Case study: What is this £3.4 million property portfolio really earning?

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Case study: What is this £3.4 million property portfolio really earning?

Every year or two, I carry out a detailed review of my own property and investment portfolio.

The exercise is not confined to checking whether my properties have increased in value or whether the rents still cover the mortgages. I want to understand how much equity is tied up in each asset, what cashflow that equity is producing, how sensitive the results are to refinancing, and whether some of my capital might be more productive elsewhere.

This is broadly representative of the analysis Property118 consultants can undertake for clients, particularly where landlords are considering incorporation, refinancing, retirement, succession planning or a gradual reduction in their exposure to property.

The following anonymised case study illustrates why this type of review can produce a very different picture from the one suggested by headline portfolio values.

The portfolio at a glance

The clients were a married couple with two children. Other family members or employees were already involved in the rental business, partnership accounts were being prepared, and the rental income and expenditure were pooled through a dedicated business bank account.

The portfolio comprised 20 properties spread across England, Scotland and Wales. Most were residential, although four were commercial properties. Nineteen were held personally and one was already owned by a limited company.

The headline figures were as follows:

A £3.4 million portfolio producing nearly £209,000 of annual rent sounds substantial, and it is. The figure that interested me most, though, was not the gross rent or even the £1.07 million of apparent equity. It was the cashflow return being generated by that equity.

What was the portfolio producing at current interest rates?

For the purposes of this initial analysis, non-finance operating costs were estimated at 25% of gross rent. This allowed approximately £52,185 a year for repairs, management, insurance, compliance, voids and other property expenses.

After deducting these costs and the existing annual mortgage interest of £73,100, the estimated cashflow before tax was approximately £83,455 a year.

Measured against apparent equity of £1,071,000, the portfolio was therefore producing a cashflow return on equity of approximately 7.8% (before tax).

Whether that represents a satisfactory return depends on the owners’ objectives, workload, appetite for risk and available alternatives. There is no universal percentage at which a property should automatically be retained or sold.

The calculation nevertheless gives the owners something meaningful to evaluate. Without it, they might simply conclude that a profitable portfolio containing more than £1 million of equity must be performing well.

The current result depended heavily on inexpensive borrowing

The annual mortgage interest of £73,100 represented an average interest cost of approximately 3.13% across the portfolio.

That is a significant point because the current cashflow was being supported by finance arrangements that might not be available indefinitely.

We therefore stress-tested the portfolio using an assumed mortgage interest rate of 6%. This did not mean that every mortgage would necessarily be refinanced at that rate or at the same time. The purpose was to understand what might happen as the existing loans matured and were replaced.

At 6%, annual mortgage interest would rise to approximately £140,040. After allowing for the same operating costs, estimated cashflow before tax would fall from £83,455 to only £16,515 a year.

The cashflow return on equity would reduce from approximately 7.8% to just 1.54% (before tax).

Nine of the 20 properties would become individually cashflow negative under the assumptions used.

The portfolio had therefore not suddenly become a bad investment, but its resilience looked very different once the cost of refinancing was taken into account. Around 80% of its current pre-tax cashflow could disappear if the average interest cost rose to 6%.

Portfolio averages concealed very different results

The next stage was to examine each property separately.

One commercial property in Wales was worth approximately £115,000, generated £12,000 a year of rent and had mortgage debt of £83,000. After allowing for operating costs and existing interest, it produced estimated annual cashflow of £7,000.

With only £32,000 of equity tied up in the property, its current cashflow return on equity was approximately 21.9%. It would also remain comfortably cashflow positive if mortgage interest increased to 6%.

Another property was worth approximately £275,000 and contained £130,000 of equity. It produced annual rent of only £11,400 and estimated current cashflow of £4,450.

Its cashflow return on equity was approximately 3.4%, and it would become marginally cashflow negative under the 6% stress test.

The second property contained considerably more equity and might have appeared to be the stronger asset when viewed solely from the balance sheet. The first property was using the owners’ capital far more productively.

Sometimes the finance is the problem, not the property

Another commercial property was worth approximately £140,000 and had a mortgage balance of only £40,000. It generated £12,600 of annual rent and contained around £100,000 of equity.

Its mortgage interest was £4,800 a year, equivalent to approximately 12% of the outstanding borrowing.

Under the existing finance arrangement, its estimated cashflow return on equity was only 4.65%. Refinancing the £40,000 mortgage at 6% would improve annual cashflow from approximately £4,650 to £7,050.

A superficial review might have identified this property as an underperforming asset that should be sold. The detailed analysis suggested that the property itself was not necessarily the problem. The unusually expensive borrowing and low LTV was suppressing the return.

This is why decisions should not be based solely on gross yield or current cashflow. Refinancing, rent reviews, management changes and selective capital expenditure may materially alter the outcome.

High returns on equity can also be misleading

A different residential property was worth £125,000 and carried mortgage debt of £110,000. It contained only £15,000 of equity but produced estimated current cashflow of £1,400.

That represented a return on equity of approximately 9.3%.

The return appeared attractive until the borrowing was examined more closely. The existing mortgage rate was approximately 2.8%. At an interest rate of 6%, the property would produce an estimated annual cashflow loss of £2,100.

The apparently strong return was largely a consequence of the small amount of equity left in the property and the exceptionally cheap borrowing. It did not indicate that the asset was particularly resilient.

Property should be compared with alternative uses of capital

The purpose of calculating cashflow return on equity is not to persuade landlords to sell their properties. It is to identify what their capital is currently producing and to compare that result with other available uses of the money.

I apply the same discipline to my own portfolio.

Property remains an important part of my personal investment strategy, but I do not believe that every pound of my capital must remain invested in property indefinitely. Some of my liquid funds are invested in fixed-term, fixed-coupon institutional bonds.

The investments I currently hold pay contractual annual coupons of 8% and 10%, with the income paid quarterly. They have fixed repayment terms, so I know the scheduled duration of each investment when I commit the capital.

