Hi, Personal loan for un-mortgageable auction property?

Jack_Johnson_the_acorn

Jeffrey_Shaw wrote: »

As to lack of Mgt. Co., ask your solicitor to investigate a possible Indemnity Insurance policy.

Yes I was considering this, just depends on the cost.

Werdnal

As you are going to be stuck with this tenant for atleast 6 months (maybe more if they refuse to budge and you need to enlist court eviction to get them out), are you fully aware of the obligations of becoming a LL?

Are you also aware that all income from rent must be declared for tax? You could have used mortgage interest as an allowable expense against your tax, but I do not think HMRC will accept personal loan repayments in the same way.

You may also be landed with other costs, as if the vendor has ignored and tenant has put up with disrepair issues, whilst management company has been non-existant, they may suddenly dump a long list of things requiring attention on you. As LL you have repair obligations and a lack of prior inspection and survey on the property may come back to bite you! Loan for the purchase price might be the least of your worries, if they suddenly present you with the long and costly list of things that have been neglected and request you put them right or they will got to EHO for enforcement!

GDB2222

Are you also aware that all income from rent must be declared for tax? You could have used mortgage interest as an allowable expense against your tax, but I do not think HMRC will accept personal loan repayments in the same way.

I think it's the purpose of the loan that counts, rather than what it's secured on.

Jack_Johnson_the_acorn

GDB2222 wrote: »

I think it's the purpose of the loan that counts, rather than what it's secured on.

It will also be my sole property....

Jack_Johnson_the_acorn

My parents are wanting to go 50/50 on the property, thinking of making an offer pre-auction now, I'll try and keep the thread upto date once we've made a decision.:T

puddy

Jack_Johnson_the_acorn wrote: »

It will also be my sole property....

are you thinking that this means you dont have to pay tax on the rental income?

Werdnal

puddy wrote: »

are you thinking that this means you dont have to pay tax on the rental income?

I wondered what this reply meant too? Just been scanning the thread to see if I missed something. OP also hasn't answered whether they know the legal responsibilities and obligations (including associated costs) of being a LL. My impression is this purchase is being taken as a little "rose-tinted" and not being thought through, but we can but try to advise!

Wonder if parents would also go 50/50 on any further costs and associated financial problems which arise AFTER they have already half funded buying the place?!

Jack_Johnson_the_acorn

Werdnal wrote: »

I wondered what this reply meant too? Just been scanning the thread to see if I missed something. OP also hasn't answered whether they know the legal responsibilities and obligations (including associated costs) of being a LL. My impression is this purchase is being taken as a little "rose-tinted" and not being thought through, but we can but try to advise!

Wonder if parents would also go 50/50 on any further costs and associated financial problems which arise AFTER they have already half funded buying the place?!

Yes as that's what 50/50 means

Jack_Johnson_the_acorn

Werdnal wrote: »

I wondered what this reply meant too? Just been scanning the thread to see if I missed something. OP also hasn't answered whether they know the legal responsibilities and obligations (including associated costs) of being a LL. My impression is this purchase is being taken as a little "rose-tinted" and not being thought through, but we can but try to advise!

Wonder if parents would also go 50/50 on any further costs and associated financial problems which arise AFTER they have already half funded buying the place?!

I understand that it's my responsibility for the upkeep inside the apartment, general wear in the communal area is not for me to sort... I doubt that it would become an issue although stranger things have happened, and the tax on a 50/50 rent of 450 would be negligible, hardly an issue to concern me. Repayments on £10k would also be minimal so any profit from the rent would go towards the upkeep of the property. Thus leaving me free to save for another place of my own.

puddy

you may be right that you wont make 'profit' on the rent, but that is for HMRC to decide after they have received your tax return each year, you will re required to do this as you will need a self assessment

in addition, the communal areas are very much to do with you, you will be required as a leaseholder to share the costs of any communal area work, that includes ongoing maintainance, electricity of outside lights, any gardening, roof repairs painting the outside of the house etc etc

in my flat, we had a bill for 6k each to fix the drains, this could not be claimed on the buildings insurance for some reason, the management company also add on 10% for fees for their 'work' in arranging all this stuff too

you are either quite arrogant or extremely naive