Staircase or not?

mattthecat

Hi All,

Im pretty new to this forum, but I have a dilemma that you pro buy to rent people may be able to help with.

I own 40% of a flat in the Watford area. I have a chance to purchase the entire 100% share at a price of £135,000. The only sticking point here is the lease is at 79 years and needs re-newing asap - this is likely to cost me around £7k in the worst case scenerio from the research Ive carried out.

The point is, I am looking to start a small buy to let business with this as my first one. The only sticking point is that I either purchase the entire 100% and extend the lease or get my money out of it and buy somewhere else to rent.

Myself, I'd likely go and rent a room off a mate for a year to cut my personal costs and to give me the room to do this, but I just wondered if you had a similar situation you could advise me on?

I have been told that keeping hold of a property within the M25 would be better long term than selling and buying somewhere to rent in say the Midlands.

But can you let me know either way?

Many thanks

Pixie5740

Do you have £135,000 to buy the remaining 60% share of the property plus another £7,000 to extend the lease or would you have to borrow it?

chanz4

i love these popup landlords

mattthecat

I have around £11k equity in it at £135,000 and £135,000 is the total value of the property at 100%. I have another £12k I can put into it and I do have £7k I can use to extend the lease.

But, I was wondering if it'd be a better move to take my money out of it (if I sold it the overall value would be worth more - as £135k is minus improvements etc) and buy a freehold say in the midlands OR purchase the whole lot of this place and use it as my first buy to let property?

As I mentioned, in an area within the M25 the value is unlikely to go down and rental yields would be fairly constant.

Any more thoughts?

Pixie5740

If you want to rent the flat out then you'll need a BTL mortgage which will require a 25% deposit and the rent would need to equal at least 125% of the mortgage repayments.

Unless of course you're planning on continuing to live in the property in which case you could get a residential mortgage for now and apply for consent to let from your lender at a later date but they might not grant it and even if they do you will at some point have to get a BTL mortgage.

thequant

chanz4 wrote: »

i love these popup landlords

Yeah they are so funny, OP reckons he "Owns" 40% of his property then go on to state he only has 11k equity.


Can't even do basic maths.


11k to start a BTL business, PMSL

dimbo61

"The point is, I am looking to start a small buy to let business with this as my first one"
With what are you going to start a BTL business?
40% of a shared equity flat with a lease of 79 years left!
Are you sure you can rent out the flat?
How can you sell 40% of something with a short lease

mattthecat

Guys, I am new to even thinking about this so may come up with obviously dumb questions, but all the help the better.

Regarding my mortgage, my intention would be to live in it for a while then to get a consent for let (which my lender has already said I could do a year or so down the road), I will then shift it to BTL with me moving out into another property.

I do have other money to put down as well - of which the bank has provisionally said I could borrow the money.

I just wanted to know whether its better to staircase or sell. For those who are already in BTL what would your suggestion be?

da_rule

Does your lease allow for subletting?

mattthecat

It does yes, but only when I own 100% of the flat.