I am not suggesting that these investments are directly comparable to property or suitable for every reader. A fixed coupon does not eliminate issuer risk, and the repayment of capital depends on the issuer meeting its contractual obligations. Fixed-term bonds do not provide the same potential for rental growth, property appreciation or active value creation, and the capital is usually  inaccessible during the agreed term.

The comparison is, nevertheless, still commercially relevant because every investment decision carries an opportunity cost.

This portfolio in this Case Study contained approximately £1,071,000 of apparent equity and was producing estimated current cashflow of £83,455 a year. That equated to approximately 7.8%.

An 8% annual return on £1,071,000 would amount to £85,680, while a 10% return would amount to £107,100. These figures do not include taxation, capital growth or differences in investment risk, so they should not be treated as a like-for-like comparison.

They do, however, demonstrate why landlords should periodically ask whether the return from managing a large, leveraged and regulated property business remains proportionate to the capital, work and risk involved.

The comparison became more striking under the 6% mortgage interest stress test. Estimated property cashflow (before tax) fell to only £16,515 a year, equivalent to approximately 1.54% of the equity tied up in the portfolio.

A landlord might reasonably decide that the responsibilities and risks of the portfolio were worthwhile for a pre-tax cashflow return of 7.8%. The same landlord might reach a different conclusion if the return fell to 1.54%.

Apparent equity is not the same as investable cash

The owners could not simply sell the portfolio and place £1.071 million into another investment.

Our intentionally severe disposal model allowed for selling costs equivalent to 15% of property values, capital gains tax at the highest applicable rates, no annual exempt amounts and no personal reliefs.

On those deliberately pessimistic assumptions, selling the entire portfolio and repaying the mortgages might produce net proceeds of approximately £426,610.

This was not intended to calculate the exact tax cost of a disposal. The actual outcome would depend on legal ownership, acquisition costs, capital improvements, available reliefs, each owner’s tax position and the timing and sequence of sales.

The calculation was designed to expose the gap between headline property equity and the amount that might actually become available for reinvestment.

Nevertheless, even using the reduced figure of £426,610, an annual return of 8% would produce approximately £34,129, while 10% would produce approximately £42,661.

Both figures exceeded the £16,515 of estimated property cashflow under the 6% refinancing stress test. This did not prove that the portfolio should be sold. It showed that the question deserved more detailed consideration.

The answer was unlikely to be selling everything or retaining everything

The analysis suggested that a selective strategy might produce a better outcome than treating all 20 properties in the same way.

The strongest cash-generating properties could potentially be retained. Properties with expensive mortgages should be considered for refinancing before concluding that they were fundamentally poor investments. Assets containing substantial equity but producing weak returns required closer examination to determine whether rents could be improved or capital could be released and redeployed.

The appropriate balance would depend on the clients’ ages, income requirements, retirement plans, attitude to risk, family circumstances and desire to remain actively involved in property.

Where incorporation fits into the strategy

The clients had initially approached the question from an incorporation perspective.

The portfolio included personally owned assets, one company-owned property, residential and commercial property, three different UK tax jurisdictions and one property in which the client held only a 50% interest.

Partnership accounts were being prepared and income and expenditure were pooled, although there was no formal partnership agreement documenting ownership of capital and profit-sharing arrangements.

All of these matters would require careful examination before recommending that any part of the business should be transferred into a company.

Incorporation may improve after-tax cashflow, create refinancing flexibility, assist succession planning, support business continuity and provide a structure through which future generations can participate. These are potentially valuable outcomes.

Transferring an inefficient portfolio into a company does not, by itself, make the underlying properties more efficient.

The clients first needed to decide which properties they wanted to retain, which mortgages should be refinanced, how much exposure to property they wished to maintain and how the business should eventually pass to their children.

The company structure could then be designed to support the commercial strategy selected by the clients.

This is what a strategic assessment is intended to achieve

Property118 consultations are not designed to produce a predetermined recommendation that every landlord should incorporate.

Its purpose is to help clients understand what they own, what each property contributes, how the portfolio might perform under different financing conditions and which combination of retention, refinancing, disposal, incorporation and diversification best supports their objectives.

This is similar to the analysis I undertake for myself every year or two. The investments, priorities and acceptable risks will differ from one person to another, but the underlying questions remain broadly the same.

How much capital is tied up? What income is it producing? What could change? Is the return still sufficient? Are there better uses for part of the capital? How should the assets be structured for retirement, succession and future management?

Property118 consultants are not regulated financial advisers and do not recommend particular investment products. We do, though, work closely with FCA-regulated advisers and are happy to introduce clients to them where regulated investment or pension advice forms part of the wider strategy.

Our role is to help landlords understand the property business they already own, identify the commercial choices available to them and coordinate the appropriate professional advice where necessary.

For the clients in this case study, the important question was not simply whether 19 personally owned properties should be transferred into a company.

The real question was how a £3.4 million property business containing more than £1 million of apparent equity could be reorganised to produce the income, flexibility and succession outcomes the family actually wanted.

Incorporation might form an important part of the answer, but it should support the strategy rather than replace it.

The above anonymised and illustrative case study uses simplified assumptions and rounded figures. References to my personal investments are included to explain my own approach to capital allocation and do not constitute financial advice, a recommendation or an invitation to invest. Fixed coupons and repayment of capital depend on the issuer meeting its contractual obligations. 

