Alternative to property
Discussion
My wife owns a small rental property which she lived in before moving in with me 13 years ago. It's done okay over the years but has been quite a hassle, not least because of an upstairs neighbour who constantly complains about each and every tenant we've had. The neighbour is at it again now and has sent my wife a lengthy email threatening legal action over matters like the tenant not mowing the lawn and visitors parking outside the property. I know it gets my wife down and personally I don't think it's worth it. I think that when the current tenant leaves she should sell up.
The property is worth around 200k and is paid for outright. It generates £975 a month in rent. She's just had a good year rent wise with very little expenses but it hasn't always been like that. She just doesn't do investing and I'd need a very strong argument about what she could do with the money if she sells. I don't want her to stick it in a savings account which I know she would be inclined to do.
What suggestions could I make to persuade her to give the rental up?
The property is worth around 200k and is paid for outright. It generates £975 a month in rent. She's just had a good year rent wise with very little expenses but it hasn't always been like that. She just doesn't do investing and I'd need a very strong argument about what she could do with the money if she sells. I don't want her to stick it in a savings account which I know she would be inclined to do.
What suggestions could I make to persuade her to give the rental up?
I always thought it was a good investment until recently when I started looking into S&S ISAs. She thinks of it as her pension. She's self employed and only has very modest pension provision with a couple of previous employments.
The income is mostly saved. It mounts up and gets used for expenses. For example she had a new boiler put in before the current tenant. There's normally jobs to be done and costs can and have mounted up over the years. If she sells there will be CGT to pay although I haven't tried to calculate how much yet. I have read about Wes Streetings plans to tackle CGT at the same rate as income.
She only has cash ISAs in which she has 6 figures. I know. Its been mostly up to me to ensure she keeps these at decent rates as she's not bothered with it. Very sceptical about S&S as was I until earlier this year.
Personally I'd like her to consider something like opening a S&S ISA as well as a Sipp and putting as much in as possible to shield from tax. Maybe buying max premium bonds temporarily as I intend to do when my late father's flat sells. I believe she can do a lot better but convincing her won't be easy.
We are on holiday this week and she is stressed out by constant messages from the neighbour and her daughter. It's a shame.
The income is mostly saved. It mounts up and gets used for expenses. For example she had a new boiler put in before the current tenant. There's normally jobs to be done and costs can and have mounted up over the years. If she sells there will be CGT to pay although I haven't tried to calculate how much yet. I have read about Wes Streetings plans to tackle CGT at the same rate as income.
She only has cash ISAs in which she has 6 figures. I know. Its been mostly up to me to ensure she keeps these at decent rates as she's not bothered with it. Very sceptical about S&S as was I until earlier this year.
Personally I'd like her to consider something like opening a S&S ISA as well as a Sipp and putting as much in as possible to shield from tax. Maybe buying max premium bonds temporarily as I intend to do when my late father's flat sells. I believe she can do a lot better but convincing her won't be easy.
We are on holiday this week and she is stressed out by constant messages from the neighbour and her daughter. It's a shame.
I’ll leave investment advice to others, but question why the neighbour has a direct complaint conduit to your wife; especially for seemingly trivial complaints. From your description, it seems bordering on harassment.
We probably all have experienced such things before, and the perpetrators often back down when confronted about their behaviour or their bluff is called out. Regardless, blocking further communication from them might seem a good idea.
We probably all have experienced such things before, and the perpetrators often back down when confronted about their behaviour or their bluff is called out. Regardless, blocking further communication from them might seem a good idea.
FlyVintage said:
I ll leave investment advice to others, but question why the neighbour has a direct complaint conduit to your wife; especially for seemingly trivial complaints. From your description, it seems bordering on harassment.
Yes absolutely. I think it's harassment too.The neighbour has my wife's contact details as she used to live in the property. She was always quite bossy with my wife and would often mention the garden amongst other trivial things. When my wife moved out and rented it the neighbour made it very clear that she was unhappy about having the downstairs property rented at all.
