Iain Wallis

Proven Tax Strategies for High Net Worth Individuals

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Autumn Statement 2013: the key bits. Analysis and comment to follow

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Personal Taxes and Tax Credits

 Personal Allowance, Rates of Tax, National Insurance Contributions for 2014/15

  As announced at Budget 2013, people born after 5 April 1948 will be entitled to a basic personal allowance of £10,000 for 2014 to 15. The ‘higher rate threshold’ (the sum of the basic personal allowance and the basic rate limit) will be £41,865. As the personal allowance will be £10,000 for 2014/15, this means that the basic rate limit will be £31,865 the rates of tax will be announced at Budget 2014.

For 2014/15, there are no changes to the percentage rate of contribution for Class 1, Class 1A, Class 1B and Class 4 National Insurance Contributions (NICs) but there are changes to all of the thresholds and limits. The weekly rates for Class 2 and Class 3 NICs will be increased. The Class 1 Upper Earnings Limit (UEL) and the Class 4 Upper Profits Limit for NICs will continue to be aligned with the point at which higher rate tax becomes payable £41,865.

 

Tax Credit, Child Benefit and Guardian’s Allowance: rates for 2014/15

 

Tax Credits – disability elements increased in line with CPI of 2.7%. Other rates are increased by 1%. The family element of child tax credit is not increased annually and remains at £545

Child Benefit – increased by 1%.

Guardian’s Allowance – increased in line with CPI of 2.7%.

 

Recognising marriage in the tax system

 From April 2015, a spouse or civil partner who is not liable to Income Tax or not liable above the basic rate for a tax year will be entitled to transfer £1,000 of their personal allowance to their spouse or civil partner provided that the recipient of the transfer is not liable to Income Tax above the basic rate. The transferor’s personal allowance will be reduced by £1,000. The spouse or civil partner receiving the transferred allowance will be entitled to a reduced Income Tax liability of up to £200.

 Abolition of NICs for under 21s

 From 6 April 2015 employers will no longer be required to pay Class 1 secondary National Insurance Contributions (NICs) on earnings paid up to the Upper Earnings Limit (UEL) to any employee under the age of 21.

Capital Gains Tax (CGT ) Private Residence Relief – Final period rule

 The final period exemption applies to a property that has been a person’s private residence at some time even though they may not be living in the property at the time they dispose of it and they may be claiming private residence relief on another property at the same time. From 6 April 2014 the final period exemption will be reduced from 36 months to 18 months.

Income tax relief for qualifying loan interest

 From April 2014, the income tax relief for interest paid on loans to invest in close companies and employee-controlled companies will be extended to investments in such companies resident throughout the European Economic Area (EEA).

CGT Non residents and UK residential property

From April 2015 a capital gains tax charge will be introduced on future gains made by non-residents disposing of UK residential property. A consultation on how best to introduce this will be published in early 2014.

 CGT Annual Exempt Amount

The annual exempt amount will be £11,000 for the year 2014/15 and £11,100 for 2015/16 and subsequent years. The exemption for most trustees will be £5,000 and £5,500 respectively.

 

Tackling Tax Avoidance and Evasion

The government has announced 5 measures to help tackle tax avoidance which have effect from 5 December 2013.

 Changes to the debt cap provisions

 The measure comprises of 2 changes to improve the effectiveness of the World Wide Debt Cap (WWDC). The first change is to the grouping rules and the second change is to the regulation-making powers. It will have effect in respect of the change to the grouping rules for accounting periods starting on or after 5 December 2013 and the change to the regulation-making powers will have effect on or after the date that Finance Bill 2014 receives Royal Assent.

Controlled foreign companies (CFC): profit shifting

 The measure switches off the partial exemption rules for loan relationship credits of a CFC that arise from an arrangement with a main purpose of transferring profits from existing intra group lending out of the UK. It also amends the anti-avoidance rule relating to the transfer of external debt to the UK to ensure that the rule works as intended. The first part of the measure will apply to arrangements entered into on or after 5 December 2013 and the second part will have effect for accounting periods beginning on or after 5 December 2013.

Partnerships review: partnerships with mixed membership

 The first element of the partnerships review measure will affect mixed membership partnerships where partnership profits are allocated to a non-individual partner in circumstances where an individual member may benefit from those profits. The second element will affect cases where partnership losses are allocated to an individual partner, instead of a non-individual partner, to enable the individual to access certain loss reliefs. The changes will take effect from 6 April 2014 with the exception of anti-avoidance rules concerning tax-motivated profit allocations. These rules come into force from 5 December 2013 in order to protect against risks to tax revenue.

