Negative Equity - Portable Mortgage

gifster83

Hi all,

Still struggling to get anywhere with getting rid of my apartment. Looking to rent it out and rent somewhere myself. Which seems like the best option.

But then I got an email from Oakleaf Homes (Part of Barratt) offering 'older homes from barratt' at 'below valuation' prices and this got me thinking, I am in negative equity by between £10-20k (not had proper valuation done) and I have a portable mortgage. If I was to find another house being sold at £10-20k under valuation, then would I be able to just port my mortgage and sell the current apartment at market value?

Caveat_Mortgagor

Yeah, someones going to magic away your negative equity.

You will be able to sell at full price and buy at a huuuuuuge discount.

Sounds silly when phrased like that doesnt it?

hazyjo

Are you in debt? Is that why you need to sell? Negative equity will only be 'obvious' when you sell so I don't see why you want to. Can't you just stay put?

Jx

gifster83

Thanks for the sarcasm, that is really helpful!

No I am not in debt, but my family and I have outgrown the apartment, and also don't want to be in the city center any more. So I think it will be still be best to rent out the apartment and find a house to rent myself. Can anyone advise me on the tax implications involved with doing this?

puddy

the best thing you can do for your family is to stay put and not put yourself or them into a precarious financial situation which is what you would do if you were then liable for rent on a new property (which you could find yourself moving from at the end of the fixed term on the landlords whim) and also liable for a mortage which may not be covered by non paying tenants or voids

thats without considering moving costs, deposit for new property rental and whether your current lender would allow you to rent the place out

you would be liable then for tax on the profit you make from the rental income. you can offset landlords insurance and possibly interest but im not sure to be honest.

if you live elswhere for more than 3 years then when you sell your previous (current) flat you will pay capital gains tax i understand but someone else will be along to correct that if its wrong

Werdnal

Right, first check with your mortgage company that they will agree to your letting - many will not, or will add extra costs and clauses.

Then you need landlord insurance - normal residential doesn't apply.

You need gas safety certificate if applicable.

TBH, renting should be treated as a "business" even if you only have 1 property to let. Businesses need a cash flow for unforeseen costs, and in your precarious financial situation, where would that extra cash come from? Your tenant stops paying rent (it happens) or you get a void between lets, how would you cover the mortgage? The boiler goes wrong or there is a major burst pipe, leading to costly damage, and you have to pay to rehome your tenant whilst the repairs are done, and pay for the repairs on top?

And of course, you need to declare all income for tax.

Perhaps this does not sound like to good plan you thought it might?

You also have to read and learn about all your legal obligations in becoming a landlord, how to draw up a binding tenancy agreement, full and thorough inventory, vet and credit check tenants, take and protect a deposit in a scheme, how to issue notice if you want them out, and what to do if they simply refuse to move - eviction is a long and costly procedure!

Do you really want to risk your family's already tight finances by adding the extra complications of becoming a LL?

hazyjo

gifster83 wrote: »

Thanks for the sarcasm, that is really helpful!

No I am not in debt, but my family and I have outgrown the apartment, and also don't want to be in the city center any more. So I think it will be still be best to rent out the apartment and find a house to rent myself. Can anyone advise me on the tax implications involved with doing this?

I can assure you that was not said with sarcasm. Sorry you chose to take it that way.

Jx

Werdnal

hazyjo wrote: »

I can assure you that was not said with sarcasm. Sorry you chose to take it that way.

Jx

I think OP may have been referring to the reply above yours!

hazyjo

Ah, that's alright then. I did wonder... Multi-quote would have been better then rather than answering mine in the same box saying 'it' was sarcastic.

That's not meant to be sarky, btw

Jx

gifster83

hazyjo wrote: »

I can assure you that was not said with sarcasm. Sorry you chose to take it that way.

Jx

Sorry Jo, that wasn't aimed at you. Thanks for your advice!