Talk me out of this idea or not (buying a property for holiday rental)

[Crofter]

Our changeovers work out at about £30/hr. You'd think that would be pretty attractive but in a location where there are thousands of STLs and most young people move away to study, it's not at all easy to get people to do it. Admittedly our two properties are pretty quick to clean which might distort our cost per hr.

A friend had to give up on his STL plans after failing to get a single person interested in doing the changeover, at any price.

We've been quite lucky, and been able to persuade recently retired friends to do it, or to at least fill in.

Gardening is also difficult, very few people want to do strimming through a Scottish summer with the rain and the midgies. We've had to sack one gardener already because the place looked like a jungle. I wonder if he was even showing up. One cleaner decided she'd like a day out to Inverness and the house didn't get cleaned. We were incredibly lucky that the previous guests had left it almost spotless, and the new ones just complained that the towels were damp. Absolutely mortifying for us. We don't use that cleaner any more.

[recoveringbuilder]

Whatever you do with your pot I’d get it well hidden! 14 months since my husband had his brain haemorrhage and multiple complications he is no longer the man he was and therefore not able to come home. I now stand to lose half of the house we’ve worked all our lives to have. This house was going to be sold when we retired to give us an additional pension pot as we have no private pensions. I am now in the situation that with my half I’ll probably need to buy something like an ex council house to give me extra cash to live in my retirement. This is something neither of us foresaw and it makes me so angry to think we’ve really worked for nothing, if we’d stayed in a council house all our lives and had no assets his care would have been paid for!

[Ferdinand]

58 minutes ago, recoveringbuilder said:

Whatever you do with your pot I’d get it well hidden! 14 months since my husband had his brain haemorrhage and multiple complications he is no longer the man he was and therefore not able to come home. I now stand to lose half of the house we’ve worked all our lives to have. This house was going to be sold when we retired to give us an additional pension pot as we have no private pensions. I am now in the situation that with my half I’ll probably need to buy something like an ex council house to give me extra cash to live in my retirement. This is something neither of us foresaw and it makes me so angry to think we’ve really worked for nothing, if we’d stayed in a council house all our lives and had no assets his care would have been paid for!

 

Are you sure that that is correct?

 

I thought that there was a right to continue living in the shared dwelling without being able to be forced to sell it to let the Council access funds to pay for care. On that basis when my mum and I moved house a few years ago such that I could be her carer, she lifetime-gifted me half of the house. *

 

There are lots of ins and outs though, and each situation is different, as are ways of managing it - so I'm raising not trying to lay down an answer, and specific advice may be needed. 

Ferdinand

 

* ironically she died 6.5 years later, so there was some tax to pay on the gift.

[joe90]

30 minutes ago, Ferdinand said:

I thought that there was a right to continue living in the shared dwelling without being able to be forced to sell it to let the Council access funds to pay for care.

I agree,   https://www.ageuk.org.uk/globalassets/age-uk/documents/factsheets/fs39-paying-for-care-in-a-care-home-if-you-have-a-partner.pdf
 

(for some reason I can’t cut and paste the relevant paragraph)

[recoveringbuilder]

Yes, @Ferdinand apparently they can’t make me sell however I can’t afford to keep it on my part time income and they would run me up a bill for his care and add interest. 

[Mr Punter]

You could invest in a few freehold lock-up garages.  No sitting tenants, EPC, council tax etc.  Sometimes there may be an angle for later planning consent.

[Ferdinand]

1 hour ago, recoveringbuilder said:

Yes, @Ferdinand apparently they can’t make me sell however I can’t afford to keep it on my part time income and they would run me up a bill for his care and add interest. 

 

Depending on how much you have to raise in capital and/or income, are there options such as taking in a lodger or two, which would be tax free for the first £7500 of income?

 

OTOH if your plan was always to sell the big house, then it may be time to think about that and downsize at this point. My only comment would be that it may be good to look at bungalows, of which I am a huge fan.

Wishing you all the best.

 

[Jilly]

1 hour ago, recoveringbuilder said:

Yes, @Ferdinand apparently they can’t make me sell however I can’t afford to keep it on my part time income and they would run me up a bill for his care and add interest. 