Avoidance schemes using total return swaps

 The measure blocks avoidance schemes where deductions are claimed for payments between companies in the same group under derivative contracts which are linked to company profits. It will apply from 5 December 2013 to schemes entered into on any date.

Double Taxation Relief (DTR): revenue protection

The measure will make two changes to the DTR rules to prevent avoidance. Both changes will have effect from 5 December 2013. It will have effect on non-trading credits for accounting periods beginning on or after 5 December 2013, with transitional provisions where accounting periods straddle this date. The amendment to the rules on refunded tax credits will take account of payments made by the foreign tax authority on or after 5 December 2013.

Further details of these 5 measures can be found in the Written Ministerial Statement, Tax Information and Impact Notes, Draft Finance Bill 2014 Legislation and Explanatory Notes.

Other measures included are found below.

Charities established for tax avoidance purposes

 Legislation will be introduced in Finance Bill 2014 to prevent a charity from being entitled to claim charity tax reliefs if one of the main purposes of establishing the charity is tax avoidance. The definition of a charity for tax purposes will be amended to exclude such charities.

 High risk promoters

 A new information disclosure and penalty regime for high risk promoters of avoidance schemes will be introduced. Objective criteria for identifying high risk promoters and a higher standard of reasonable excuse and reasonable care that will then apply to them will also be introduced. Clients of these promoters will also have certain obligations including identifying themselves to HMRC.

 Accelerated tax payment in avoidance cases

 Legislation will be included in Finance Bill 2014 to require payment of the tax in dispute in a tax avoidance enquiry when an ‘avoidance follower penalty notice’ is issued. This will take effect from Royal Assent which is expected mid July 2014.

At present taxpayers (in most cases) can hold on to the disputed tax while the dispute is being investigated. This can take a number of years, and there is evidence that some taxpayers enter into avoidance schemes primarily for the cash flow benefit.

The government will also consult on possible wider criteria for issuing a payment notice in avoidance enquiries.

 

Fuel Duty Main Rate Freeze

 The increase due in September 2014 has been cancelled and there will be no further increase in the current Parliament.

Inheritance Tax Online

 HMRC will be investing in a new online service to support the administration of Inheritance Tax. This will do away with the need to complete paper versions of forms and enable people to proceed with their application for probate and submit Inheritance Tax accounts online. It will also improve the customer experience as well as HMRC’s ability to perform compliance activities. It is anticipated that the new online service will become available in 2016.

Why Tax Avoidance is still legal

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“No man in this country is under the smallest obligation, moral or other, so as to arrange his legal relations to his business or to his property as to enable the Inland Revenue to put the largest possible shovel into his stores. The Inland Revenue is not slow – and quite rightly – to take every advantage which is open to it under the taxing statutes for the purpose of depleting the taxpayer’s pocket. And the taxpayer is, in like manner, entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue.”

This delicious quote from the judgment of Lord Clyde (Ayrshire Pullman v CIR (1929) 14TC 754)  has always been the foundation on which accountants like me, who help their clients with legal tax avoidance have built their arguments.

 

Parliament has rejected this judgement by enacting the general anti-abuse rule or GAAR. Taxation it is argued is not to be treated as a game where taxpayers can indulge in any ingenious scheme in order to eliminate or reduce their tax liability.

So watch out Jimmy Carr!

 

But what does it mean for those of us who do arrange their affairs to avoid tax but not in such an aggressive way?

Well the good news is that those who feared that it would be a charter for HMRC to crush and penalise anything it didn’t like have not materialised. Instead we have a reasoned argument that making the most of the rules is just fine but taking steps which are artificial, abnormal or simply to escape tax will be caught by GAAR. The downside is that what you consider to be fair and reasonable may not be quite the same as that of your local Tax Inspector!

So what does that mean in the property world:

  •   Giving assets to your spouse or children to reduce tax while it may avoid tax isn’t abusing the rules
  •  Switching the capital gains tax relief between main residences is allowed; that will no doubt keep a few MP’s happy

That said few of us are engaged in the aggressive tax planning used by the likes of Jimmy Carr so in the real world nothing really changes.

