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Advice on ex council flat purrrlease
joopjoop
Posts: 10 Forumite
Hi there,
I have some curio questions that we desperately need some help and advice on. We would like to buy a flat in a 100% privately owned block in south london. The location is excellent and the rental yield quite good. We have saved some capital and the only way we can do it is to remortgage our own house to circa 65% ltv. Questions are what are the tax implications of doing it that way and also if its not the best way of going about it, does anyone lend on these anymore? Its a high rise and we are looking on the 5th floor.
I have some curio questions that we desperately need some help and advice on. We would like to buy a flat in a 100% privately owned block in south london. The location is excellent and the rental yield quite good. We have saved some capital and the only way we can do it is to remortgage our own house to circa 65% ltv. Questions are what are the tax implications of doing it that way and also if its not the best way of going about it, does anyone lend on these anymore? Its a high rise and we are looking on the 5th floor.
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Comments
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I suspect you are right - it can be difficult to get mortgages on certain ex-council high rises. The only way to find out is to ask. Speak to an IFA/IMB.
You could certainly ask your existing mortgage lender (if currently mortgaged) if they will extend your mortgage on your own home. Whether they say yes/no will depend on their policy, your income etc.
If you have no mortgage, again, speak to an IFA/IMB!
I'm guessing you plan to let the new property? If so, read this post.0 -
Wouldn't you want a rental yield that is a bit better than 'quite good'?
Otherwise why bother?Posts are not advice and must not be relied upon.0 -
Never mind about the flats being 100% privately-owned. Who is the freeholder? If it's still the council DO NOT BUY!0
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Thanks guys...much appreciated. The freeholder is the council indeed. Why do you suggest one should avoid them?0
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The concern is future maintenance, service charges and the possibility of a lift needing to be replaced at your expense.
Borrowing the money on your own home is tax neutral. You can offset the mortgage interest on a mortgage upto 100% of the purchase price of the BTL against the rental income.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0 -
It has been known for the council to undertake extensive works to the building and lease-holders being issued with bills for tens of thousands of pounds. In the meantime the service-charges could, and often do, soar. This is one kind of property I would most certainly not consider buying, most especially if you're going to borrow the money to do it. This sounds like an extremely risky strategy indeed.0
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Thank you ever so much guys. You've been very very helpful.
Ta.0 -
Thanks kingstreet. I needed an asnwer to the tax question as well.
thanks0 -
Which council is it? I've been a leaseholder from Wandsworth for 15 years and have no complaints whatsoever. I consider that I pay a below average service charge and major works bills, when they come, have been reasonable.0
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Welcome!
It's worth running an advanced search, these issues have come up many times. You rental yield is only quite good IF you don't have to pay thousands for maintenance or tens of thousands for improvements to the building. Most long leases with a private freeholder do not permit improvements within major works, so the costs are more limited.
http://www.lease-advice.org/publications/
http://www.hmrc.gov.uk/manuals/pimmanual/index.htmDeclutterbug-in-progress.⭐️⭐️⭐️ ⭐️⭐️0
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