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HMO Property Investment | Chartered Accountancy | Landlord Support
Property Strategies That Work
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BUY TO LETS (BTL)
These are lets of a whole house or flat to a person, couple or family for them to use as their home. Leases are normally a minimum of 6 or 12 months with tenants typically staying in the property for several years or more. They are usually let unfurnished so the tenants can set them up the way they want them.
HOUSES OF MULTIPLE OCCUPATION (HMO)
SA is often set up in a similar way to a HMO with multiple bedrooms and shared amenities. The obvious difference is that SAs are let by the night with some let for the weekdays to businesses and then for the weekends to tourists or visitors mostly in larger towns or cities. Generally the whole house or flat is let to one booker so may be to a group of workers, friends or a family. They are similar to what people think of as AirBnB but the owner never lives there.
SERVICED ACCOMODATION (SA)
SA is often set up in a similar way to a HMO with multiple bedrooms and shared amenities. The obvious difference is that SAs are let by the night with some let for the weekdays to businesses and then for the weekends to tourists or visitors mostly in larger towns or cities. Generally the whole house or flat is let to one booker so may be to a group of workers, friends or a family. They are similar to what people think of as AirBnB but the owner never lives there.
HOLIDAY LETS (HL)
These are lets of a whole house or flat to a person, couple or family for them to use as their home whilst on holiday normally for a weeek or just a few days
OWNED OR RENTED
Investors can choose to rent properties to then use as BTL, HMO, SA or HL but this is normally only done in the case of HMO and SA where the numbers can work out well for both owner and renter. The owner can score a double wammy if he lets to someone using his property for SA or HL as he might be able to claim capital allowances and not have any restriction on mortgage interest.
Why Choose To Work With Cass Properties
Time To Act
Finding time to manage properties hasn't happened by accident. In fact, it's taken a lot of years to get to the point where I have established partners in the industry , so I can focus on the larger plan. This is something I share with the people I work with.
Property Knowledge
I invest in Family Buy-To-Lets & Houses of Multiple Occupation in and around Greater Manchester, the North West, and West Yorkshire. I have the time, money and experience and already work closely with partners who have over 200 properties. I am looking for landlords selling 5+ properties and investors with over £100,000 who would like a great rate of return.
Industry Experience
Knowing the industry inside out, Cass Properties doesn't just talk about how property works; we do it too. We always have active projects, in various stages of the strategy, and welcome other investors who are seeking to build wealth with property.
Comparing Strategies
Strategies Side By Side
Features
Cash Flow
Capital growth
Regulation & Licensing
Difficulty
Management Ease
Management Cost
Capital Allowances Available
Interest restricted to Basic Rate
VAT (when over threshold)
Fallback Option to BTL
BTL
Low
High
Low
Easy
Easy
Cheap
No
Restricted
Never
N/A
HMO
High
High
High
Relatively Easy
Easy
Cheap
No
Restricted
Never
Yes
SA
High
High
High
Moderate
Complex
Expensive
Yes
Not Restricted
Yes
Yes
HL
High / Very High
High
Low
Moderate
Complex
Expensive
Yes
Not Restricted
Yes
Possibly
CONTACT
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CIS: Are conversions within the scheme?
CIS: Are conversions within the scheme?
If you are a property investor who converts houses into HMOs (Houses of Multiple Occupancy), care should be taken when establishing whether you need to register as a Construction Industry Scheme (CIS) contractor.
Background
In a previous Factsheet ‘7 - Are you a Property Investor or Developer?’ we explained the differences between property investors and property developers. For CIS purposes, property developers are considered to be ‘mainstream contractors’, whereas property investors are only considered ‘deemed contractors’ if certain conditions are met.
What are the conditions for ‘deemed contractors’?
Firstly, a property investor (or any non-construction business) will fall within the definition of ‘deemed contractor’ if ‘in any rolling one year period, the person’s expenditure on construction operations exceeds £3,000,000’.
Secondly, HMRC’s guidance (CISR 12080) states:
“If its activities include the construction of an entirely new property or a redevelopment of a property, leading to change in its nature of use, for instance redeveloping an old hotel or offices into a block of flats, then that part of its activities will amount to property development, and it will be immediately within the scope of CIS as a mainstream contractor.”
Why does this matter?
A common question is whether converting residential properties into HMOs would bring a property investor under ‘deemed contractor’ status. Deemed contractor status brings a raft of CIS compliance obligations.
Things to consider
The first step is to consider whether your business is a property investor or a developer.
·A property developer’s activity is the creation of new buildings, or the renovation or conversion of existing buildings, or other civil engineering works.
·A property investment business acquires and disposes of buildings for capital gain or uses the buildings for rental.
Then:
If the business is a property investor, and its annual expenditure on construction works exceed £3million, it is a deemed contractor.
Then:
If expenditure is below £3million, consider if there has been a change of use of the property.
Has there been a change of use?
The key is to look at the property’s use both before and after the construction works have taken place. In the case of houses being converted into HMOs, the use does not change – it is ‘residential’ both before and after the conversion. It would be a different story if, say, a factory was converted into flats.
What if an investor undertakes multiple/substantial development contracts?
In this case, it will be necessary to decide if the nature of that business has now changed from “property investor” to “property developer”.
Further information
For more detailed guidance, see: https://www.gov.uk/hmrc-internal-manuals/construction-industry-scheme-reform/cisr12080
TESTIMONIALS
"Clive exceeded ecpectations"
"Investing in property was new to me. I'd always done everything myself and found it stressful. Investing with Clive made everything simple and totally hands-off."
- Lilly, Bolton
"Better ROI than my Lifetime ISA"
"Working with Clive has become a rinse and repeat exercise. The way he does property puts my bank to shame. Property Investing works for me."
- John, Manchester
"Highly recommend this"
"As a mother of 2 I don't have the time to manage property like others do. But I know it's a good investment. Which is why working with Clive makes sense for me and my family."
- Shahida, Lancs
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