Or as the neighbours might say plus ca change J

 If you would like a strategic session to review your affairs please email Iain@iainwallis.com

 

Taxability 2013/14: Over 65 proven legal ways to save tax

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Do you really want to give the taxman £521,700?

 

It’s a lot of money, isn’t it? But, even before the current economic crisis, that’s how much someone earning £30,000 a year would have paid in taxes over their lifetime. While if you are lucky enough to earn more than £30,000, your lifetime tax bills will probably have been even higher.

However, because of the economic crisis, as the country starts to pay the billions to balance the Government books, your tax bills will almost certainly soar even higher still.

As a result, there is a tax bombshell about to explode.

 Of course we all have to pay our fair share of taxes. But there’s no reason why you should pay more than your fair share of that tax burden, is there?

Unfortunately, paying more than their fair share is precisely what many people do… often without even realising it.

So, because we don’t want you to be one of them, here’s our up to date easy-to-use tax-busting checklist.

In just a few pages it reveals 70 powerful ideas to shave many pounds – perhaps even many thousands of pounds – off your tax bills.

Just think, even if you can only shave 5% off your tax bills, if you earn £30,000 a year that tiny 5% saving adds up to an extra £26,085 in cash to spend and enjoy during your lifetime.

And if your earnings are much more than £30,000 per annum then your savings could well be disproportionately higher – quite possibly as much as a 50% reduction in the tax you have to pay.

 What could you do with that sort of money?

The TaxAbility checklist has been specifically designed to help you start to identify where and how to make these sorts of savings.

And it has been designed to take less than 25 minutes to complete. It could be the most profitable 25 minutes you’ll spend this year.

Once you’ve filled it in we strongly recommend that you discuss all of your “no” answers with your Chartered Accountant.

Of course, if you don’t have a Chartered Accountant, or you would simply like someone to give you a fresh perspective on your options, we would be delighted to help you.

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Iain Wallis – Proven Tax Strategies For High Net Worth Individuals

RIP Mrs Thatcher

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Margaret ThatcherWhatever your political views on Mrs Thatcher please try and remember that at the heart of this a son and daughter have lost their Mum, grandchildren their granny and countless other family members are dealing with the passing of a loved one.

Much of the ill informed vituperate bile has been spat out by those who weren’t even alive when she was in power and those who were would do well to remember that at some stage they will shuffle off their mortal coil and you won’t find me chanting “ding dong the ……….’s  dead when Bob Crowe Arthur Scargill and others leave this world.

Mrs Scargill may well be “really really happy” at the death of Mrs Thatcher but has presumably chosen to ignore that Kinnock, the Labour party leader called her husband’s actions “suicidal vanity” and that over 200 pits were closed in this country under the Labour stewardship of the late Harold Wilson. Did she & the miners rejoice at his death?

So yes I was in the minority when, while studying at university, that political hotbed of debate, where universities were regularly occupied over tuition fees, Mrs Thatcher came to power with a sweeping majority. Naïve as I was of the business world then  I believed that we had turned a corner and it would be good for UK Plc. Why?

We had just gone through the winter of discontent, rubbish was piled up because the bin men were on strike and yes even the dead went unburried. “Crisis what crisis“ reflected Jim Callaghan. We had inefficient state owned industries and an altogether complete lack of understanding as a country about profitability. Yes we were very much the sick man of Europe with massive inflation and regularly seeking hand outs from the IMF. The government owned Gleneagles hotel, an airline, a car manufacturer and even a removal company!

During this “winter of discontent” my late father bless him struggled through a three day week to get his fledgling manufacturing company off the ground.

Did he go to the government and ask to be nationalised as he was inefficient? No he worked through it, and ultimately created more employment in Dorset and yes saw the company grow.

That was very powerful to see and his entrepreneurial spirit lives on in both my brother and I. Has it been tough? You bet but did I go running for benefits and hand outs, no way.

So the message that I take form the Thatcher years and what I reflect upon on her death is that if you have the will and desire to succeed then you will. If you aspire to own your own house then you can and for the investors amongst you, if you aspire to own your own property portfolio, then you can.

Funny isn’t it that the harder you work the luckier you become.

So RIP Mrs T

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Iain Wallis – Proven Tax Strategies For High Net Worth Individuals

So what about the 2013 Budget?

