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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
Tax changes: Help! I am confused…
I bought a buy-to-let property a few years ago as a bit of a hobby and a way to fund my retirement but I am sorely regretting the decision.
Firstly, I have had to hike the rent to cover the agency fees, and I now understand that my mortgage interest – which has been tax deductible – will no longer be so from April. Can you explain how this might impact me?
I would like to sell up but obviously there is capital gains tax to consider. Is it worth me remortgaging to a better deal to save a bit of money?
Answer
The Section 24 tax relief changes are a conundrum for many landlords at the moment. I would say that your first question, about how it’s going to impact you, should be directed to a qualified tax adviser (or accountant) to ensure you receive the correct information.
Unfortunately, the nature of these changes do mean that you may end up paying more tax.
To answer your question about whether to remortgage, I would say that this is a good idea. Mortgage rates are incredibly low at the moment so you could make savings on your monthly mortgage repayments which would help mitigate any additional tax you may end up paying.
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Question
Can I purchase a fourth-floor flat?
I seem to recall reading somewhere that lenders are not keen to lend money for a buy-to-let (or residential for that matter) mortgage on a flat which is in a high rise. Would this include a flat on the fourth-floor?
The property is part of an apartment block, built in the early 2000s, and on the fourth floor of a four-storey development. It’s pretty smart and mostly owner occupied, some owners have shared-ownership so clearly other firms have been happy to lend.
Answer
The majority of lenders would not consider four floors as ‘high rise’ (some houses have four storeys) although, some lenders may insist that there is a lift in the building as the absence of one can limit who can live in the property.
Most buy-to-let lenders will allow up to ten storeys, and some even higher, so you should not encounter any issues with regards to a fourth-floor flat.
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Question
HMO mortgages – what do I need to consider?
I have a very basic question. I am looking at purchasing a second buy-to-let property and am thinking of going for a student let.
Do I need a specialist mortgage for this? Also would I need to a buy a property that already has Houses in Multiple Occupation (HMO) status or could I convert a three-bed house to a student let?
Answer
The key here is how you are going to let the property. Are you going to have three students on one shared Assured Shorthold Tenancy (AST) or will they have one each?
If they are going to be on a shared tenancy, then there are lots of lenders who will do this on a ‘normal’ buy-to-let mortgage. If you opt for three separate tenancy agreements, then you will require a mortgage which includes HMO properties in the criteria.
In terms of what to buy, there’s no need to purchase something that is already a student let, however, you will need to ask your local authority whether the property requires an HMO licence to become a student let.
If it does require an HMO licence, the lender will expect to see that you have applied for it before you complete.
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Question
Accidental landlord: What do I need to do?
I am, what I think is known as, an accidental landlord. My auntie died near the end of last year and she has left her home to my brother and me. My brother wants to sell but I am keen to rent out the property because I am reluctant to lose my ties to the property – it holds very fond memories.
I think I am going to buy my brother out but this means I need to get a mortgage to purchase his share. Since I will be renting the property out, do I need to get a buy-to-let mortgage?
I don’t actually have my own mortgage as I live with my partner and it’s just him on the mortgage and deeds. Will this make getting a mortgage difficult?
The property has been valued at £420,000 and so I would therefore need a mortgage of £210,000. I earn £35,000 per annum.
Answer
In terms of getting a buy-to-let mortgage to raise funds needed to buy out your brother’s share, this should be possible.
There will be restrictions to your choice of lender as your ‘accidental landlord’ status and being a first-time property owner will make this a ‘consumer buy-to-let’.
That said, there will be options so it’s certainly worth speaking to a mortgage broker who will be able to help you find a suitable lender.
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