Considering HAP tenants

Good morning , May I check that If a property is rented to a HAP tenant and in time , that arrangement may have to cease, I am assuming the tenent remains on the council housing list ?

I am beginning to look into renting a property to a family I know who are eligible for HAP and rent charged is expected to be 1500 per month. for a 4 bedroom house Taxation on this income is paid at my own normal tax rate , which is in the highest tax band - is it madness to hand it all back in tax !
I am sure a lot of the expenses related to preparing the property for rent will reduce the tax payable .

There is the possibility I will take early retirement also in the next 5 years so that also will be a reduction in tax payable.
The main reason for considering this is to secure a return on capital as interest rates are nil .
I know I have a lot of research to do but I appreciate all the pointers and information available to me on the various threads on related topics,
Many thanks .

Pre-letting expenses are not deductible against rental income.

Letting to a family you know is a bad plan. Renting property is a business with a large amount of capital involved. Treat it as a business stay away from people you know and even further away from families you know.

Is the family your child, spouse plus grand children? If so, I can see the attraction of providing the accommodation while HAP basically covers the rent. Otherwise, I would run a mile from this plan. I also have no idea if this scenario is against HAP rules, could easily be.

Thank you for your replies! Run a mile says it all !

No, it's a family who are currently renting near me and the house is being put up for sale.

I know they have always paid their rent on time etc and HAP would cover 1k of the rent even before the proposed 35 % discretionary increase , yet I do appreciate the perils of renting a property are quite real !
Thank you.

creditworthy said:

Thank you for your replies! Run a mile says it all !

No, it's a family who are currently renting near me and the house is being put up for sale.

I know they have always paid their rent on time etc and HAP would cover 1k of the rent even before the proposed 35 % discretionary increase , yet I do appreciate the perils of renting a property are quite real !
Thank you.

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Well speak to the other landlord and get an honest view of how they behaved during their tenure.

If they respected the property and as you say paid the rent on time its relatively easy money, less tax obviously.

But our experience with HAP wasn't a nice one, but we didn't have the opportunity to research to level you have available to you.

@creditworthy

Not sure if you have read this previous AAM thread or if it is relevant but at the same time might be worth a read.

I'm not discriminating against HAP applicants, but being a landlord is risky enough in the current environment. The idea of a HAP tenant stopping the top up payment and as a result, the council payment being stopped as a result, makes me wonder why on earth anyone would consider the scheme in it's current format.

Thank you all for your feedback . Appreciate it.

Investment is about risk and reward.

Ask yourself whether delinquent behavior is more likely or less likely when dealing with HAP tenants.

The elephant in the room is the fact that these are people who can’t pay their way for a variety of different reasons.

Run a mile.