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 Headline grabbing announcements in the Budget do little to hide the three brutal truths and the billion bombshell that will mean excruciating pain for many in the UK

 
The anorak wearers amongst you in reading about the budget have spotted in Table B.5 on page 104 of the Treasury’s full “Budget 2013” document (which you can download here http://www.hm-treasury.gov.uk/budget2013_documents.htm) National Debt is going to rise in the next 5 years from £1,189bn to £1,637bn

That’s a staggering increase of £448bn. Given that there are 63.2 million people in the UK, that equates to £7,088 per person. try obtaining that on an interest free credit card!

So today I’ve  launched a free “2013 Tax Minimisation Review” initiative to help local taxpayers and businesses get to grips with the pain behind the Budget.

There are some very welcome headline grabbing announcements in this Budget. But we shouldn’t get carried away, since the underlying message is one of three brutal truths.

The first brutal truth is that public finances are still in a terrible mess.

In fact, the bombshell is that the people and businesses in the UK  will be forced find an extra £448 Billion just to pay back our share of the extra money the government is now going to borrow over the next 5 years. So for some local people the pain is going to be excruciating as the country balances the books with even higher tax bills, even lower wage increases and even fewer public services and benefits.

And even if they work hard and manage to avoid all of that, high earners could find the government taking up to 60p from every extra pound they earn: 60% – is the effective tax rate on income just above £100,000 due to the withdrawal of the personal allowance.

Middle earners could have as much as 65p taken from them  http://www.independent.co.uk/news/uk/politics/middle-classes-face-65-tax-rate-after-child-benefit-squeeze-8439162.html

While low earners can lose a staggering 73p once the claw-back of benefits is also taken into account http://www.thisismoney.co.uk/money/news/article-2242158/The-families-hammered-73-tax–income-tax-National-Insurance-combine-loss-benefits.html

The second brutal truth is that it is businesses and not Budgets that offer us the best hope of putting things right by replacing the jobs and wealth lost, and generating the extra taxes needed to pay for everything.  So the region’s job and wealth creating businesses need to stand up and be counted by taking urgent action to make it happen.

The third brutal truth is that the 2013 tax regime is hideously complicated and contains a huge number of pitfalls for the unwary.

The good news, though, is that it now also allows the really well advised to make some very big tax savings. And that’s why we’ve launched our free 2013 Tax Minimisation Review service for businesses and individuals – to make sure that no-one suffers by paying a single penny more than their fair share of tax.” 

 Readers who do not want to pay a single penny more tax than they need to can claim a free 2013 Tax Minimisation Review by calling Iain] on 0191 206 4080.

Further information on this topic can be obtained from Iain@iainwallis.com

Some timely tax planning tips with 5 April coming fast

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Here’s a few tax tips to ponder and take action upon before the end of the tax year:

Income Tax

Those property investors who do not trade through a limited company have no choice as to when to make up your accounts.

Letting income will always be that arising in each tax year to the 5th April.

In looking to save tax in any business approaching a year end, you would look to defer income and maybe bring forward expenditure.

Now with rental income it’s pretty hard to defer income as I would expect you receive your rental each month so not much planning opportunity there then so what about expendtiture. Well now we’re talking.

If you’ve some major repairs on the horizon, maybe a complete repaint and remember we are talking repairs here not capital expenditure, get in place a contract for the work to be undertaken. If you’ve contracted to have the work done then these costs can be brought into your letting accounts which a) may reduce the level of profit and save tax or b) turn a profit into a loss and again save tax.

Remember that loses can only be offset against other property income or carried forward in perpetuity to offset against profits. 

As an aside tax losses are personal and so a) can not be transferred to anyone and b) go with you to the grave.

Capital Gains Tax

You may have in your portfolio a property that is sitting on a nice capital gain. Now may be a chance to offload that at a slightly below market price for a quick sale and a tax free gain. Each individual can currently make capital gains tax free of £10,600. So a property held jointly could show a gain in excess of £21,200 and if sold before 5th April 2012 not create a tax liability.  I say in excess because you pay capital taxes on the net sale proceeds less the cost of acquisition.

Inheritance Tax

As with income tax and capital gains tax there is an exemption for inheritance tax. The annual exemption is currently £3,000 and thus the first £3,000 of any transfer of value will be exempt from Inheritance Tax. If the exemption is not used then this can be carried forward. So assuming no gifts were made last year, Mum and Dad could gift £6,000 to their children completely tax free. As an impoverished trainee accountant it was a relief I often brought to my parents attention, though this simple tax planning strategy always fell on deaf ears!