What a difficult situation for you. Is this because the stroke happened below a particular age? Could you get a lodger to help pay the bills and keep your home? Sorry overlapped with Ferdinand but had similar ideas. 

Edited December 30, 2023 by Jilly

[Jilly]

Just now, Jilly said:

What a difficult situation for you. Is this because the stroke happened below a particular age? Could you get a lodger to help pay the bills and keep your home?

 

[Ferdinand]

56 minutes ago, Mr Punter said:

You could invest in a few freehold lock-up garages.  No sitting tenants, EPC, council tax etc.  Sometimes there may be an angle for later planning consent.

 

ProDave as the new Roger Dudding, who made much of his (couple of hundred) millions from lockup garages, as well as from his business making ticket dispensing queueing machines, as used everywhere. Also a well-known car collector.

 

I first heard of him in Rich Lists in the early 1990s.

 

https://en.wikipedia.org/wiki/Rodger_Dudding

[recoveringbuilder]

3 hours ago, Jilly said:

 

Doesn’t matter what age you are if you have to go into care they’ll take everything you have until you have nothing and only then will they pay it. I have thought about a couple of lodgers but being a woman on my own now I’m a bit wary

[recoveringbuilder]

3 hours ago, Ferdinand said:

 

Depending on how much you have to raise in capital and/or income, are there options such as taking in a lodger or two, which would be tax free for the first £7500 of income?

 

OTOH if your plan was always to sell the big house, then it may be time to think about that and downsize at this point. My only comment would be that it may be good to look at bungalows, of which I am a huge fan.

Wishing you all the best.

Unfortunately if I want to survive on my pension when I get it in a couple of years I’ll have to keep myself a bit of money back from my half so a bungalow would be out of the question around here.

 

[Marvin]

Hi @ProDave

 

Further to my PM:

 

https://www.telegraph.co.uk/money/investing/cant-touch-300000-broker-shut-down/

 

Be warned.

[ProDave]

3 minutes ago, Marvin said:

Hi @ProDave

 

Further to my PM:

 

https://www.telegraph.co.uk/money/investing/cant-touch-300000-broker-shut-down/

 

Be warned.

Never ever put more than £85K with one provider.  Except NS&I seem to offer unlimited protection.

 

I am still slightly vunerable as we still have a little over £170K in a joint account with one provider, I am moving it out as fast as I can but the amount of bank holidays just now does not help.

[MBT6]

If you do it then it is best to go high end, make the property really high spec so you can charge £2k+ per week.

 

I live of the Isle of Skye and the situation is really bad for 'local' people. People looking to do short-lets have driven up land and property prices so much a 'local' person has little chance of getting any land or property unless they have a family member who give them land. I'm quite fortunate to earn a pretty good salary working offshore but even I'm struggling to find anywhere to live, short-let property speculators have driven prices up so much. Really old asbestos riddled dilapidated houses in need of full renovation go for a fortune. 

 

The ones who operate short lets on the island but don't live in the area area the worst, they drive up property prices and suck the tourist money out of the area and put hardly anything back into the local economy. The short-let market should be there to provide a livelihood for people who actually live in the local area where the short-lets are operating.

 

With the short let control areas being introduced in some places I really hope they target the people who don't live in the areas first, a lot of local people would have to move away without the income provided by short lets. It would be a great shame if these people who live in the areas got caught in cross fire of a problem exacerbated by people profiteering who don't live in the area.

 

There are about 5,800 dwellings on the Isle of Skye and there were about 1,500 short let licence applications on the island. So about 26% of the housing stock could be short-lets, another 10% are second homes, so probably at least 36% of the housing stock are not primary residences. 

Edited January 25 by MBT6

[Adsibob]

@MBT6 not wishing to undermine the seriousness of the housing crisis, but I was confused by the idea that short lets don’t result in money going into the local economy. Surely those renting short term are more likely to be tourists or people visiting on a short to medium term work assignment. All their expenditure will be pumped into the local economy. What am I misunderstanding here?

[MBT6]

2 hours ago, Adsibob said:

@MBT6 not wishing to undermine the seriousness of the housing crisis, but I was confused by the idea that short lets don’t result in money going into the local economy. Surely those renting short term are more likely to be tourists or people visiting on a short to medium term work assignment. All their expenditure will be pumped into the local economy. What am I misunderstanding here?

