Rental property portfolio bank account issues
Discussion
I'll try to keep this concise...
My mother and step-father have a modest porfolio of 8 or 9 rental properties - pays them a comfortable retirement income and they've had them for about 10-12 years. They are both in their 80s and to be frank, their mental acuity is starting to decline. Looks like I'll be steppping up to manage the rental income on their behalf. There's a letting agent that deals with the day to day stuff like fixing a dripping tap and collecting rent.
They've been receiving their rental income into a joint personal bank account for years without issue. However, there's some new accounting legislation coming in soon (very soon?) that's going to require them to submit returns quarterly (is this 'Making Tax Digital'?)
Anyway, the upshot is that they'll need a bank account that SOLELY deals with transactions for the properties - rental money in, expenses going out, so that I can link the account with Xero, which will allow me to submit returns electronically each quarter. The bank account can't have non-rental related traffic through it as it just makes things really difficult.
So - they went to HSBC, who my mother has banked with for over 60 years. They also have a separate business that's banked with them for 20+ years (which I do all the accounting for). Apparently, this loyalty counts for nothing.
When HSBC learned that there was rental income from 8 or 9 properties, they said it must be a business and threatened to close the personal current account, saying they needed to open a business current account instead. So, they applied for a business account, but the application was declined without any explanation.
Ultimately, it is not a business - its just a couple of increasingly doddery pensioners lucky enough to have acquired a few properties.
However, we're now faced with HSBC saying they'll close the personal account if it continues to receive rental income, and that it has to be a business account, but they can't have one....
We've got business account applications in with NatWest and Lloyds, but both are asking for evidence of the business, as though it was a plumbers or a retail outlet. Not one bank seems to be able to recognise the actual circumstances.
So - a please for help from the PH collective - is anyone running a small-ish property portfolio that can point me in the direction of a decent bank, where an applicaiotn will be considered by a real human, rather than just "computer says No "?
My mother and step-father have a modest porfolio of 8 or 9 rental properties - pays them a comfortable retirement income and they've had them for about 10-12 years. They are both in their 80s and to be frank, their mental acuity is starting to decline. Looks like I'll be steppping up to manage the rental income on their behalf. There's a letting agent that deals with the day to day stuff like fixing a dripping tap and collecting rent.
They've been receiving their rental income into a joint personal bank account for years without issue. However, there's some new accounting legislation coming in soon (very soon?) that's going to require them to submit returns quarterly (is this 'Making Tax Digital'?)
Anyway, the upshot is that they'll need a bank account that SOLELY deals with transactions for the properties - rental money in, expenses going out, so that I can link the account with Xero, which will allow me to submit returns electronically each quarter. The bank account can't have non-rental related traffic through it as it just makes things really difficult.
So - they went to HSBC, who my mother has banked with for over 60 years. They also have a separate business that's banked with them for 20+ years (which I do all the accounting for). Apparently, this loyalty counts for nothing.
When HSBC learned that there was rental income from 8 or 9 properties, they said it must be a business and threatened to close the personal current account, saying they needed to open a business current account instead. So, they applied for a business account, but the application was declined without any explanation.
Ultimately, it is not a business - its just a couple of increasingly doddery pensioners lucky enough to have acquired a few properties.
However, we're now faced with HSBC saying they'll close the personal account if it continues to receive rental income, and that it has to be a business account, but they can't have one....
We've got business account applications in with NatWest and Lloyds, but both are asking for evidence of the business, as though it was a plumbers or a retail outlet. Not one bank seems to be able to recognise the actual circumstances.
So - a please for help from the PH collective - is anyone running a small-ish property portfolio that can point me in the direction of a decent bank, where an applicaiotn will be considered by a real human, rather than just "computer says No "?
I've had business bank accounts with Abbey/Santander and various small banks.
Mostly limited company accounts.
Investec was one.
Should you be looking at some kind of partnership account?
In 35 years of business, I've always found the big four High St banks to be well worth avoiding, particularly if you want to keep fees low and you're not looking for an overdraft.
I'd be looking at the internet banks.
Mostly limited company accounts.
Investec was one.
Should you be looking at some kind of partnership account?
In 35 years of business, I've always found the big four High St banks to be well worth avoiding, particularly if you want to keep fees low and you're not looking for an overdraft.
I'd be looking at the internet banks.
OutInTheShed said:
Should you be looking at some kind of partnership account?