Further information on this topic can be obtained from Iain@iainwallis.com

Jimmy Carr K2 and Tax Avoidance

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The Jimmy Carr Debate

Leaving aside the moral debate about Jimmy Carr, K2 and tax avoidance let’s bring you some less controversial tax planning around the subject of death which will happen to all of us at some stage.

Estate planning is not simply about Inheritance Tax (IHT).

Bear in mind that in your eagerness to avoid IHT you may trigger a liability to Capital Gains Tax (CGT).

When planning to avoid Inheritance Tax (IHT) the general view and practical approach is to reduce the value of your estate that is subject to IHT. The easiest and simplest way to do this is to give away as much wealth as you can as soon as you can. Assuming that you survive for a further seven years, then the value of that gift will fall out or your estate and you have potentially saved 40% of its value.

Sounds good so far but be careful for the gift of an asset to a connected person, except your spouse, will be treated by the taxman as a deemed sale at market value. So maybe you have a holiday cottage in the beautiful county of Northumberland that you have owned for years and maybe paid £30,000 for in 1985 but no longer need, a simple gift to the children or grandchildren of the asset now worth £130,000 will create a capital gain of £100,000 (OK  adjusted for acquisition and disposable costs and maybe some improvements). So a potential tax bill of 28% of the gain. Ouch!. Even worse were the donor not to survive the seven year period the estate could potentially be looking at a further 40% IHT. Double ouch!!

Deathbed Gifts

Forgive for the slightly morbid nature of deathbed planning but tucked away in the legislation is a wonderful rule the enables certain gifts to be ignored for CGT .In case you were not aware, gifts from a will are not subject to CGT.

Deathbed gifts, or to put it another way gifts made in contemplation of death, known as “donatio mortis causa” (DMC), count as transferred at the date of death.

For a gift to be considered as DMC three factors must be present at the time:

 

  • it must be made in contemplation of death but not necessarily expectation. For example, someone undergoing a serious operation might contemplate the possibility of death even though they hope and expect to survive

 

  • the gift must only become a permanent one where the person making the gift dies. In other words they have the right to take back the property in the event they survive

 

  • the assets in question must be passed to the beneficiary of the gift, a mere promise is not enough; there must be physical transfer. Transfer is effected by delivery of the actual property and must be made to the donee, or someone on their behalf. The donor must part with control and not merely physical possession of the property. For example, the delivery of title deeds (kept in a steel box, the key to which had been given by X to Y during her visits to the hospital during X’s illness) amounted to X’s parting with control over the house. Or A’s terminally ill father, B, told A to keep the keys to B’s car, which A used regularly was seen as effective delivery.

 

As always with estate planning it is a difficult and sometimes a very emotive subject, but bear in mind in trying to dodge the issue of estate planning could leave your beneficiaries with an unexpected double tax charge and the last thing you want is the taxman snapping at your heels having lost a loved one.

Tax Planning

As ever with tax planning seek professional advice as everyone’s circumstances are different.

Finally never forget that tax avoidance is legal. Any professional advisor not doing their utmost to provide their client with opportunities to legally reduce a tax liability has failed in their professional duties.  It is for the client to decide with their moral compass whether they wish to pursue that route.

Walk Trot & Canter Your Way to Property Investment

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In the summer of 1977 I had just completed my first year at university and found myself living in a bedsit round the back of the Royal Free Hospital, Hampstead, London in some Marxist safe house. The doors were never locked and my landlady’s three sons and assorted guests would come and go at various times of the day.

Possibly not the ideal spot for this trainee Chartered Accountant but they seemed happy enough to accept the rent in cash and my Morris Minor was no real indication of rampant capitalism.  Throw in the heady mix of the Sex Pistols “Anarchy in the UK” and it’s fair to say that this was not the best place to want to celebrate the Queens Silver Jubilee.

So I took refuge in leafy Dorset with my parents and younger brother where in true cucumber sand-witch and cream tea style we and the local villagers celebrated The Silver Jubilee. I had to return to London to work the day after the Bank Holiday so missed the fun of the pub that night and endless singing of Jerusalem and Rule Brittania but I was able to play an active part in the festivities and it was there that I picked up the Silver Jubilee Walk Trot and Canter prize for the over 16’s while my brother was equally successful in his event.