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.p118-crm-form .crm-field{margin-bottom:14px}
.p118-crm-form label{display:block;font-weight:700;color:var(–navy);margin-bottom:6px}
.p118-crm-form input[type=”number”],.p118-crm-form input[type=”text”],.p118-crm-form input[type=”email”],.p118-crm-form select{width:100%;min-height:44px;border:1px solid #aebdca;border-radius:7px;padding:10px 11px;background:#fff;font-size:16px;color:#1f2937;box-sizing:border-box}
.p118-crm-form input:focus,.p118-crm-form select:focus,.p118-crm-form button:focus{outline:3px solid rgba(21,93,145,.24);outline-offset:1px}
/* section headings */
.p118-crm-form .crm-section,.p118-crm-form h2,.p118-crm-form h3{color:var(–navy);font-size:20px;margin:22px 0 6px;padding-top:10px;border-top:1px solid var(–line)}
/* shareholder repeater rows as cards */
.p118-crm-form .crm-repeater-field>label{font-size:20px;border-top:1px solid var(–line);padding-top:10px;margin-top:22px}
.p118-crm-form .crm-repeater-rows{counter-reset:p118sh}
.p118-crm-form .crm-repeater-row{counter-increment:p118sh;position:relative;border:1px solid #b9c7d3;border-radius:10px;padding:52px 16px 16px;margin-top:12px;background:#fbfdff}
.p118-crm-form .crm-repeater-row::before{content:”Shareholder ” counter(p118sh);position:absolute;top:15px;left:16px;font-size:18px;font-weight:700;color:var(–navy)}
.p118-crm-form .crm-repeater-row-fields{display:grid;grid-template-columns:1fr;gap:12px}
.p118-crm-form .p118-btl-calc-btn{appearance:none;border:0;border-radius:8px;padding:13px 20px;font-size:16px;font-weight:700;cursor:pointer;background:var(–navy);color:#fff;margin:12px 0}
.p118-crm-form .crm-repeater-row .crm-field{margin-bottom:0}
.p118-crm-form .crm-repeater-row-fields input:not([type=”checkbox”]),.p118-crm-form .crm-repeater-row-fields select{width:100%;box-sizing:border-box}
/* single-checkbox booleans (salary optimisation, dividends, pension, non-resident toggles) */
.p118-crm-form .crm-repeater-row-fields .crm-choices label{display:flex;gap:9px;align-items:center;font-weight:400;min-height:44px;margin:0;cursor:pointer}
.p118-crm-form .crm-repeater-row-fields .crm-choices input[type=”checkbox”]{width:18px;height:18px;min-height:0;flex:0 0 auto;margin:0}
.p118-crm-form .crm-repeater-remove{position:absolute;top:12px;right:12px;background:#fff;color:#9f1239;border:1px solid #e6a6b8;border-radius:8px;padding:6px 10px;font-size:13px;font-weight:700;cursor:pointer}
.p118-crm-form .crm-repeater-add,.p118-crm-form button[type=”submit”]{appearance:none;border:0;border-radius:8px;padding:12px 17px;font-size:16px;font-weight:700;cursor:pointer}
.p118-crm-form .crm-repeater-add{background:#e6eef5;color:var(–navy);border:1px solid #b9cad9;margin-top:12px}
.p118-crm-form button[type=”submit”]{background:var(–navy);color:#fff}
/* consent + submit area */
.p118-crm-form .crm-consent-label{font-weight:400;display:flex;gap:8px;align-items:flex-start}
/* results */
.p118-btl-results{margin-top:20px}
.p118-btl-hint{background:var(–pale);border:1px dashed var(–line);border-radius:10px;padding:16px;color:var(–muted);font-size:15px}
.p118-btl-out{border:2px solid var(–navy);border-radius:12px;background:var(–pale);padding:18px}
.p118-btl-headline{font-weight:700;font-size:18px;margin:0 0 14px}
.p118-btl-headline.p118-pos{color:#17633a}
.p118-btl-headline.p118-neg{color:#9f1239}
.p118-btl-tablewrap{overflow-x:auto;margin-top:12px}
.p118-btl-table{width:100%;border-collapse:collapse;background:#fff;font-size:14px;min-width:640px}
.p118-btl-table th,.p118-btl-table td{border:1px solid #d6e0e8;padding:9px 10px;vertical-align:top}
.p118-btl-table th{background:var(–navy);color:#fff;text-align:left}
.p118-btl-table td+td{text-align:right;white-space:nowrap}
.p118-btl-table tr:nth-child(even) td{background:#f8fafc}
.p118-btl-table tr.p118-btl-strong td{font-weight:700}
.p118-btl-table td.p118-btl-net{text-align:right;white-space:nowrap}
/* summary cards */
.p118-btl-summary{display:grid;grid-template-columns:repeat(3,minmax(0,1fr));gap:12px;margin:14px 0}
.p118-btl-card{background:#fff;border:1px solid var(–line);border-radius:10px;padding:15px;display:flex;flex-direction:column}
.p118-btl-cardlabel{display:block;color:var(–muted);font-size:13px;margin-bottom:7px}
/* margin-top:auto pins the value to the bottom of each (equal-height) card, so
all three values line up even when a label wraps to two lines */
.p118-btl-value{font-size:24px;font-weight:700;color:var(–navy);margin-top:auto}
.p118-btl-value.p118-pos{color:#17633a}
.p118-btl-value.p118-neg{color:#9f1239}
@media(max-width:760px){.p118-btl-summary{grid-template-columns:1fr}}
/* figures-used recap + warning notes */
.p118-btl-figures{background:#fff;border:1px solid var(–line);border-radius:10px;padding:15px;margin-top:15px}
.p118-btl-figures p{margin:6px 0 0;line-height:1.5}
.p118-btl-warning{background:#fff8e6;border:1px solid #e8cc80;border-radius:9px;padding:12px;margin-top:14px;font-size:14px;line-height:1.5}
/* “Estimated result” heading (override the section-heading border-top) */
.p118-btl-out .p118-btl-resulttitle{border-top:0;padding-top:0;margin:0 0 10px;color:var(–navy);font-size:21px}
/* static disclaimer notes, always visible below the form */
.p118-btl-notes{margin-top:18px}
.p118-btl-note{font-size:12px;color:var(–muted);line-height:1.5;margin-top:14px}
/* title + intro at the top (matches the standalone calculator) */
.p118-btl-header{margin-bottom:8px}
.p118-btl-title{color:var(–navy);font-size:28px;line-height:1.2;margin:0 0 10px}
.p118-btl-intro{line-height:1.55;margin:0 0 6px;color:#1f2937}

(function(){
‘use strict';