I have often felt its not worth the hassle.
ChrisH72 said:
FlyVintage said:
I ll leave investment advice to others, but question why the neighbour has a direct complaint conduit to your wife; especially for seemingly trivial complaints. From your description, it seems bordering on harassment.
Yes absolutely. I think it's harassment too.The neighbour has my wife's contact details as she used to live in the property. She was always quite bossy with my wife and would often mention the garden amongst other trivial things. When my wife moved out and rented it the neighbour made it very clear that she was unhappy about having the downstairs property rented at all.
I have often felt its not worth the hassle.
We get it from time to time with properties where neighbours take a dislike to the concept of a renter living next door to them.
In our case it's generally empty nesters, still in family sized properties, who don't like a family moving in next door. The rental aspect is a weapon they like to try to deploy against both landlords and tenants alike (the "I'm going to get you evicted" card). If they treated them the tenants the same way as they'd treat a new owner occupier they'd find a way to live with less discourse and sort matters out between themselves.
If she realises the asset, hopefully with limited CGT exposure, she could put away a lot the money into a SIPP and trigger 3 years worth of pension tax relief (up to her yearly earnings). That's step 1 of basic pension planning IMO, providing she is happy to not see that money until she is 55/57.
You need to help open her mind and make her understand what wrappers are. I know it can be difficult but worth the effort. Investing, whatever the risk level is about accepting to be educated.
You need to help open her mind and make her understand what wrappers are. I know it can be difficult but worth the effort. Investing, whatever the risk level is about accepting to be educated.
nickfrog said:
If she realises the asset, hopefully with limited CGT exposure, she could put away a lot the money into a SIPP and trigger 3 years worth of pension tax relief (up to her yearly earnings). That's step 1 of basic pension planning IMO, providing she is happy to not see that money until she is 55/57.
You need to help open her mind and make her understand what wrappers are. I know it can be difficult but worth the effort. Investing, whatever the risk level is about accepting to be educated.
I've read about the 3 year thing with a Sipp. She is 47 now so has 20 years until state pension age. Over the last decade she has made no pension contributions at all. I think her net income from self employment is around 30k excluding the rental. Am I right in thinking she can put 30k a year into a Sipp and the Government will add a further 20%? And that it may even be possible to backdate that for 3 years so more like 90k? If she could do that, put 20k in an ISA and buy 50k premium bonds in the short term then what's left over would probably not take her much above the 1k limit in savings interest. So she shouldn't face too high a tax bill.You need to help open her mind and make her understand what wrappers are. I know it can be difficult but worth the effort. Investing, whatever the risk level is about accepting to be educated.
Not sure I understand the pension thing but I can research it.
Nothing will happen until the current tenant decides to leave. My wife wouldn't contemplate trying to get rid of them and in any case I think that can be a very difficult process. When that time comes I'm going to try to talk her into selling. The bathroom and kitchen are starting to look a bit tired and would need replacing before too long. It's just not worth it.
Nothing will happen until the current tenant decides to leave. My wife wouldn't contemplate trying to get rid of them and in any case I think that can be a very difficult process. When that time comes I'm going to try to talk her into selling. The bathroom and kitchen are starting to look a bit tired and would need replacing before too long. It's just not worth it.
It might be worth reminding the neighbour that any noise complaints or anything of that nature needs to reported to the council. You're the Landlord not their keeper.
I had this a few years ago I used to own a property over the road from my mum and we had a bit of a noisy guy in there. The neighbour complained regularly to my mum but then my mum gave the neighbour my number! She ALWAYS used to text or call when I was on holiday (often late at night too) so eventually I just directed her to the council and she never bothered me again. House has since been sold of course.
I had this a few years ago I used to own a property over the road from my mum and we had a bit of a noisy guy in there. The neighbour complained regularly to my mum but then my mum gave the neighbour my number! She ALWAYS used to text or call when I was on holiday (often late at night too) so eventually I just directed her to the council and she never bothered me again. House has since been sold of course.