So what’s that to do with property?

House prices have been on a walk trot and a canter too with the odd gallop and occasional fall as the graph below shows from The Nationwide.

 

 

In 1952 the average price for a “new modern house” was £2,020 and by 1962 this had risen to £2,726 so a fairly gentle walk through the 50’s. A continued walk though they picked up some speed and by 1977 had cantered up to £12,236 and continued up to 1989 with a bit of a tumble.

 Back in the saddle our “new modern house” walks then trots and gallops away up to 2007 when it’s true to say it hits a fence hard and suffers a massive fall. Even now as it starts the walk again it is still at a staggering £150,532. Yes that’s an increase of 7,352%!

 So even though our “new modern house” is gently walking and could easily be spooked, there has never been a better time to buy property. In the right area and at the right price you should be able to build a portfolio delivering more than 10% yield with capital growth an added bonus.

 So have a great weekend and ask yourself what achievements in property will you be looking back on in 10 years time and if you’re young enough in 60.

 If you would like to invest with me or through me please email Iain@iainwallis.com .

 

5 Common Mistakes when Property Investing

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Speaking to you as a property investor who bought his first investment property in 2006 and who has continued to vigorously acquire in the last two years it’s sometimes good to reflect on lessons learned and how I’m now qualified to say that I genuinely believe property is a sound investment while others just don’t get it.

Have I made mistakes? Sure!

Have I learnt from them? Oh yes!

So can you imagine how easy property investing will be if you avoid these mistakes?

 1. This is a serious business

Absolutely! This is property not monopoly. Treat it like a game and hope that someone will land on your property and yes you will fail. Cashflow is the lifeblood of any business and property trust me is no different and without good cashflow then your business will fail. Yes the acquisition process is fundamental and where you make your profit but any property must demonstrate a good return and cashflow well, So aim for a minimum of 8% yield (gross rental/ cost of property and refurbishment) and you can’t go wrong, though typically I aim and get much more from single lets in my goldmine area.

 Are you focused on the cashflow?

 

 2. All the gear and no idea

If you are a skier you will know what I mean or even a golfer. Indeed any recreation you undertake you will see those who’ve the state of the art kit but can’t use it. Property knowledge is no different. Seminar junkies trek from location to location investing more and more cash with different people to find the missing piece of the property puzzle. Believe me there is no missing piece and the property market is always evolving. So, yes I learnt from two of the leaders in the property game and yes I continue to train with and for them but here’s the thing I’ve taken action and built a portfolio of property. So you’ve the skills to invest so go practice them. Invest your cash in a property not another training programme unless it’s furthering your knowledge alongside your core activity.

 Are you the course junkie?

 

 3. No clear vision

When I ask people why they want to invest in property a typical response would be “I want to get rich or maybe I want to quit my job”. Now this might sound perverse but that’s not a good enough reason. It’s not clear enough, it’s not specific enough and has no clear vision as to what the world will look like when you get there. I want to pay for my kids education! Great but how much do you need for that and how many properties will do that, or how many deals do I have to package and what will tell you that that goal or vision has been achieved. Unfocussed you will sleepwalk along the property road and be prepared to wave as those with a clear vision motor past at speed.

 Like me you’re focused on clearly defined goals aren’t you?

 

 4. There’s no F in planning

Any property purchase must be preceded by full due diligence and research so that you are able to invest with all the facts. Will there be a high level of demand for your rented property at the right amount of rent to provide the cashflow you need? What are house prices doing in that particular area, what comparables of sold houses do you have? Don’t make the mistake of buying because it’s cheap: it’s probably cheap for a reason. If you’ve done the research and are happy with the risk then yes buy cheap but ONLY after you’ve checked everything. I buy stuff now that I wouldn’t have touched two years ago but only because I’m thorough in my research.

 Be sure to buy after all thorough due diligence.

 

5. Patience is a virtue

Property investing is no race and no competition. Just because someone is buying a load does not mean that you should be. Their circumstances may be different. They may have more time, money whatever but it really doesn’t matter. What matters is that you go at your pace to learn, research etc and then take action armed with all the facts but please take action. There are thousands of houses out there for sale and the right deals for you will come along and you will know when they are the right deals, believe me.

 So to paraphrase Cpl Jones, “Don’t panic Capt Mainwaring!”