// ── Field ids (must match the seeded BTL Calculator form) ──────────────────
var F = {
year:’8ca5faab-7fd0-4263-ab16-c28cac2a33dd’,
rent:’29a6d2dd-1824-4d07-ae3f-5e14607d1599′,
interest:’a4cb8069-1050-4ccd-951f-d5aa4dea1cee’,
costMode:’3decd8c1-e458-4085-bb5c-fab26e71432b’,
costPct:’b6bf5767-e12f-4c46-aec2-06a7eba263f3′,
costAmt:’e9cb6264-8168-4b6d-81ff-c4ed51212e4f’,
associated:’aaa3b1a0-7c1d-4e01-aa7b-069a6335ff7d’,
extraction:’fdce52bf-c76f-449c-a63b-bce9e7906c6b’,
extractionPct:’8bd621d8-8eef-4114-9db9-d0f5f7c17963′,
shareholders:’c441faed-5bf9-4290-9335-37c9aba50a40′,
shName:’fe7f6621-acd1-42b9-b4fc-37ca29cbaf1a’,
shShare:’9df50ba8-ff5a-454a-9748-4bb9cb45f5c8′,
shResident:’e5601232-087b-4db0-8d4a-4b4a91cbbeb3′,
shOtherIncome:’3843a208-bb92-4b89-be11-9bd3088b57e9′,
shOtherDiv:’5609d332-3866-48ea-9ca1-4eb519005d46′,
shOptimise:’bce9079f-806e-4f61-b9ec-ea9591cd448f’,
shDividends:’b2b09c3b-0ef8-4ec5-8c29-686d2db85d8a’,
shPension:’5e6320c4-fd4b-4a97-93a0-f9048581c39a’,
// non-UK-resident only (shown when “UK tax resident?” = No)
shEntitledPa:’7c1de2f0-11aa-4b22-9c33-a1b2c3d40001′,
shApplyDivTax:’7c1de2f0-11aa-4b22-9c33-a1b2c3d40002′,
shApplySalaryTax:’7c1de2f0-11aa-4b22-9c33-a1b2c3d40003′,
name:’df54eedb-ec85-410c-b865-c14e5d5983c6′,
reportData:’c8e98065-9275-4fd9-9bbe-607e5eb8e588′
};

var repeater = document.querySelector(‘.crm-repeater[data-repeater-id=”‘ + F.shareholders + ‘”]’);
var mount = document.querySelector(‘.p118-btl-results’);
var reportField = document.querySelector(‘[name=”‘ + F.reportData + ‘”]’);
if (!repeater || !mount) { return; }
var form = repeater.closest(‘form’) || document;

// ── helpers to read the native fields ──────────────────────────────────────
function el(id){ return form.querySelector(‘[name=”‘ + id + ‘”]’); }
function val(id){ var e = el(id); return e ? e.value : ”; }
function num(id){ var v = parseFloat(val(id)); return isFinite(v) ? v : 0; }
function entered(id){ var e = el(id); return !!e && String(e.value).trim() !== ”; }
// read a sub-field inside a given repeater row by its child field id
function rowEl(row, childId){ var w = row.querySelector(‘[data-field-id=”‘ + childId + ‘”]’); return w ? w.querySelector(‘input,select,textarea’) : null; }
function rowVal(row, childId){ var e = rowEl(row, childId); return e ? e.value : ”; }
function rowNum(row, childId){ var v = parseFloat(rowVal(row, childId)); return isFinite(v) ? v : 0; }
function rowYes(row, childId, dflt){ var e = rowEl(row, childId); if (!e) return dflt; if (e.type === ‘checkbox’) return !!e.checked; return e.value === ‘yes'; }

function money(v){ return new Intl.NumberFormat(‘en-GB’,{style:’currency’,currency:’GBP’,maximumFractionDigits:0}).format(isFinite(v)?v:0); }
function percent(v){ return (isFinite(v)?v:0).toFixed(1).replace(‘.0′,”) + ‘%'; }
function escapeHtml(v){ return String(v||”).replace(/[&'”]/g,function(ch){return {‘&':’&’,”:’>’,”‘”:’'’,'”‘:’"’}[ch];}); }

