Opinion on buying a new house with rental property already owned

brocq_18

I'm currently living with my parents but have had a house nearby on rent since 2011. I'm now looking to buy myself a property. I'm heavily leaning towards purchasing a house.

If I keep the first house as is I'll have to pay the 3% surcharge on the new property. If I sell up and then buy, not only do I not have this additional 3% but I would also be eligible for the 40% HTB. In this case I would consider buying a much larger place and renting out a room.

My current mortgage is fixed now til January 2020 so would have to pay a fee.

Obviously there is now less tax relief on rentals. I would like to have a place to myself but any opinions and knowledge would be appreciated.

00ec25

what sort of opinion are you after? you have summarised your factual position, you have 2 options, you need to consult a crystal ball as to which one to pick

G_M

and do the maths.


How much is the 3% going to cost you?
How much is the mortgage early redemption fee?


And then all the other maths: current rental net profit?
Potential earnings from equity currently tied up?

Potential rent from lodger?


Not to mention the subjective value to you of living in a larger place.

Bossypants

Assuming that all your figures add up for both options, this is a choice only you can make. Personally, I have done the live-in landlord thing and the traditional/absent landlord thing, and I significantly prefer the privacy/personal space I get with the second option. It's arguably also more hassle, though, since you have to maintain a property without living in it or having free access to it, which means you're less likely to be immediately aware when problems crop up, and will have to put in more effort to get them fixed (i.e. if the boiler goes in my own home, I'll just work from home while waiting for the plumber to turn up. If it's in a rental, I have to take the tenant's timetable into account, and potentially go over there myself if the tenant can't/doesn't want to be available to deal with the plumber on the day). Of course, you can get an agent to manage that aspect for you, but they cost money and the property is still ultimately your responsibility, so you still have to manage the agent and make sure they are on top of everything they need to be. There's also less flexibility to being a traditional landlord in terms of, for example, dealing with bad tenants, not to mention all the legal admin which needs to be done (deposit protection, gas and electric certs, etc).

dimbo61

As others have said you need to do the maths !
With the changes to how landlords are taxed if your a 40% tax payer your rental property may end up costing you money each month.
Will the rental property increase in value ? Did you live there ?
Capital gains tax ? Letting relief
A big deposit and Normal stamp duty would reduce your mortgage payment on the big house you want to buy

SDLT_Geek

dimbo61 wrote: »

Normal stamp duty would reduce your mortgage payment on the big house you want to buy

Surcharged SDLT.