Financial and time aspects of Rent-to-own to landlords
Agenda:
- Have a good understanding of all your cost associated with Rent-to-own.
- Have a common knowledge about costs related to property purchase in the UK.
There are the following savings for landlords using Rent-to-own:
- Time.
- Money.
>> Let’s focus first on time.
The joint venturer fully manages the property, so the landlord spends a second worrying about property management. In reality, the tenant buyers mentality is that they own the property, so to be fair, there is relatively little control to be carried out. So for landlords, it doesn’t cost anything, it doesn’t take any time, and it is not the landlord's responsibility. Maintenance - it does include time and money. Both are the joint venturer responsibility. But again, the tenant-buyer mentality is the owners, so they look after their house, and they in most situations carry out some work themselves. However, obvious legal requirements like gas and electricity certificates, Energy Performance Certificate etc., are done by the joint venturer. So for landlords, it doesn’t cost anything, it doesn’t take any time, and it is not the landlord's responsibility. Rent collection - rent is paid by the joint venturer, so any delays or missed payments by the tenant don’t affect the landlord—no time spent chasing tenants for money. The joint venturer sets up the standing order to transfer the rent to the landlord on a set date every month.
>> Savings on money.
No management, so no letting agent fees. That's a savings of, usually, 10% plus VAT. So with the rent of £1000 a month it is £120 a month, so £4320 in 3 years. No maintenance. It is difficult to calculate precisely but let’s say that each landlord spends at least £700 annually for minor maintenance together with required certificates. It is £2100 per three years. Potential Tax Savings. Because of the long term rent structure connected with the sale, each landlord can move some of the rent to be included in the sale price. Then there is a Capital Gain Tax instead of income tax and therefore no National Insurance Contribution and lower tax rate with delayed tax to pay. Its various but potential savings in three years will reach thousands of £.
Financial and time aspects of Rent-to-own to landlords
Agenda:
- Have a good understanding of all your cost associated with Rent-to-own.
- Have a common knowledge about costs related to property purchase in the UK.
There are the following savings for landlords using Rent-to-own:
- Time.
- Money.
>> Let’s focus first on time.
The joint venturer fully manages the property, so the landlord spends a second worrying about property management. In reality, the tenant buyers mentality is that they own the property, so to be fair, there is relatively little control to be carried out. So for landlords, it doesn’t cost anything, it doesn’t take any time, and it is not the landlord's responsibility. Maintenance - it does include time and money. Both are the joint venturer responsibility. But again, the tenant-buyer mentality is the owners, so they look after their house, and they in most situations carry out some work themselves. However, obvious legal requirements like gas and electricity certificates, Energy Performance Certificate etc., are done by the joint venturer. So for landlords, it doesn’t cost anything, it doesn’t take any time, and it is not the landlord's responsibility. Rent collection - rent is paid by the joint venturer, so any delays or missed payments by the tenant don’t affect the landlord—no time spent chasing tenants for money. The joint venturer sets up the standing order to transfer the rent to the landlord on a set date every month.
>> Savings on money.
No management, so no letting agent fees. That's a savings of, usually, 10% plus VAT. So with the rent of £1000 a month it is £120 a month, so £4320 in 3 years. No maintenance. It is difficult to calculate precisely but let’s say that each landlord spends at least £700 annually for minor maintenance together with required certificates. It is £2100 per three years. Potential Tax Savings. Because of the long term rent structure connected with the sale, each landlord can move some of the rent to be included in the sale price. Then there is a Capital Gain Tax instead of income tax and therefore no National Insurance Contribution and lower tax rate with delayed tax to pay. Its various but potential savings in three years will reach thousands of £.