// ── TAX ENGINE (unchanged — same maths as the standalone calculator) ───────
var TAX = {
‘2026’:{pa:12570,basicBand:37700,additionalThreshold:125140,generalRates:[0.20,0.40,0.45],propertyRates:[0.20,0.40,0.45],dividendRates:[0.1075,0.3575,0.3935],dividendAllowance:500,section24Rate:0.20,employeePT:12570,employeeUEL:50270,employeeMain:0.08,employeeUpper:0.02,employerST:5000,employerRate:0.15,ctLowerLimit:50000,ctUpperLimit:250000,ctSmallRate:0.19,ctMainRate:0.25,ctMarginalFraction:0.015},
‘2027’:{pa:12570,basicBand:37700,additionalThreshold:125140,generalRates:[0.20,0.40,0.45],propertyRates:[0.22,0.42,0.47],dividendRates:[0.1075,0.3575,0.3935],dividendAllowance:500,section24Rate:0.22,employeePT:12570,employeeUEL:50270,employeeMain:0.08,employeeUpper:0.02,employerST:5000,employerRate:0.15,ctLowerLimit:50000,ctUpperLimit:250000,ctSmallRate:0.19,ctMainRate:0.25,ctMarginalFraction:0.015}
};
function personalAllowance(ani,eligible,tax){ if(!eligible){return 0;} return Math.max(0,tax.pa-Math.max(0,ani-100000)/2); }
function allocateTax(amount,occupied,rates,zeroRateAllowance,tax){
amount=Math.max(0,amount);occupied=Math.max(0,occupied);zeroRateAllowance=Math.max(0,zeroRateAllowance||0);
var basicAvailable=Math.max(0,tax.basicBand-Math.min(occupied,tax.basicBand));
var basic=Math.min(amount,basicAvailable);var remaining=amount-basic;occupied+=basic;
var higherAvailable=Math.max(0,tax.additionalThreshold-Math.max(occupied,tax.basicBand));
var higher=Math.min(remaining,higherAvailable);remaining-=higher;var additional=Math.max(0,remaining);
var slices=[basic,higher,additional];var totalTax=0;
for(var i=0;i<3;i++){var free=Math.min(slices[i],zeroRateAllowance);zeroRateAllowance-=free;totalTax+=(slices[i]-free)*rates[i];}
return {tax:totalTax,occupied:occupied+higher+additional,slices:slices};
}
function computeIncomeTax(input,tax){
var other=Math.max(0,input.other||0),property=Math.max(0,input.property||0),dividends=Math.max(0,input.dividends||0);
if(input.applyDividendTax===false){dividends=0;}
var ani=other+property+dividends;var allowance=personalAllowance(ani,input.personalAllowance!==false,tax);var remainingPA=allowance;
var otherTaxable=Math.max(0,other-remainingPA);remainingPA=Math.max(0,remainingPA-other);
var propertyTaxable=Math.max(0,property-remainingPA);remainingPA=Math.max(0,remainingPA-property);
var dividendTaxable=Math.max(0,dividends-remainingPA);var occupied=0,total=0;
var a=allocateTax(otherTaxable,occupied,tax.generalRates,0,tax);total+=a.tax;occupied=a.occupied;
var b=allocateTax(propertyTaxable,occupied,tax.propertyRates,0,tax);total+=b.tax;occupied=b.occupied;
var c=allocateTax(dividendTaxable,occupied,tax.dividendRates,tax.dividendAllowance,tax);total+=c.tax;occupied=c.occupied;
return {tax:total,allowance:allowance,ani:ani,taxable:occupied};
}
function employeeNIC(salary,tax,statePensionAge,apply){ if(!apply||statePensionAge||salary<=tax.employeePT){return 0;} return Math.max(0,Math.min(salary,tax.employeeUEL)-tax.employeePT)*tax.employeeMain+Math.max(0,salary-tax.employeeUEL)*tax.employeeUpper; }
function employerNIC(salary,tax,apply){ if(!apply||salary<=tax.employerST){return 0;} return (salary-tax.employerST)*tax.employerRate; }
function corporationTax(profit,associated,tax){ if(profit<=0){return 0;} var divisor=associated+1,lower=tax.ctLowerLimit/divisor,upper=tax.ctUpperLimit/divisor; if(profit=upper){return profit*tax.ctMainRate;} return profit*tax.ctMainRate-(upper-profit)*tax.ctMarginalFraction; }
function personalScenario(state,shareholders){
var tax=TAX[state.year];var propertyProfitBeforeInterest=state.rent-state.costs;var totalTax=0,totalCredit=0,totalCash=state.rent-state.costs-state.interest;var rows=[];
shareholders.forEach(function(s){
var propertyProfit=Math.max(0,propertyProfitBeforeInterest*s.share);var interest=state.interest*s.share;
var base=computeIncomeTax({other:s.otherIncome,property:0,dividends:s.otherDividends,personalAllowance:s.personalAllowance,applyDividendTax:s.applyDividendTax},tax);
var full=computeIncomeTax({other:s.otherIncome,property:propertyProfit,dividends:s.otherDividends,personalAllowance:s.personalAllowance,applyDividendTax:s.applyDividendTax},tax);
var adjustedAboveAllowance=Math.max(0,full.ani-full.allowance);var creditBase=Math.min(interest,propertyProfit,adjustedAboveAllowance);
var credit=Math.max(0,creditBase*tax.section24Rate);var incremental=Math.max(0,full.tax-credit-base.tax);
totalTax+=incremental;totalCredit+=credit;
});
return {tax:totalTax,credit:totalCredit,cashAfterTax:totalCash-totalTax,combinedWealth:totalCash-totalTax};
}
function dividendAllocations(dividendPool,shareholders){
var participants=shareholders.filter(function(s){return s.receivesDividends;});var participatingShares=participants.reduce(function(sum,s){return sum+s.share;},0);var result={};
shareholders.forEach(function(s){result[s.index]=0;});if(dividendPool<=0||participatingShares<=0){return result;}
participants.forEach(function(s){result[s.index]=dividendPool*(s.share/participatingShares);});return result;
}
function companyScenario(state,shareholders,salaries){
var tax=TAX[state.year];var operatingProfit=state.rent-state.costs-state.interest;var employerNi=0,totalSalary=0;
shareholders.forEach(function(s,i){var salary=Math.max(0,salaries[i]||0);totalSalary+=salary;employerNi+=employerNIC(salary,tax,s.applySalaryTax);});
var preCT=operatingProfit-totalSalary-employerNi;if(preCT0){return null;}
var ct=corporationTax(preCT,state.associated,tax);var postCT=preCT-ct;var dividendPool=Math.max(0,postCT)*state.extractionPct;
var dividendByShareholder=dividendAllocations(dividendPool,shareholders);var personalTax=0,employeeNi=0,netCash=0,rows=[];
shareholders.forEach(function(s,i){
var salary=Math.max(0,salaries[i]||0);var dividend=dividendByShareholder[s.index]||0;
var base=computeIncomeTax({other:s.otherIncome,property:0,dividends:s.otherDividends,personalAllowance:s.personalAllowance,applyDividendTax:s.applyDividendTax},tax);
var taxableSalary=s.applySalaryTax?salary:0;
var full=computeIncomeTax({other:s.otherIncome+taxableSalary,property:0,dividends:s.otherDividends+dividend,personalAllowance:s.personalAllowance,applyDividendTax:s.applyDividendTax},tax);
var incomeTax=Math.max(0,full.tax-base.tax);var eni=employeeNIC(salary,tax,s.statePensionAge,s.applySalaryTax);
personalTax+=incomeTax;employeeNi+=eni;netCash+=salary+dividend-incomeTax-eni;
rows.push({name:s.name,resident:s.resident,salary:salary,dividend:dividend,incomeTax:incomeTax,employeeNi:eni,net:salary+dividend-incomeTax-eni});
});
var retained=postCT-dividendPool;var combinedWealth=retained+netCash;
return {operatingProfit:operatingProfit,employerNi:employerNi,employeeNi:employeeNi,ct:ct,dividendPool:dividendPool,personalTax:personalTax,retained:retained,combinedWealth:combinedWealth,rows:rows};
}
function salaryOptimisationLimit(s,state,tax){ if(!s.optimiseSalary||!s.personalAllowance){return 0;} var dividendsForAllowance=s.applyDividendTax?s.otherDividends:0;var allowance=personalAllowance(s.otherIncome+dividendsForAllowance,true,tax);var unusedAllowance=Math.max(0,allowance-s.otherIncome);var companyCashProfit=Math.max(0,state.rent-state.costs-state.interest);return Math.min(unusedAllowance,companyCashProfit); }
function candidateSalaries(s,state,tax){ var limit=salaryOptimisationLimit(s,state,tax);if(limit<=0){return [0];}var values=[0,Math.min(limit,tax.employerST),Math.min(limit,tax.employeePT),limit];var step=limit<=5000?50:100;for(var x=0;x<=limit;x+=step){values.push(x);}var unique={};values.forEach(function(v){v=Math.max(0,Math.min(limit,Math.round(v/10)*10));unique[v]=true;});return Object.keys(unique).map(Number).sort(function(a,b){return a-b;}); }
function optimiseSalaries(state,shareholders){
var tax=TAX[state.year];var salaries=shareholders.map(function(){return 0;});var best=companyScenario(state,shareholders,salaries);if(!best){return null;}
for(var pass=0;pass<8;pass++){var changed=false;
for(var i=0;ilocalBest.combinedWealth+0.01){localBest=result;localSalary=candidate;}});
if(localSalary!==salaries[i]){salaries[i]=localSalary;best=localBest;changed=true;}}
if(!changed){break;}}
for(var j=0;j<shareholders.length;j++){if(!shareholders[j].optimiseSalary){continue;}var current=salaries[j],limit=salaryOptimisationLimit(shareholders[j],state,tax);
for(var c2=Math.max(0,current-500);c2best.combinedWealth+0.01){best=result;salaries=trial;}}}
return best;
}