Know that when you are aware of the above mistakes you will take action to avoid them and your property investing journey will be a rich and fulfilling one.

To your continued success.

 

Homes Under The Hammer comes to Newcastle part 2

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A few days after I returned home the researcher from Homes Under The Hammer was on the phone, sorting out dates for filming, and wanting to know a bit about me, why I had bought the property and my property experience. I guess the best car crash telly is where someone, not necessarily but more than likely a first time auction attendee buys a lemon. This was no lemon!

 They had a date set for filming which unfortunately was some three weeks after completion. Normally we like to get in fast, do the refurb and get the tenant in as soon as possible. Our best is two weeks from completion to tenant but on this occasion I was prepared to wait for a bit of free publicity. More importantly however I booked in the second filming so that we could flip or let as soon as the work was completed.

 They wanted four hours of my valuable time. On the day I was ahead of schedule so I nipped to the beach to enjoy my lunch. I was confused to see people filming the North Sea in January. I thought they were from the local college doing media studies until the same car and crew turned up outside the property.

 A quick tour of the property, I retired to my car to do some work and then if it moved or even didn’t move they filmed it. Up the street, down the street, across the street, the mould in the bathroom, the holes in the ceiling, the appalling décor etc etc. I’d turned up in a T shirt to do a bit of self promotion though that was given short shrift “this is the BBC don’t you know!”

 After a while the presenter Martin arrived, though to be honest I was hoping it would have been Lucy Alexander. He did his various bits to camera and then it was my time. One take Wallis nailed it as I walked up to the property, walked into various rooms for a studious appraisal and then the interview. Usual stuff from Martin though much to his annoyance I kept calling him Richard: a senior moment.

 Soon after the agent turned up to look around and value the property and give her valuable opinions. The estate agent, let’s call her Gill, as that’s her real name had brought her manager for some moral support, though she like me just giggled as Gill walked up to the property, around it etc and then did her interview.

 Now this is where the fun starts as we’d been working with this firm for a long time and have a good working relationship with them, so while Gill gave her best performance and suggested values when complete and likely rental income let’s just say that they were fair but the right side of fair. Cheers Mrs Bouquet, though Gill did confess to hating doing the whole thing.

 The luvvies packed up and it was time to unleash the builder. Steve, as that’s his real name had already viewed the property and given me a quote for the work. Again I’d been working with him for a while so he knew what to do to get it habitable and ready for letting or a flip. I gave him the keys and let him get on with the work.

Fast forward four weeks and we are all finished and ready for the post refurb filming. A slightly smaller film crew and no Martin or was it Richard, so I had to pretend to be replying to his questions. Usual stuff, walk up to the property, walk around property and look suitably enthused.

 The two agents arrived, filmed and gave values and likely rental income. One agent was from out the area which was slightly left field but Gill was there having taken time off in the morning to visit the hairdressers! Again Gill was brilliant. Never again she vowed!

 Then it was more interviews as they hit me with the valuations and rental. Both said that we’d done a good job, and though there was a £10k difference in values the mid price would see a 122% uplift on the purchase price. Not a bad return over eight weeks I thought. Yes there were refurb costs but if it sold at that value, that would still be a very healthy return.

 The luvvies left and promised to let us know when the editing was done and when it would be aired. No news yet peoples.

 The view had always been to buy and flip and if it didn’t sell then refinance in six months. So we struck a deal with my fave agents, thanks Clare and all the girls @ The RMS Dream Team, and for once she was selling a property for me not getting me to buy one with one of those cheeky offers.

 Within two weeks we had a buyer keen to move into the area though they couldn’t afford the full price. Note to self: it feels very odd when your price is being dropped when you are used to encouraging the vendor to accept less than the asking price though she seemed genuine, had a Decision In Principle in place so all system go.

 All was going swimmingly until the survey! It was down valued “expensive for the area” and had a very long conditions list. Suffice to say the issues were easily resolved, the buyer found some extra cash to contribute and on reflection, the surveyor had probably had a row with his wife that morning, so was looking for all the negatives. Still the quick sale became a medium term sale.

 Contracts have just been exchanged and soon the funds will be released to go shopping again.

 I’ll keep you posted as to when I make my debut on BBC1

 As a postscript, we’d just napped another at auction and just finished the paperwork and yes you guessed it I heard those words “Would you be interested in filming for Homes Under the Hammer?” To be continued…………………

 

 

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