Thank you to Peter and Paul for sharing their journeys with us earlier in the week at the monthly VIP meet up. We heard their inspiring stories as they progressed from taking their first uncertain steps in property to scaling up the deals in volume and size. Some common denominators were clear to see, including belief, consistent action taking, education and a solid underlying purpose.
On the SA front Chris and I are starting to explore opportunities to rent blocks of flats and in doing so have made some great learnings (many thanks to conversations with our mentor Paul Smith) that will no doubt benefit others by sharing this.
Some considerations if you are looking at R2R on a block of flats:
- Seek to help the owner claim Capital Allowances- get a desktop survey done in the first instance and if there are significant reliefs then this should be reflected in the rent ie free rent for a period or sufficient discounted rent.
- If you actually lease the flats and the total lease value over the proposed period is greater than the LBTT (Scotland) or SDLT (England) threshold, then you will be required to pay stamp duty (shocker I know, and came as surprise news to us). Scottish calculator https://www.revenue.scot/land-buildings-transaction-tax/tax-calculator/lbtt-lease-transactions-calculator
- As we recently learned, a management agreement does not attract stamp duty.
- Ideally avoid signing full repairing and insuring leases as that would make you fully responsible for all repairs.
- If there will be a rent review, best to agree how much per year when agreeing all other terms.
Happy Sunday.