ChrisH72 said:
My wife owns a small rental property which she lived in before moving in with me 13 years ago. It's done okay over the years but has been quite a hassle, not least because of an upstairs neighbour who constantly complains about each and every tenant we've had. The neighbour is at it again now and has sent my wife a lengthy email threatening legal action over matters like the tenant not mowing the lawn and visitors parking outside the property. I know it gets my wife down and personally I don't think it's worth it. I think that when the current tenant leaves she should sell up.
The property is worth around 200k and is paid for outright. It generates £975 a month in rent. She's just had a good year rent wise with very little expenses but it hasn't always been like that. She just doesn't do investing and I'd need a very strong argument about what she could do with the money if she sells. I don't want her to stick it in a savings account which I know she would be inclined to do.
What suggestions could I make to persuade her to give the rental up?
I’d start off by having a word with the whiny neighbour and point out to them that you’re thinking of selling up and you do hope that whoever buys the place isn’t a nasty, obnoxious a-hole. That should stop and make her think…The property is worth around 200k and is paid for outright. It generates £975 a month in rent. She's just had a good year rent wise with very little expenses but it hasn't always been like that. She just doesn't do investing and I'd need a very strong argument about what she could do with the money if she sells. I don't want her to stick it in a savings account which I know she would be inclined to do.
What suggestions could I make to persuade her to give the rental up?
I'm a landlord and in the process of selling myself. I strongly agree with the comments about
- go and talk f:f with the whiny neighbor and tell them to stop with the hassle/ point them to the council. Being bossy to your wife is simply unacceptable - get her to deal with you instead?
- it's no longer worthwhile renting a property as an accidental landlord/ side business. It's evolved into only being profitable and tax efficient for professional landlords with multiple properties inside a company structure
- being an accidental landlord is only going to get harder/less profitable - especially with the threat of increased CGT. Personally I would exit ASAP
- putting the money into ISA/SIPP in a phased manner is definitely a better course of action financially, not to mention the reduced risk and hassle.
The CGT liability is proportional to how long it has been rented out for vs lived in by the owner. There is a useful calculator here, where you can work out the CGT liability.
https://www.propertysolvers.co.uk/homeowners-hub/t...
Be aware that you can market it for sale whilst the tenant is still in place - you don't need to wait for them to leave to start the sales process. I d suggest dropping the rent a bit so they are amenable to making it look decent for viewings.
That said, if you do issue a notice that you're selling up, you are going to have to commit to that path because re-renting if you fail to sell is no longer allowed for 12 months after you give notice... This is related to the new Rental Rights Act.
- go and talk f:f with the whiny neighbor and tell them to stop with the hassle/ point them to the council. Being bossy to your wife is simply unacceptable - get her to deal with you instead?
- it's no longer worthwhile renting a property as an accidental landlord/ side business. It's evolved into only being profitable and tax efficient for professional landlords with multiple properties inside a company structure
- being an accidental landlord is only going to get harder/less profitable - especially with the threat of increased CGT. Personally I would exit ASAP
- putting the money into ISA/SIPP in a phased manner is definitely a better course of action financially, not to mention the reduced risk and hassle.
The CGT liability is proportional to how long it has been rented out for vs lived in by the owner. There is a useful calculator here, where you can work out the CGT liability.
https://www.propertysolvers.co.uk/homeowners-hub/t...
Be aware that you can market it for sale whilst the tenant is still in place - you don't need to wait for them to leave to start the sales process. I d suggest dropping the rent a bit so they are amenable to making it look decent for viewings.
That said, if you do issue a notice that you're selling up, you are going to have to commit to that path because re-renting if you fail to sell is no longer allowed for 12 months after you give notice... This is related to the new Rental Rights Act.
Edited by FullyReclined on Monday 25th May 17:23
Gassing Station | Finance | Top of Page | What's New | My Stuff