 

The vast bulk of what the tourist spending is on accommodation.  A house on short-let brings in a least £1k per week but can be much more. Some high-end houses go for £3k per week.

 

It is better if that money goes into the pockets of people who actually live and spend their money in the local area rather than people who live elsewhere. People who don't reside in the area develop holiday lets in rural areas driving up land and property prices then suck the tourism money out of the area.

 

Many rural parts of Scotland are suffering from over tourism in the summer, there are enough tourists visiting already, it is about keeping the profits from the tourist spending in the rural economies rather than having speculators/investors suck it out of these areas.

 

Employment opportunities are not very good in rural areas, operating short-lets provides vital income to local people. But profiteering from people who don't live in the area is ruining it.

 

Non-resident operators of short-lets argue they are improving the economy by employing cleaners to do turnovers and say their guests spend money in cafes and restaurants, but that money is paltry compared to the £1k to £3k per week tourist money they extract from the rural communities.

Edited January 25 by MBT6

[SteamyTea]

9 hours ago, MBT6 said:

There are about 5,800 dwellings on the Isle of Skye and there were about 1,500 short let licence applications on the island

Has every single one of them always been owned by non locals?  Who sold these properties to the business people?

 

Apparently we have the same 'problem' here.  It is not so much the price of property, it is not excessive in absolute terms (about the same as Milton Keynes).

What is the biggest problem is the majority of jobs in the tourist industry are minimum wage, and zero hour contracts.

 

[OwenF]

On 30/12/2023 at 21:25, ProDave said:

I am still slightly vunerable as we still have a little over £170K in a joint account with one provider, I am moving it out as fast as I can but the amount of bank holidays just now does not help.

Couldn’t tell from your original post if this amount was something you’d had for a while or from a recent sale [Edit: re-read OP and see it is a house sale]. However worth noting that the £85k FSCS protection is temporarily increased to £1m after ‘life events’ e.g. house sales.

 

Cant remember how long it lasts (maybe 6-12 months) but is there to give you time to redistribute as you describe. Might be a comfort?

Edited January 26 by OwenF
Hadn’t opened my eyes

[Adsibob]

35 minutes ago, OwenF said:

However worth noting that the £85k FSCS protection is temporarily increased to £1m after ‘life events’ e.g. house sales.

 

Cant remember how long it lasts (maybe 6-12 months) but is there to give you time to redistribute as you describe. Might be a comfort?

I think this is not much more than a comfort. The rules aren’t always clear on this, and I wouldn’t want to rely on it. There are plenty of banks where you can open accounts. I seem to remember that Investec, RBI and Shawbrook can all be opened online fairly quickly. They usually have reasonable rates.

[ProDave]

53 minutes ago, OwenF said:

Couldn’t tell from your original post if this amount was something you’d had for a while or from a recent sale [Edit: re-read OP and see it is a house sale]. However worth noting that the £85k FSCS protection is temporarily increased to £1m after ‘life events’ e.g. house sales.

 

Cant remember how long it lasts (maybe 6-12 months) but is there to give you time to redistribute as you describe. Might be a comfort?

I think you only get that temporary protection if it was the sale of your own house.  Sale of your spare house might not count.  Anyway it is distributed in suitable sized chunks and RBS did not go bust in the time it took to move it, so all is well.

[SteamyTea]

5 minutes ago, ProDave said:

Sale of your spare house might not count

As it took you so long to sell that place, does that mean you have to pay CGT on it?

[ProDave]

10 minutes ago, SteamyTea said:

As it took you so long to sell that place, does that mean you have to pay CGT on it?

Yes, all declared and paid.  It was not that much, covered by 3 months rent.

[SteamyTea]

Just now, ProDave said:

Yes, all declared and paid.  It was not that much, covered by 3 months rent.

Not so bad then.  It usually takes 3 months for all the paperwork to be done.

[ProDave]

Just now, SteamyTea said:

Not so bad then.  It usually takes 3 months for all the paperwork to be done.

Why?  You have all the figures on completion day.  The tax rules have changed, it used to be you waited until the tax year end and then declared it, but now it has to be declared and paid within 60 days of completion.