Buy seperately or buy together ?

Lloyd90

Am currently in a rented house in Bristol with my partner for which we pay rent of £900PCM.


I have been left some money and we were looking to buy together in the future. With my money I was exploring the option of also buying a Buy To Let, however with changes (S24) of landlord tax relief etc this option is looking less appealing for the future, I will currently have an income of £28k+ but expected to reach into £40+ in the next 3-5 years.


I am either considering using my full deposit on a large 4+ bedroom house for us to live in and rent the spare rooms (2+) lodgers, or suggest that we try to buy houses separately. My partner also has a decent income so this would be an option but the house obviously wouldn't be a nice as one larger more expensive house.


If separately I am under the impression that I would not have to pay the extra 3% stamp duty, and as long as I retain a room there and stay a certain number of nights this can be my primary residence , even if I spend some nights at the house my partner may buy ? If separately I would still look to rent the spare rooms out.


I am trying to think long term and whether this would put us in a stronger position in the future possibly owning two homes ?


Has anyone done similar any can they offer any advice ?

sheff6107

It all sounds a bit messy. Personally I'd want to live in a house with my partner, who I will probably marry in the future, and not have to deal with lodgers. Plus consider the possibility of children.

But the relationship with your partner sounds a bit different if you are considering living apart? Are you same or different genders?

I'd get a 3 bed house instead and put the spare money into a different investment instead of buy to let. But that's just my opinion.

Lloyd90

Initially the plan was for us to buy a house together and I was also intending to buy a BTL house to rent.


Unfortunately the big changes in BTL have made this less attractive.


We are different sex, currently renting together.


Basically I wonder if it would be easier to buy separately but essentially still live together, or use the money for a bigger nicer home and look for a lodger (or two) in the time being.

Pixie5740

You can only have one primary residence for the purposes of tax. I'm not sure if you will be able to convince HMRC that this property with "lodgers" is your main residence just because you keep a room there whilst living and building a life with your partner. That brings us on to the question of whether you will actually have lodgers or if they would really be tenants. Keep in mind that should you get married then you can only have one primary residence between you.

Yes, mortgage interest relief is changing for landlords but that doesn't necessarily mean you would be better of with lodgers than tenants. 1) Tenants pay more for a room than lodgers do. 2) You'd be receiving rental income for 4 rooms instead of 3. 3) Income from lodgers is still subject to tax. Yes you can use the Rent a Room scheme but any rental income over and above that will be charged at the higher rate (in your case). Alternatively you can choose not to use the RAR scheme and deduct expenses to reduce your tax liability on any rental income but you'd still need to pay the higher rate of tax on any profit.

That all said I wouldn't do either. I would buy a home with my partner that would be our home, just us no lodgers, and I would invest whatever I had left over in something other than BTL.

AnotherJoe

Lloyd90 wrote: »

I have been left some money and we were looking to buy together in the future. With my money I was exploring the option of also buying a Buy To Let

How does the income from that compare with investing? How much money were you left?
Did you know its difficult (not impossible but difficult) to get a BTL if you dont own a primary residential property already ?

Lloyd90 wrote: »

I am trying to think long term and whether this would put us in a stronger position in the future possibly owning two homes ?

Stronger in terms of what???????

Lloyd90

1) Yes I know it is difficult, although we were looking to buy together before I was going to look for the BTL, hence owning a residential property beforehand.


I was also under the impression that you could own a BTL as long as you had an income of over £25k. I do appreciate that affordability testing is changing and may be totally different soon.


2) Stronger as in a better financial position, eg 2 houses are worth more than 1, rental income from one provides more stability etc.


To the post further up, If you genuinely retain a room in a home where you let out the spare rooms, how many days a week do you have to live/stay there to be considered a second home ?


Your point about the RAR scheme is very valid re: tax over the set amount (soon to be £7500 I believe).


Thanks for advise so far, I am just looking into options and this is helpful info

Pixie5740

Lloyd90 wrote: »

To the post further up, If you genuinely retain a room in a home where you let out the spare rooms, how many days a week do you have to live/stay there to be considered a second home

It's not as straightforward as saying you have to stay over 4 nights a month (or whatever) for a property to be considered your main residence. You have to be confident that you can justify claiming this property with the "lodgers" is your primary residence to HMRC. I don't know how easy that will be since your plan seems to be owning two properties in Bristol, one of which will be jointly owned with your partner.

Brightspark87

It is also very difficult to buy a buy to let with a mortgage if you do not own a property yourself - worth keeping in mind.

ravsd

Buy seperelty so that you both get the benefits of first time buyer.

You can always change/join the deed at a later point.


https://www.aneasierway.co.uk

sheff6107

1. Keep it simple.
2. Think about the future. A lot of people go from living apart to married with 3 kids in the blink of an eye.

Renting will get you 6% yield but you can get a bit less in a low risk share portfolio for zero effort.