Buy to let or sell?

HIA

DD has had her current property valued and it has dropped in value over the two years she's owned it.  She now has only 6% equity in it and it is likely to stick on the sales market here at the moment.  I am wondering if it's a good idea for us to lend her the amount she would get back in equity which would allow her to move on and maybe convert her existing mortgage to buy to let and keep the property as an investment.  The other three flats in her block are all currently let, she lives near a university. What's the chances of converting repayment mortgage to BTL and getting another mortgage with her partner?

Cscott139

For it to be converted to a buy to let you would typically need 25% equity in it. She may be able to get consent to let from her current lender though but this is rarely a long term solutions. You would also then need to factor in the higher level of stamp duty which would apply to the onward purchase which would be at 3%.

dimbo61

Have you got a spare 25% of the value of the property plus the 3% stamp duty ?
Don't forget the fees and legals you need to pay.
Is the property a suitable BTL investment ?
What could be the yield ?
Lots of young students and professionals looking for a nice city centre apartment with Ensuite bedroom and balcony, bills all included and someone to share with.
Happy to pay £450/500 a month.

HIA

Thanks, stamp duty may be 4% for an additional dwelling in Scotland.

scottishblondie

Yes she would have to pay 4% extra LBTT on the new property in Scotland, regardless of her partner's status.  Long term, it's likely to be better for her to take the hit and try to sell now.  Being a LL comes with a lot of costs and potential problems.