Renting property out for 12 months

Mrowe

Hi All,

First time posting here. Just wanted some advice really. I am in the process of selling my home that I bought with a friend, we both have partners and want to go our separate ways. It looks like I’m going to have made a nice amount of money over two years, proving a great investment.
My girlfriend currently lives in a council house, which I would like to move into with her, and then buy through right to buy. However I need to be living at the property on record for 12 months before we can buy.
My dilemma is that I don’t want to have the money I get from my house sale sitting in my bank for a year making 0.05%, I’d rather invest it in another property. But this throws up the obvious issue of having to put down a 20-30% deposit and pay enormous stamp duty on a buy to let mortgage. This almost doesn’t seem worth it for the sake of a year as I’ll need to sell on to release equity to buy the council house. Is there any way of getting around the buy to let and enormous stamp duty for letting my property for 12 months? Is there a way to let my house on a personal mortgage instead of buy to let for 12 months?
Bit of a tricky one I know but any advice would be greatly appreciated.

martindow

Before you start worrying about stamp duty, etc. are you sure all you have to do is live with your GF for 12 months to have your name added to her tenancy? If your name is not on the tenancy you cannot be involved in right to buy.

Maybe your GF should move in with you to release her house for someone in great need on the waiting list.

Mrowe

Information sent to my girlfriends says I need to be on the tenancy for 12 months before we can apply for right to buy. As previously said I'm selling my home so can't move in here. I also live 30 minutes away from my gf. She has 2 kids, and is starting a child minding business so cannot move from where she is living now, and I can't afford the house prices to buy us a home in the area she lives at the moment, so the only way she can keep kids in school and her business is for us to buy the council house with the discount.


So I take you point but as you can see its not possible for her to move in with me unfortunately.

Pixie5740

How much money are we talking about here? It is possible to get your money to earn more than 0.05% using a variety of savings and current accounts. That could work out more cost effective than paying SDLT, mortgage product fees, two sets of solicitor's fees, tenant finding fees, mortgage interest, etc.

Mrowe

Probably looking around £35-40k however around £25-30k will be looking to invest. Considering my initial investment £4K and after 2 years I'm walking away with over £30k you can see why I'm keen to keep my money in property. But as you're pointing out, buy to let has a lot more fees associated than a personal mortgage so I'm struggling to see if it's worth it. Hence why I'm trying to find an alternative or a way around the buy to let and stamp duty

HouseBuyer77

You can get around 1.4% over a year: http://www.moneysavingexpert.com/savings/savings-accounts-best-interest#oneyearfixed

Given you want to invest for a year only and presumably do not want any risk, they're the best option. Higher returns require increasing the risk (This includes BTL, which given the short period of investment would be rather risky, a single month's void and/or a brexit induced drop or freeze in the market could end up costing you dearly).

Out,_Vile_Jelly

Mrowe wrote: »

Hence why I'm trying to find an alternative or a way around the buy to let and stamp duty

BTL is a long term business investment, not a convenient way to make quick cash on a timescale to suit you.

You've made a profit from one house and plan to get a sizeable discount at taxpayers' expense from another- what more do you want?

HouseBuyer77

Oh and presumably this potential BTL would be your only property? In which case I think stamp duty is as normal (i.e. no extra 3%).

AnotherJoe

Bottom line, its extremely risky for one year. If this wasa ten year proposition thats one thing, for one year, steer well clear.

If you did want to do it you shouldn't sell, you should ask for Consent To Let from your current lender for a year on your current mortgage (or failing that permission, convert to a BTL mortgage), however although your house might go up more in value, it could also go down, you could have a bad tenant and lose a lot of money, you have all the expense of setting up for BTL such as safety certificates, deposit account, legal fees, maybe agency fees. Most landlords would expect to get those costs back over years, not in year one.

In your situation given you need the money in only one year there's no chance I'd take such a high risk, I'd just put it in NS&I for a year, 1% interest, risk free.

Mrowe

I guess that's another question I need to clear up, and perhaps this isn't the right thread to get the answer, but if I own a property, and then move in with my girlfriend with my name on the tenancy, am I then allowed to keep my property and rent it out without paying the extra stamp duty, all rather confusing.

nubbins

"am I then allowed to keep my property and rent it out without paying the extra stamp duty, all rather confusing.", not sure but I hope not.