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Buying a property before moving abroad

Apologies if this has been asked already, did a search but couldn't really find anything.

Ok the background:

I have a 40-50k deposit (let's say 45k) set aside to put down on a house, but moving abroad to study next summer for two years, may not even come back if I enjoy it enough! Was hoping to buy a place which I could rent out whilst I was away, would then give me a little bit of income to support my student life, as well as potential capital gains for further down the line. Hopefully my brother would be able to look after the property instead of me wasting money on agency fees.

The problem:

Buy-to-let mortgages require a much bigger deposit, also I'm a contractor so it's actually a 30% minimum. This means a maximum house price of 150k which is not the type of house I'd want to buy to let out. I live in London and this can't really get much.

Potential options:
1. Buy to let in my hometown where 150k gets a much better place (would actually only need to get a ~110k place). But then I'm not getting the potential growth of London. This option may not even be possible, waiting for my broker to contact me about this.
2. Buy to let in London but with my brother also contributing half the deposit. Problem arises if one of us wants to sell the house (for example, to obtain cash for our own house later on as neither of us own at the moment)?
3. Get a joint residential mortgage with my brother, with him living in the house. Is it perfectly ok for one of the mortgage holders to not live at the property? Could potentially get a lodger there which would provide a bit of rental income.
4. Do nothing, just keep the cash or invest it in something else, and stop thinking that house ownership is the be all and end all!

Options 2 and 3 could be a bit awkward in terms of having to fully agree on when to sell etc. The more research I do, the more appealing option 4 is looking! lol. I've heard some people buy to live but then are granted "consent to let" after a period of 6 months to a year but I'd be moving abroad before the six month mark so that is out of the equation. Are there any other obvious options I've missed out?

Many thanks in advance for any replies! :D

Comments

  • kingstreet
    kingstreet Posts: 39,118 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    If you don't already own your own home, you'll find it difficult to get a BTL mortgage. One of the remaining lenders, Virgin Money pulled out of this market this week.
    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.
  • kingstreet wrote: »
    If you don't already own your own home, you'll find it difficult to get a BTL mortgage. One of the remaining lenders, Virgin Money pulled out of this market this week.

    According to my broker there are two remaining lenders - Clydesdale and Natwest (not sure on the second one, I didn't hear him properly). My income is only good enough for Clydesdale so he is contacting them and will get back in touch in a couple of days, which is why option 1 is only a maybe right now. He did say that a joint BTL would be quite doable with one of these two lenders as the deposit would be sufficiently large. Option 3 he said would present few obtacles.
  • Errata
    Errata Posts: 38,230 Forumite
    10,000 Posts Combo Breaker
    2 and 3 can put you in the position of your brother living their with future wife/partner and potentially 1 or 2 kids. How would you feel about forcing a sale if you needed to and he didn't want that?
    .................:)....I'm smiling because I have no idea what's going on ...:)
  • Errata wrote: »
    2 and 3 can put you in the position of your brother living their with future wife/partner and potentially 1 or 2 kids. How would you feel about forcing a sale if you needed to and he didn't want that?

    That would only be a possibility in 3, as 2 we would do BTL and rent out the entire place. But yeah, you're right. 3 would be the easiest mortgage to actually obtain but throws up the most complications as we'd need to have matching priorities down the line.
  • Errata
    Errata Posts: 38,230 Forumite
    10,000 Posts Combo Breaker
    What would prevent your brother renting it at a point in the future if he decided to? What grounds would you have for refusing him?
    .................:)....I'm smiling because I have no idea what's going on ...:)
  • Personally, I'd go with option 4.

    I was in a similar situation, I had a two year contract to work abroad in Europe for 2 years (I come from the US). Eleven years later and I'm still here.

    Too much can change in two years. You may love it enough to stay or you may decide to move elsewhere. You may need your cash to be ready to live in your new country or life may take you somewhere else after you finish your studies.

    I'd sit on the cash in a bank account at least for a year and see how things look then, the world may be a very different place! (Assuming that you can afford your student lifestyle without the rental income.) While annoying in the short term to lose rental income, it can make savings in the long term if your plans are unknown.
  • Interesting, thanks for the insight uk_american!

    There have been a couple of developments in my situation. There may be an opportunity to buy a house in my hometown for 75k (or less). I may be able to buy it in cash with my parents (45k from me, 30k from them) and they are quite happy to find tenants/upkeep the place whilst I'm away.

    They are not really interested in the rental income mainly because of the tax implications though as they already rent out another place. What's the most sensible way to structure a purchase like this?

    - For them to just loan me 30k and have my name on the house alone? If so, would it need to be a formal loan contract in writing detailing what I would repay to them?
    - Or is the best option to buy jointly with all our names on the house but then for me to take all the rental income? (is that allowed?) If we buy jointly are they still liable for capital gains tax when it is eventually sold?

    Thanks once again in advance!
  • booksurr
    booksurr Posts: 3,700 Forumite
    What's the most sensible way to structure a purchase like this?

    - For them to just loan me 30k and have my name on the house alone? If so, would it need to be a formal loan contract in writing detailing what I would repay to them?
    good idea

    they may be your parents but it is always better to put things in writing... if no other reason it will provide "proof" if you ever have to sort out tax liabilities - inheritance on their death (loan to be repaid or written off?), they have no tax liability assuming you do not pay them any interest on the loan
    - Or is the best option to buy jointly with all our names on the house but then for me to take all the rental income? (is that allowed?) If we buy jointly are they still liable for capital gains tax when it is eventually sold?
    whilst it is possible to split the income 0/100 between you and parents with joint ownership they would be liable for CGT unless you put some decent paperwork together formally establishing that they have no beneficial ownership (note that is different to legal ownership) - take professional advice !!!
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