Help for student landlords

Bootboy

Apologies if this has been covered, but there are so many threads about student lets from the student’s perspective, I have not checked every one.  

I am a student landlord with three properties as my main income. I let the properties as a private individual, and file tax returns as income from land and property.  As of now, I have no income, and I do not think I am able to access any help whatsoever.  I had a very poor year financially last year, and used all of my ‘slush fund’ and savings that I keep for maintenance on utterly scandalous refinance costs (no choice, following the death of my husband I had literally a single mortgage offer, and the charges were horrendous) and unexpected repairs.  I expect to budget for no income over the summer months anyway, so things are not dire just yet, I just want to make sure I have explored every avenue for short term income before I can make any radical decisions. 

I am not ‘self employed’ so I do not qualify for the SEISS

I am not employed, so cannot be furloughed. 

I do not have a business, so I am not eligible for any business grants, including the special assistance funding provided by local authorities

I do not have a severe disability, so cannot claim tax credits

I have some capital in the property, and so am not eligible for universal credit (my income was only 11k last year, so I would be eligible on an income basis) 

I am unable get a job to help short term, as I have a child in year 5 who is not yet allowed to return to school or other paid childcare. 

I am unable to release equity, as the properties were only mortgaged in my name at the beginning of March (and that took more than a year, and was the maximum they would lend at the time) and so cannot be transferred to a new lender for six months. I was planning to do this as soon as possible, because they are on a 4.75 percent interest rate at present, and reducing the rate would help enormously.  So applying for a mortgage holiday would not be wise, either, as it could lock me into this uncompetitive rate by blighting my credit rating. 

I expect to be able to meet all my financial obligations until September, but if universities don’t announce soon that they will reopen physically (and I don’t see how they can), I may need to consider selling one of the properties, increasing the mortgage on my own property or other borrowing.  I am most reluctant to do this, as living on capital or debt is very poor financial practice but I’m not seeing a lot of options just at the moment. 

Grumpy_chap

For a commercial mortgage, which BTL is, I would not consider your current rate to be horrendous.

Jeremy535897

You may be able to argue that for universal credit your equity in the properties is negligible. Properties have a very uncertain value at present, and who knows whether students will be going back to university in October?

Grumpy_chap

Three properties at max 85% ltv suggests the equivalent of 45% of a property as capital (minimum).  Given the OP says she took £11k income last year and living from that indicates the equity is somewhat higher percentage.  At a 5% return, the £11k suggests £220k equity.  Will be difficult that value has diminished to 'negligible' and, possibly, nor would the OP wish for that.

noseph

Maybe get a real job, plenty of things you can do from home, or sell one of your four properties.

gt94sss2

You've mentioned mortgage holidays : https://moneyfacts.co.uk/news/mortgages/how-to-get-a-coronavirus-buy-to-let-mortgage-holiday/

what about a bounce back loan?

Vestraun

Could you rent them to non students?

Grumpy_chap

gt94sss2 said:

what about a bounce back loan?

I don't think the OP will be eligible for BBLS as property rental income is non-trading income.

Question for the OP. 
You say "I expect to budget for no income over the summer months anyway". 
I understood that a common practice was that the new students taking up the properties had to be making offers and agreeing contracts around Easter time to secure the property for the next academic year and, if the old year students vacated 31st July, then the new year contract started from 1st August.
Are you saying that you do the lets on 10-month contracts October to July?  That is very fair from my recollections of student lets.

gettingtheresometime

Are students due to stay in these houses in September? If so have they signed contracts ?

if the answer is yes to both these then you'll have income come September...though as Grumpy-champ it's very unusual to have gaps in tenants especially when the houses are student houses

Jeremy535897

Grumpy_chap said:

Three properties at max 85% ltv suggests the equivalent of 45% of a property as capital (minimum).  Given the OP says she took £11k income last year and living from that indicates the equity is somewhat higher percentage.  At a 5% return, the £11k suggests £220k equity.  Will be difficult that value has diminished to 'negligible' and, possibly, nor would the OP wish for that.

It's not that sophisticated for UC. You can't pay for your food with a property, so you have to look at what you can sell it for, and at this moment in time who is buying up properties normally let to students for a good price? It is an argument that has been put to decision makers.

Grumpy_chap

I get that you can't eat bricks & mortar, but this UC seems too god to be true based on this forum.  There are people saying you can have all sorts of assets and still qualify for UC so long as you manage income and personal cash in the bank to be low.  Among recent threads, I have read the arguments put for the following types of capital as all disregarded:

• Classic car
• Cash in a Director-owned Ltd Co
• and now, a property portfolio (even allowing for reduction of equity because of 'fire sale')

Am I in the only household in the country not receiving free money every week, even outside of furlough?