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Our property investment expert is Jeni Browne, Sales Director at
Mortgages for Business
www.mortgagesforbusiness.co.uk
Tel: 0345 345 6788
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Question
Overwhelmed by new rules and regulations
I am the owner of a residential home (mortgaged with about 50% equity) and I also have a buy-to-let. Originally, I bought the buy-to-let as a small investment – a way to help boost my pension when I got older. It’s just one property, and I don’t look on it as a business. But lately it has started to feel like I am running a business!
The Government has made it so hard and expensive to run the investment and I am nervous about the tax return, so I am thinking of selling this, and my residential home, so my partner and I can buy a place together. Is now a good time to sell a buy-to-let? Or should I wait? What are the implications, if any, of selling a buy-to-let?
Answer
I think it’s fair to say that a lot of landlords are feeling the same way just now. There has been a real raft of changes brought in recently, which are bound to make you question whether letting a property really is for you. However, there are also lots of really good reasons why sticking with it may be a good idea.
I digress… In terms of whether now is a good time to sell or not, Brexit is affecting the housing market in parts of the UK and prices are flat or even slightly in decline.
Now, whilst one could argue that this makes it a bad time to sell, you are not just a seller but a buyer too. The sales market may have slowed down, but you may stand to benefit from a sluggish market as a buyer and secure a really good deal on your new home.
It may be that you are in an area which is enjoying increasing values… so, in terms of the implications of selling a buy-to-let, you may well face a capital gains tax bill depending on how much the property has grown in value so it may be worth speaking to an accountant to check this out for you.
So in a nutshell, it will really depend on your individual circumstances and which part of the country the houses are located. I would recommend researching house values and speaking with an accountant to work out your best move. Good luck with your decision!
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Question
Do I need to be experienced to invest in HMO?
I am looking at investing in the buy-to-let market having come into quite a windfall. I have heard there are lots of opportunities, not to mention yield, in Houses in Multiple Occupation (HMO).
The problem is, although I am a homeowner, this is my first foray into buy-to-let and I am not sure I will be accepted for a mortgage in this sector. Is there anything I can do to boost my chances? Or do I really need to have some background and success in buy-to-let on my side first?
Answer
The majority of lenders who offer mortgages on an HMO property require that you have some experience of letting property when you apply. The reason for this is that if you take on an HMO with six tenants, you go from having no experience of letting to letting to six people, which can be quite a baptism of fire.
However, there are a couple of lenders who do offer mortgages to first-time landlords, as long you own your own home. So, I think you should be ok but do have a chat with a broker to run through your options and the costs to make sure the numbers work for you.
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Question
Buying a property in the UK as an expat
I am a Brit who moved to Spain 12 years ago. I have since married, set up home and had children here. I would now like to purchase a property in the UK as a buy-to-let investor because I would like to keep a link with the UK for my children’s future.
I thought about doing this through my parents but they already have several BTLs and don’t want to get involved in another. Is it possible to take out a BTL mortgage in my position? Are there any specialists who could help me? And would there be any tax or other implications to consider?
Answer
The expat buy-to-let mortgage market is definitely going through a growth phase just now, as lenders seek to improve their lending proposition and move into areas which are historically untapped. So, this means that the options which are available and the different client scenarios we can cater for have broadened over the last 12 months.
In theory, we would be able to assist you, but there are more questions we would need to ask. These largely centre around whether you are employed or self-employed, whether you work for a multinational company or not, how much you earn and whether you have a credit profile linked to a UK address.
These factors will play a hand in determining whether we can help, and which lenders would be most appropriate. In terms of tax implications, you would need to speak to an adviser who can advise you on your tax position both in the UK, where the asset is based and the income (rent) is generated, and also in Spain where you are based for tax purposes.
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Question
Letting to my niece
My niece is moving to a town which is far away from her home to start her first job after leaving university. Meanwhile, I have been thinking about getting a buy-to-let. I am considering helping my niece by purchasing a buy-to-let and renting it out to her. The area she plans to move to is excellent in terms of yield and house prices are very attractive.
Are there any restrictions on having a family member as a tenant? If so, are there any ways around this? For example, could I put the mortgage in my husband’s (who is not a blood relative) name?
Answer
A buy-to-let which will be rented to a member of your family (and this would include your husband letting to his ‘niece by marriage’) falls into the classification of a regulated buy-to-let.
There are very few lenders offering regulated buy-to-let mortgages. So, whilst it can be done, you will need to be sure that you approach the right lenders. If you do not get this right, you could end up falling foul of your mortgage terms and conditions.
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