// ── read the form ──────────────────────────────────────────────────────────
function getState(){
var costMode=val(F.costMode)||’percent';var rent=num(F.rent);
var costs=costMode===’amount’?num(F.costAmt):rent*(num(F.costPct)/100);
var extractionMode=val(F.extraction)||’retain';
var extractionPct=extractionMode===’retain’?0:(extractionMode===’all’?1:num(F.extractionPct)/100);
return {year:val(F.year)||’2026′,rent:rent,interest:num(F.interest),costs:costs,associated:Math.max(0,Math.floor(num(F.associated))),extractionMode:extractionMode,extractionPct:Math.max(0,Math.min(1,extractionPct))};
}
function getShareholders(){
var rows=repeater.querySelectorAll(‘.crm-repeater-row’);
return Array.prototype.map.call(rows,function(row,index){
var resident=rowVal(row,F.shResident)!==’no';
return {index:index,name:(rowVal(row,F.shName)||”).trim()||(‘Shareholder ‘+(index+1)),share:Math.max(0,rowNum(row,F.shShare))/100,resident:resident,
otherIncome:Math.max(0,rowNum(row,F.shOtherIncome)),otherDividends:Math.max(0,rowNum(row,F.shOtherDiv)),
optimiseSalary:rowYes(row,F.shOptimise,true),receivesDividends:rowYes(row,F.shDividends,true),statePensionAge:rowYes(row,F.shPension,false),
// UK residents get full PA + UK dividend/PAYE treatment; for a non-resident
// read the three conditional fields (defaults match the original: PA off,
// dividend tax off, salary PAYE/NI on).
personalAllowance:resident?true:rowYes(row,F.shEntitledPa,false),
applyDividendTax:resident?true:rowYes(row,F.shApplyDivTax,false),
applySalaryTax:resident?true:rowYes(row,F.shApplySalaryTax,true),
entered:{share:String(rowVal(row,F.shShare)).trim()!==”}};
});
}
function personName(){
var f=form.querySelector(‘[name=”‘+F.name+'[first]”]’),l=form.querySelector(‘[name=”‘+F.name+'[last]”]’);
return ((f?f.value:”)+’ ‘+(l?l.value:”)).trim();
}

// ── render + report_data ────────────────────────────────────────────────────
function showMessage(msg){ mount.innerHTML=’

‘; if(reportField){reportField.value=”;} }

function recompute(){
var state=getState();var shareholders=getShareholders();
if(!entered(F.rent)||state.rent0.0001){ return showMessage(‘Ownership percentages must total 100% (currently ‘+percent(shareTotal*100)+’).’); }
var personal=personalScenario(state,shareholders);
var optimised=optimiseSalaries(state,shareholders);
if(!optimised){ return showMessage(‘No feasible salary combination for these figures.’); }

var diff=optimised.combinedWealth-personal.combinedWealth;var cls=diff>=0?’p118-pos':’p118-neg';
var headline=diff>=0?’The optimised company structure leaves an estimated ‘+money(diff)+’ more in combined cash and retained profit each year.':’Personal ownership leaves an estimated ‘+money(Math.abs(diff))+’ more cash each year.';
var nonResident=shareholders.some(function(s){return !s.resident;});
var html=’

‘;
mount.innerHTML=html;

if(reportField){
reportField.value=JSON.stringify({
name:personName()||undefined,taxYear:state.year,rent:state.rent,costs:state.costs,interest:state.interest,
personal:{tax:personal.tax,credit:personal.credit,combinedWealth:personal.combinedWealth},
company:{operatingProfit:optimised.operatingProfit,ct:optimised.ct,nationalInsurance:optimised.employerNi+optimised.employeeNi,personalTax:optimised.personalTax,dividendPool:optimised.dividendPool,retained:optimised.retained,combinedWealth:optimised.combinedWealth,
shareholders:optimised.rows.map(function(r){return {name:r.name,resident:r.resident,salary:r.salary,dividend:r.dividend,incomeTax:r.incomeTax,employeeNi:r.employeeNi,net:r.net};})}
});
}
return true;
}
function cell(v){ return ‘ ‘+v+’