Yes - there's no limited company, so a simple partnership account should be fine - everything is owned 50/50 and I just need to be given access as a signatory to manage the account, make payments, submit returns, etc.Peter911 said:
Our rental income just goes into a joint account (with HSBC)
And that's what was happening with my folks too, until they became awre of the number of properties. I'm absolutely fuming at HSBC for forcing them to apply (under duress) for a business account and then turning down the account application without any explanation. If it wasn't so much hassle, I'd move the proper business account from them too, but I don't suppse they'd flinch.Have a look at Starling or some of the other newer banks, they can apply online.
Have you/they thought about what happens to all this property moving forward? Being a landlord is going to get more and more difficult, new rules and regs, tax implications etc. Maybe time to start to sell up and distribute the money to children etc. Remember the 7 year rule for gifts to be outside of inheritance tax.
Have you/they thought about what happens to all this property moving forward? Being a landlord is going to get more and more difficult, new rules and regs, tax implications etc. Maybe time to start to sell up and distribute the money to children etc. Remember the 7 year rule for gifts to be outside of inheritance tax.
Is Lasting Power of Attorney set up? If not then do so as you say their mental accuity is declining. Do this BEFORE they deteriorate.
LPA ( two versions , financial and health). This formalises the nominated attorney as handler and decision maker, you I assume.
You already organise for them but make it official.
Next, sort out the banking for them, but you could start that anyway.
Take the pressure off them.
LPA ( two versions , financial and health). This formalises the nominated attorney as handler and decision maker, you I assume.
You already organise for them but make it official.
Next, sort out the banking for them, but you could start that anyway.
Take the pressure off them.
I have a business account with Lloyds that is purely for my lettings, it’s not a ltd co. I also have business account with HSBC for my flips, that is a ltd co. It’s a bit strange they won’t let you open accounts. I seen an advert for a free Virgin business account recently, maybe look into that, I was also looking at Metro bank recently as I may change all my accounts to one bank.
[quote=Plus4Four#]Is Lasting Power of Attorney set up?
[/quote]
Yes - my step sister and I have power of attorney (both types) over both parents. They are doing exceptionally well for 88 and 83, but the decline is becoming noticeable.
To answer an earlier comment - gifting the properties to avoid IHT isn't really an option. The rental income represents the vast majority of their (quite comfortable) income, so giving it away now will adversely affect their standard of living. We've explored trusts, but its just too complex with this many properties, four children and eight grand-children. We're semi-resigned to a hefy IHT bill, but my primary concern is that they live out the rest of their lives in the comfort they've earned.
in addition to my 45-50 hour a week day job and my very part-time sideline, I'm also running the financial side of the family business, which will soon be joined by the financial side of the property portfolio. Ah well - it'll save me getting bored when I retire in a few years...
Back to the bank account issue - I can see why a bank might feel that 8-9 properties requires a business account, but to then decline the business account application is just crazy.
We've got business account applications in with Lloyds and NatWest, so we'll see what comes of them. HSBC can FRO now...
[/quote]
Yes - my step sister and I have power of attorney (both types) over both parents. They are doing exceptionally well for 88 and 83, but the decline is becoming noticeable.
To answer an earlier comment - gifting the properties to avoid IHT isn't really an option. The rental income represents the vast majority of their (quite comfortable) income, so giving it away now will adversely affect their standard of living. We've explored trusts, but its just too complex with this many properties, four children and eight grand-children. We're semi-resigned to a hefy IHT bill, but my primary concern is that they live out the rest of their lives in the comfort they've earned.
in addition to my 45-50 hour a week day job and my very part-time sideline, I'm also running the financial side of the family business, which will soon be joined by the financial side of the property portfolio. Ah well - it'll save me getting bored when I retire in a few years...
Back to the bank account issue - I can see why a bank might feel that 8-9 properties requires a business account, but to then decline the business account application is just crazy.
We've got business account applications in with Lloyds and NatWest, so we'll see what comes of them. HSBC can FRO now...
The fact that they then declined the business account does give me cause to be concerned it’s flagging AML protections inside the bank. As someone mentioned they must not tell such customers this is the reason and report the the relevant authorities. The fines and sanctions for allowing ML are very very steep making it not worth the risk for the banks. My suspicion would be they have been impacted by this - it’s a lot of payments coming into a personal account for an elderly couple.
You might well need a specialist account / advice which you’ll likely need to pay for, but might resolve the issue to your satisfaction. And be less agro for you!
You might well need a specialist account / advice which you’ll likely need to pay for, but might resolve the issue to your satisfaction. And be less agro for you!
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