How often are income distributions made?
Unless otherwise stated, all distributions are made monthly. Exact timings can vary depending on rent collection.
The full monthly distribution is paid to whoever holds the relevant loan parts at the point the distribution is processed. If you have sold your holding before the distribution is run you will not receive that month’s payment, and if you have bought loan parts shortly before the distribution is run you will receive the full month’s payment on the amount you hold at that time.
How much will be distributed each month?
For properties let on an AST, the amount the contingency fund is in excess of the contingency target, unless more than one month’s rent has been paid in advance.
For all other loans a fixed rate of interest is paid (The forecast annual income / 12)
What deductions are made from the monthly income?
For the majority of our properties, let for supported living on long term leases the only deductions are Housemartin’s fees, bank/professional fees, any ground rent or service charge due and potentially insurance. These are clearly stated in the Property detail page for each property.A fixed monthly interest is paid as stated in the Terms of Agreement (usually this is inflation linked).
For properties let on an AST, deductions are made for costs as they arise.
Do you provide annual tax statements?
You can view your tax statement by selecting Tax statement from the Reports section.
Why is some income classified as interest income and some as dividend income?
If the income produced by the property is variable (i.e. determined by the performance of the underlying asset such as under an assured shorthold tenancy (AST), then the interest for the Property Company is not deemed tax deductible by HMRC for corporation tax purposes. Distributions are therefore taxable as dividend income for the investor.
If the income produced by the property is fixed (such as income produced from a long term internal repairing lease) then the interest is tax deductible for the Property Company for corporation tax purposes. Distributions are therefore taxable as interest for the investor.
What if a tenant doesn’t pay their rent or if the property is not leased?
For properties let on an AST paying a variable rate of interest, if rent is not paid then there will be no distribution.
For properties paying a fixed rate of interest, if there are insufficient funds to make a distribution, the interest will accrue and will be paid when the rent is received.