sale and you would therefore have to pay stamp duty – which could cost more than you would lose through the reduction of mortgage interest relief.
Knowing Demand hot spots, Local knowledge, Location issues, tenant demographics, possible yields, establishment costs.
Identifying and recommending
Once we have a reasonable understanding of your personal requirements, risk appetite, budget, growth and exit strategy, Lilac Lets will source Business proposals. Clients like that their investments are tangible and they hold the Title deeds and make the key strategic decisions based on our advice. After 20 years, we know what makes a good rental property and more significantly what will make a poor one. We will negotiate the purchase to achieve a fair market price and liaise with your lawyers.
Buying and Conveyancing
Lilac Lets has a rule. We don’t do business with anyone we don’t trust. We expect Clients and partners to have the same rule about us and work hard to maintain their trust. Our reputation is everything to us. Lilac Lets have sourced a network of specialists Lawyers, Accountants, Property Surveyors and Mortgage Brokers who we have learned to trust and developed good working relations with, over the years. We are equally comfortable liaising with clients agents in achieving the borrowing and ultimately the Title of a property.
Refurbishment and Project Management
Landlords repair standards are set at a minimum level to ensure properties are safe and fit for habitation. However the standard of a property also determines the nature of the clientele who are drawn to the property and whether a landlord has their choice of tenants.
Years of experience of buying a property can be the difference in avoiding money pits and achieving immediate capital growth. Lilac Lets fully understands whilst a property is being renovated it is not earning a rental income. Project Management of a property development is key to avoiding a significant void period. Knowing the key dependences and the correct sequencing determines the efficiency of the renovation. Where necessary, working with our Architect and Structural Engineer, Lilac Lets will undertake project management to ensure the quick development of a refurbishment and ensure compliance with the latest Letting Regulations as well as Building regulations where appropriate. With our Interior Designer we will even furnish your property if you chose to.
Letting and Management
We will market your property through industry leading Property sites such as Right Move and Zoopla. We place a lot of emphasis on vetting to ensure the right Tenant for the property. Once the lease, (Private Residential Tenancy) is prepared our service includes everything from setting up the lease and collecting rent, to property maintenance and emergency repairs. When your tenants move out we’ll find a new one quickly and efficiently – one of the reasons our occupancy levels are close to 100%. To achieve Accreditation Lilac Lets require both Client Indemnity Insurance and a Client Dedicated Account system. Lilac Lets uses Payprop, Client Dedicated Accounts provided by Nat West Bank that ensures clients can view their accounts which are protected.