‘; }
function row2(label,a,b){ return ‘
‘+cell(escapeHtml(label))+cell(a)+cell(b)+’

‘; }

// ── two-step flow: “Calculate comparison” computes + reveals the report step ─
var revealed=false;
var resultsField=mount.closest(‘.crm-field’)||mount;
var submitWrap=form.querySelector(‘.crm-submit’);
// Everything AFTER the results mount is the “Get your free PDF report” step —
// hidden until the user calculates. (Submit lives outside the field flow on
// the WP render, so handle it explicitly too.)
var reportEls=[];var sib=resultsField.nextElementSibling;
while(sib){reportEls.push(sib);sib=sib.nextElementSibling;}
function setReportVisible(v){
reportEls.forEach(function(e){e.style.display=v?”:’none';});
if(submitWrap){submitWrap.style.display=v?”:’none';}
}
setReportVisible(false);

// Conditional inputs — show cost %/amount + extraction % based on the selects,
// like the original calculator. Runs on load + on every change.
function showField(id,show){ var e=el(id); var w=e?e.closest(‘.crm-field’):null; if(w){ w.style.display=show?”:’none'; } }
// Per shareholder row: the three UK-treatment fields are only relevant to a
// non-UK-resident, so reveal them only when that row’s “UK tax resident?” = No
// (exactly like the standalone calculator).
function toggleShareholderRow(row){
var nonRes = rowVal(row,F.shResident)===’no';
[F.shEntitledPa,F.shApplyDivTax,F.shApplySalaryTax].forEach(function(cid){
var w = row.querySelector(‘[data-field-id=”‘+cid+'”]’);
if(w){ w.style.display = nonRes ? ” : ‘none'; }
});
}
function toggleShareholderRows(){ Array.prototype.forEach.call(repeater.querySelectorAll(‘.crm-repeater-row’),toggleShareholderRow); }
// Checkbox fields can’t be default-checked via the field config, so seed each
// row’s defaults once (salary optimisation + dividend allocation + PAYE/NI on;
// everything else off). Marked so a user un-tick is never re-applied.
function initShareholderRow(row){
if(row.getAttribute(‘data-p118-init’)===’1′){return;}
row.setAttribute(‘data-p118-init’,’1′);
[F.shOptimise,F.shDividends,F.shApplySalaryTax].forEach(function(cid){
var e=rowEl(row,cid); if(e&&e.type===’checkbox’){e.checked=true;}
});
// “UK tax resident?” renders with a blank “— Select —”; default it to Yes.
var res=rowEl(row,F.shResident); if(res&&res.tagName===’SELECT’&&!res.value){res.value=’yes';}
}
function initShareholderRows(){ Array.prototype.forEach.call(repeater.querySelectorAll(‘.crm-repeater-row’),initShareholderRow); }
function toggleConditional(){
var cm=val(F.costMode)||’percent’, ex=val(F.extraction)||’retain';
showField(F.costPct, cm===’percent’);
showField(F.costAmt, cm===’amount’);
showField(F.extractionPct, ex===’partial’);
toggleShareholderRows();
}
initShareholderRows();
toggleConditional();
form.addEventListener(‘change’, toggleConditional);

var calcBtn=document.createElement(‘button’);
calcBtn.type=’button';calcBtn.className=’p118-btl-calc-btn';calcBtn.textContent=’Calculate comparison';
if(resultsField.parentNode){resultsField.parentNode.insertBefore(calcBtn,resultsField);}
calcBtn.addEventListener(‘click’,function(){ if(recompute()){ revealed=true; setReportVisible(true); } });

// Once the report step is showing, keep the figures live as they tweak inputs.
var t;
function schedule(){ if(!revealed){return;} clearTimeout(t); t=setTimeout(recompute,120); }
form.addEventListener(‘input’,schedule);
form.addEventListener(‘change’,schedule);
document.addEventListener(‘crm-repeater-change’,function(e){ if(repeater.contains(e.target)||e.target===repeater){ initShareholderRows(); toggleShareholderRows(); if(revealed){ schedule(); } } });

// Title + intro at the very top, matching the standalone calculator.
if (form && form.tagName === ‘FORM’ && !form.querySelector(‘.p118-btl-header’)) {
var header=document.createElement(‘div’);
header.className=’p118-btl-header';
header.innerHTML=’

Buy-to-let tax comparison calculator

Compare the estimated annual position where a residential property business is owned personally or through a limited company. Property information is entered first, followed by each owner or shareholder.

‘;
form.insertBefore(header, form.firstChild);
}

// Static disclaimers — always visible below the form (as in the standalone
// calculator). Appended outside the so the two-step reveal never hides them.
var notes=document.createElement(‘div’);
notes.className=’p118-btl-notes';
notes.innerHTML=’

This calculator is an indicative comparison for England, Wales and Northern Ireland. It does not calculate SDLT, CGT, ATED, Employment Allowance, pension contributions, student loans, Gift Aid, Marriage Allowance, High Income Child Benefit Charge, brought-forward losses or brought-forward finance costs. It does not model overseas tax or individual double-taxation treaties. Any salary must relate to genuine work performed for the company.

‘+
‘

If the company is structured with multiple classes of shares, it may be possible for the founders or directors to distribute profits in proportions that differ from the overall shareholdings. The structure may also allow the value of the founders’ shares to be frozen, with future growth allocated to other share classes to incentivise the next generation and support longer-term inheritance tax planning.

‘;
(form.parentNode||form).appendChild(notes);

showMessage(‘Enter your figures above, then press Calculate comparison.’);
})();

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Rising energy costs drive demand for homes with high EPC ratings

admin    Uncategorized     agents

Property118

Rising energy costs drive demand for homes with high EPC ratings

With energy bills continuing to rise, EPC ratings are playing an increasingly important role for buyers and tenants, according to a property portal.

