Renting out main residence

anicicm

All

I am currently in the process of purchasing my first property, quite a small 1 bed flat. Depending on my circumstances I might want to move out and rent a larger flat with my partner and then rent out the flat I bought.

What are the implications of this?

The new stamp duty levy shouldn't apply to this as it is not a second home.

Will this change the type of mortgage I will need to get? Is there a minimum time I have to live there before I can rent it out?

Will the tax implications be the same as normally renting out?

Thanks!

agrinnall

Your mortgage lender is unlikely to be wildly enthusiastic about you renting a property with a residential mortgage soon after taking it out. You'll need to apply for Consent to Let, which may carry a fee or increased interest rate, they may decline it entirely, or they may require you to switch to a BTL mortgage, for which you would need to demonstrate you meet the requirements of that mortgage.

Guest101

Your lender might not let you
Your freeholder might not let you
Tax is the same
Can you afford to rent it out and rent somewhere


Why are you buying it if you aren't going to live there?

G_M

anicicm wrote: »

All

I am currently in the process of purchasing my first property, quite a small 1 bed flat. Depending on my circumstances I might want to move out and rent a larger flat with my partner and then rent out the flat I bought.

What are the implications of this?

The new stamp duty levy shouldn't apply to this as it is not a second home.
The new stamp duty levy will apply to your 2nd flat - it's a second property.

Will this change the type of mortgage I will need to get?
Is there a minimum time I have to live there before I can rent it out?
Before 6 months your lender is unlikely to grant CTL. So you'd need to switch to a BTL mortgage/
After 6 months, they might grant CTL, though still unlikely as that's designed as a temporary arrangement (eg for people moving for work for a year and then returning). If you are buying elsewhere, they'll see it as a permenant arrangement and demand a BTL mortgage.

Will the tax implications be the same as normally renting out?

Thanks!

CGT & Income tax would as as per any letting.

* New landlords: advice, information & links

* Letting agents: how should a landlord select or sack?

agrinnall

G_M wrote: »

The new stamp duty levy shouldn't apply to this as it is not a second home.
The new stamp duty levy will apply to your 2nd flat - it's a second property.

The 2nd flat is being rented not bought so no stamp duty at all.

[Deleted User]

I bought a flat to live in, with the thought in the back of my head that I would probably want to rent it out if me and my partner decided to live together in the future (which is what has happened). I had to get permission from the building owner, and consent to let from mortgage lender, pay a higher interest rate, and get extra insurance. I also have to deal with my responsibilities as a landlord, taxes, and so on as in G_M's link.

I'm sure it's not uncommon for people's circumstances to change for genuine reasons, but different lenders will have different rules. My advice would be to speak to an independent mortgage advisor (get a family or friend to recommend one if you can). Be honest with them and ask about mortgages that would be suitable to switch to BTL or to get a CTL after e.g. 6 months or a year. And check when you are buying, whether your lease allows you to sublet.

G_M

agrinnall wrote: »

The 2nd flat is being rented not bought so no stamp duty at all.

Ah!

yes.

Mis-read.