Can I buy somewhere as primary residence and rent somewhere else

AracdeFire32

I am looking to buy a property outside London as I've been working remotely since March. I don't want to buy in London as I see it as a bad long-term investment for many reasons.

However there is a chance I will not be able to stay working remotely, or could change jobs in future that would require me to return to London for work, in which case I would also need to rent somewhere else.

I still want to buy where I am now, as I think it's a much better investment than buying in London long-term. I can cover the mortgage easily without needing tenants or lodgers, so it would not be a buy-to-let setup. And I can afford an additional rent if needed, though I plan to live at the property whenever I can - even if it's just weekends.

My concern is that it could be problematic with tax authorities or housing law if I have my primary residence somewhere (with a mortgage), but also rent somewhere else. Would this raise any questions or be against any laws you are aware of? If I rented somewhere else as well, it would likely be with a tenancy agreement since I would want my own flat - not just renting a room.

Thanks

lesalanos

I can't see any issues with that.

I suspect quite a number of people do similar with renting somewhere close to work.

One thing to be aware of for me would be to ensure your buildings/contents insurance covers you for not being there all of the time 

lr1277

So how would pay for 2 properties at the same time? Can you afford both on your income?

Or would you need to rent out your main residence if you decided to work in London for a while?

davidmcn

Will the place you buy actually be your primary residence though? Not clear from your post. There isn't a problem with renting, say, somewhere for you to stay during the week while working. 

AracdeFire32

lr1277 said:

So how would pay for 2 properties at the same time? Can you afford both on your income?

Or would you need to rent out your main residence if you decided to work in London for a while?

I can afford both. I am quite a high earner, and I could afford to buy in London, but I don't want to live there long term, and don't think values will rise personally.

I wouldn't do this if I needed to convert to a buy-to-let, since it's hard to make the finances work well in that scenario.

AracdeFire32

davidmcn said:

Will the place you buy actually be your primary residence though? Not clear from your post. There isn't a problem with renting, say, somewhere for you to stay during the week while working. 

Initially it will be my primary residence. When (if!) things return to normal, I may need to return to London full-time for work, in which case it would be where I stay most or all weekends, and any weeks when I can work remotely. My longer-term plan is to get a fully remote job allowing me to stay there permanently, but I can't be sure that will be possible.

Angela_D_3

Youll be absolutely fine.  Everything will double bills wise but if youre happy with that why not 

theartfullodger

You can rent any number of properties.  But only 1 (including the place you own) can be primary residence.    And only one of the rentals might be an AST: (If it were accepted that no rental property is your permanent home then it won;t be an AST either: Unlikley landlord or agent will understand - or care)

oldbikebloke

"primary residence" is a concept that is really only applies to a) Capital Gains Tax and b) Council Tax 

CGT
As you will own one property, which you say will not be let at anytime, then the key question is will the owned property quality for private residence relief (PRR) for the entire time you owned it.

If it won't, then a percentage: time when PRR not allowed / total ownership time (with both measured in months or days but not years) of the gain will be subject to CGT

In assessing whether PRR can be claimed, the fact that matters is you lived elsewhere, whether you rented or owned the elsewhere is irrelevant.
It is a question of what use do you put the house to, not how many you own. Technically it is referred to in court as the "quality of occupation" (not quantity) and summarised as "degree of permanence, continuity or expectation of continuity".
To be classed as an ongoing main residence there are a whole range of totally subjective assessments underpinning that concept. Flavour of them here: CG64545 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

There are also  "absence" rules that preserve PRR for up to 4 years even if you never set foot in the place in the meantime.
CG65040 - Capital Gains Manual - HMRC internal manual - GOV.UK (www.gov.uk)

without going into an exhaustive Q&A session with you, a rented "pied a terre" in London will be less likely to be judged to be your main home if its use is clearly only related to your place of employment. Yes a key subjective question is "where do you commute from", but as the "pied a terre" is a rental, then there is no "permanence" as it is likely related only to the duration of a London job, with the expectation and continuity remaining with the owned property. If you own a London property, then which of your 2 has PRR is obviously vital as one of the properties must have CGT on it. In contrast with a rental, clearly there is no financial gain for you and your only owned property remains the only one subject to CGT but exempt from it under PRR

please take note however the above is based on you NOT LETTING the owned property. If let, it is not your home, end of story.
You would also need to tread carefully if you take a lodger rather than letting to a tenant. For CGT you may be able to demonstrate a claim to PRR retention, but that does not relate to income tax on rent, and specifically the ability to claim rent a room allowance for a lodger - if you get to that position pay for professional advice. 

council tax
"main residence" does matter for council tax. Please remember you cannot claim single person discount against council tax on two properties simultaneously. As you have stated you will not be lodging, but will rather take a "full" property rental, then you will have a liability for two sets of council tax, that is inescapable and only one of them can get SPD which in your case should be the owned property (for believability).


and finally, I note the similarity of question with a post from another user,
Rules on family living in property when you are not there — MoneySavingExpert Forum
 i assume it is not you in a different name? their mum's occupation puts that one in a very different situation.