Data from Rightmove shows that the latest energy price cap increase could add up to £591 a year to bills for households in the lowest EPC-rated homes.

The energy price cap is set to rise by 13% for millions of households across the UK in July.

Energy efficiency moves higher up the priority list

According to Rightmove, a typical home with an EPC rating of A could see annual bills rise by around £65, compared with £205 for a C-rated property, £284 for a D-rated home, and £591 for a G-rated property.

More than half of homes (52%) currently for sale have an EPC rating of D, as rising energy bills drive increased demand among buyers for modern, energy-efficient homes.

Colleen Babcock, Rightmove’s property expert, explains: “Energy efficiency is playing an increasingly important role in how people choose their next home. While the latest increase will be felt by most households, our data shows the difference between the most and least efficient homes is becoming starker, with those in lower-rated properties facing much higher annual costs.

“We spotted in our data that at the start of the global uncertainty and conflict in Iran in March, we saw a 35% increase in demand for homes with the highest EPC rating compared with the same time last year.

“It’s a clear sign that when the cost of living becomes more uncertain, energy efficiency moves higher up the priority list for both buyers and renters looking to keep their running costs under control.”

EPC targets must be realistic

An industry body has warned that while tenants and buyers are placing greater emphasis on EPC ratings, targets such as achieving EPC C by 2030 must not take a “one-size-fits-all” approach.

Nathan Emerson, CEO of Propertymark, said: “As energy costs continue to rise, it’s understandable that buyers and tenants are placing greater emphasis on the running costs of a property, and EPC ratings have become an increasingly visible part of that conversation.

“With households facing yet another increase in energy bills, improving the energy efficiency of homes is more important than ever. However, Propertymark has consistently called for reforms to the EPC regime so it provides a more accurate picture of a property’s energy performance and a practical roadmap for improving energy efficiency.

“Our member agents tell us that while EPCs are an important consideration for buyers and tenants, the current methodology does not always reflect how homes perform in practice, particularly older and traditional properties.

“Any drive to improve the UK’s housing stock must be backed by realistic timescales and greater financial support, ensuring energy efficiency improvements are affordable and achievable for homeowners and landlords alike.”

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Months later, landlord template sites are still quoting the wrong pet request deadline

admin    Uncategorized     agents

Property118

Months later, landlord template sites are still quoting the wrong pet request deadline

Back in June, a number of published landlord guides were citing 42 days as the response window for tenant pet requests under the Renters’ Rights Act.

The correct figure is 28 days. That correction got attention at the time, but with the law now in force and landlords actively relying on these documents, it’s worth checking again: has the error actually been fixed where it matters most?

The answer, in at least one widely-used template provider, is no.

The law is unambiguous

Section 11 of the Renters’ Rights Act 2025 inserts new sections 16A and 16B into the Housing Act 1988. Section 16B requires a landlord to give a written response to a tenant’s pet request within 28 days of receipt.

If the landlord asks for further information, the clock can extend by up to 7 additional days from when that information is provided, meaning the absolute maximum window is 35 days, not 42, and only in that specific circumstance.

Miss the 28-day deadline and the request is treated as granted by default. There is no grace period and no second chance.

This is confirmed not just by the text of the Act itself but by independent guidance from letting agents, council housing teams, and legal commentators across the sector, council guidance pages, agency compliance briefings, and tenant-rights resources all converge on the same figure: 28 days.

Why this isn’t a rounding error

A landlord who has read 42 days somewhere and plans their response around it is not being cautious, they are walking directly into a breach.

Picture the scenario: a tenant submits a written pet request on day one. The landlord, working from a template or guide that says 42 days, takes their time, perhaps responding on day 35 thinking they still have a week in hand.

Under the actual law, that response is seven days too late. The request was automatically granted a full week earlier. Any subsequent refusal is not just unwise, it’s legally void, because deemed consent already happened.

This is the kind of error that doesn’t just create inconvenience. It actively strips landlords of a right they believe they still have, while they’re relying in good faith on paid, professionally presented guidance.

Checking the current state of published templates

A review of currently published tenancy template guidance shows at least one prominent UK landlord document provider still describing the pet request response window as 42 days in live, customer-facing product pages, months after the correct figure was first published and circulated.

This isn’t a single archived blog post that slipped through; it’s appearing in active template descriptions for documents landlords are currently purchasing and relying on.

To be clear: this is very likely an honest error, probably inherited from an earlier draft of the Bill as it passed through Parliament, where a longer response period was originally proposed before being amended down to 28 days ahead of Royal Assent. That earlier figure appears to have been baked into content before the final Act text was checked against it, and never corrected.

But honest origin doesn’t change the exposure for the landlord using it. A template provider’s job is to be more current than a free download, that’s the entire value proposition.

When a paid, “compliant” product is wrong on a strict statutory deadline, the landlord using it is worse off than if they’d done no research at all, because they have false confidence instead of healthy caution.

What to do if you’ve already used a 42-day template

If you’ve sent, or are about to send, a pet request response based on a 42-day assumption, check the actual date the request was received and count 28 days from there, not 42.

If you’re already past day 28, the request has likely been automatically granted regardless of what you intended to say, and any refusal you send now will not be valid. If you’re still within the 28-day window, respond immediately rather than waiting for a deadline that doesn’t exist in law.

Going forward, the safest practice is simple: diarise day 25, not day 40. Build in a buffer, not a cushion you don’t actually have.

The broader lesson

This isn’t really a story about one provider’s product description. It’s a reminder that “updated for the Renters’ Rights Act 2025” is a claim, not a guarantee, and the only way to verify it is to check the specific figures against the Act itself — not against whichever guide you found first.

For a strict, deemed-consent deadline like this one, a seven-day error isn’t a footnote. It’s the difference between having a legal right and having already lost it.

David Osborne is the founder of DocPilot, which provides UK legal document templates updated for the Renters’ Rights Act 2025 and Employment Rights Act 2025.

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