Can I live in my BTL flat?

kingnothing83

Hi,

We currently own a London flat that we plan to eventually re-mortgage to unlock equity in the flat. We then plan to move to the North East of England and buy a house.

I'll likely still work in London however so would need a place to stay 3 nights a week.

Could I take a lodger in the flat when we move but only live there for 3 nights a week? If so would I need a BTL mortgage even though I'm not strictly letting out the flat just taking a lodger, or would a standard mortgage be what I needed? I'll also have a mortgage for the property in the North East

Thanks!

Pixie5740

You don't need a BTL to have a lodger. However for someone to be your lodger the property would have to be your only or main residence I think.

kingnothing83

Yeah a BTL mortgage doesn't seem to make sense, but as I'd only be living in this property 3 days a week it wouldn't be my main residence. Surely there's a way to get a mortgage and a lodger based on those circumstances? Hopefully anyway!

Cautious_Optimist

You may be better off "designating" the London flat as your main resistance. That will prevent any lodger becoming a tenant.

So who will be living in the house in the NE? Your wife?
Maybe you will need to designate this house as a "second home" for insurance etc.

Presumably you need a mortgage on one (or both) of the properties, as you can't afford to own both outright?

kingnothing83

Thanks for the advice, are there any rules about how long I'd need to spend there for it to be my main residence? And would this impact my ability to get a mortgage on our house in the North East?

I'll be living in the NE with my wife yeah, potential a child by then too, I imagine when it comes to schools then main residence might be important too?

This is sounding a bit messy...at a stretch we could potentially own the flat in london out right but couldnt own the house in the NE out right

Cautious_Optimist

I would designate the London flat as your main residence.
Put all utility bills etc in your name only.
I'm sure three days a week will be fine to satisfy mortgage lender and insurance company.

I would designate the house as your wife's main residence.
Put all those utility bills in her name only there.
Then you won't need "second home" insurance for either residence and your wife can claim single adult council tax discount.
Child's residence will be the house for school registration etc.
Your residence in London of no relevance to school.

Hopefully you can get two standard residential mortgages.
Maybe one in your name and one in your wife's name.
But you'll obviously need to talk to your bank etc about this.

kingnothing83

Really appreciate your advice that sounds like a good place to start!

booksurr

Cautious_Optimist wrote: »

I would designate the London flat as your main residence.
Put all utility bills etc in your name only.
I'm sure three days a week will be fine to satisfy mortgage lender and insurance company.

I would designate the house as your wife's main residence.
Put all those utility bills in her name only there.
Then you won't need "second home" insurance for either residence and your wife can claim single adult council tax discount.
Child's residence will be the house for school registration etc.
Your residence in London of no relevance to school.

Hopefully you can get two standard residential mortgages.
Maybe one in your name and one in your wife's name.
But you'll obviously need to talk to your bank etc about this.

if you follow this advice do NOT use it when it comes to making your tax return in respect of income tax on rental income and (eventually) the CGT when you sell up as HMRC will make mince meat of you

similarly councils will take some convincing that you and your wife lead separate lives and are therefore each entitled to SPD on your respective "main" residences. It is much more likely London would be designated as a second home - which with a "lodger" (see below) in residence opens up a whole can of worms as to who is liable for the CT under the "hierarchy of liability"

your main residence for tax purposes is where a reasonable person would consider you live: the test is subjective and includes:
- where does the wife life live
- where do the kids go to school
- where do you work
- where do you commute from
- where is your social life based
- where do your friends expect to find you if they call
and
- where do you spend most of your time

BTW - just because you "designate" it as your main home does not, in law, make them a lodger. On the basis of the facts you present they would be a tenant not a lodger

kingnothing83

so could I make the London flat not the primary residence, arrange a BTL mortgage and rent out to a tenant, but stipulate in the tenancy agreement that I will be in the property 3 days per week? That would seem to solve all problems about primary residence and council tax etc

Finding a tenant willing to accept those terms may be challenging though perhaps?

kingstreet

If you can afford it, without any rent from the lodger, you can have two joint residential mortgages.

This has all got very complicated and unnecessarily so.

You can't BTL the flat, because you won't be letting the whole property and most BTLs are based on you letting on a single AST. At worst, you may have to tell the flat's residential lender you are taking in a lodger. Them mortgage terms will tell you if you have to disclose it.

booksurr has dealt with the CGT main residence issues, so I'm staying out of that and dealing wholly with the mortgage.

xylophone

http://www.hmrc.gov.uk/cgt/property/sell-own-home.htm

See "Owning more than one home'