Let a HTB apartment

JPMorgan

Hi everyone,

I am looking for advice and recommendation from the experts in real estate and mortgages on this forum.

Last year, I have purchased an apartment in London using the Help to Buy Equity Loan scheme where the UK government has a 30% stake in the apartment. I am moving abroad to start a new job and was looking for the different options I could have:

1) Let the apartment. I understand it is forbidden because it is a HTB.
2) Sell the apartment. I will be losing money selling now, less than one year after the purchase
3) Keep the apartment empty, paying back the mortgage, service charges, council tax and hoping to sell at a profit later on.

I read on the HM website on the conditions permitting me to let the apartment and unfortunately I don't qualify. Basically, apart from going abroad for a military mission you can't let your HTB apartment.

Finally I was thinking of letting without a contract but who would do that? It is risky for both the landlord and the tenant.

Any ideas?

Cheers!

hazyjo

A legally binding contract would be formed even if you don't get it in writing so forget that option.

Is it a permanent move, or a contract?

AdrianC

JPMorgan said:

I am moving abroad to start a new job

Why apply for a job in another country so soon after buying a flat in London?

and was looking for the different options I could have:

1) Let the apartment. I understand it is forbidden because it is a HTB.

Buy the equity from HtB.

2) Sell the apartment. I will be losing money selling now, less than one year after the purchase

Part of the financial decision you're making to relocate, surely?

3) Keep the apartment empty, paying back the mortgage, service charges, council tax and hoping to sell at a profit later on.

And how long before those ongoing costs outweigh the loss you would make on sale now?

grumiofoundation

JPMorgan said:

Hi everyone,

I am looking for advice and recommendation from the experts in real estate and mortgages on this forum.

Last year, I have purchased an apartment in London using the Help to Buy Equity Loan scheme where the UK government has a 30% stake in the apartment. I am moving abroad to start a new job and was looking for the different options I could have:

1) Let the apartment. I understand it is forbidden because it is a HTB.
2) Sell the apartment. I will be losing money selling now, less than one year after the purchase
3) Keep the apartment empty, paying back the mortgage, service charges, council tax and hoping to sell at a profit later on.

I read on the HM website on the conditions permitting me to let the apartment and unfortunately I don't qualify. Basically, apart from going abroad for a military mission you can't let your HTB apartment.

Finally I was thinking of letting without a contract but who would do that? It is risky for both the landlord and the tenant.

Any ideas?

Cheers!

To be honest I don't believe that, legally, it is actually that risky for the tenant. Since a tenancy agreement would be formed regardless of the lack of written contract. (Although you may struggle to find many sensible, non-desperate tenants who will want to do it). But is riskier for you - since you will be taking on 'riskier' tenants than if you did it properly (i.e. legally)

As well as needing HTB permission you would also need permission from your lender.  

I suspect as well as breaking the terms you agreed to when you took out the HTB equity loan (and your mortgage) you would not fulfil the rules and regulations required to be a landlord (so potentially committing criminal offence) and would plan to evade tax as well?

The sensible option is probably to sell. Yes unfortunate that you would make a loss if you sell. But that is the risk you take in buying a property you aren't going to live in for multiple years. If you leave the property empty your insurance will probably become invalid and you may run into issues with mortgage provider)

MoJoeGo

AdrianC said:

JPMorgan said:

I am moving abroad to start a new job

Why apply for a job in another country so soon after buying a flat in London?

and was looking for the different options I could have:

1) Let the apartment. I understand it is forbidden because it is a HTB.

Buy the equity from HtB.

2) Sell the apartment. I will be losing money selling now, less than one year after the purchase

Part of the financial decision you're making to relocate, surely?

3) Keep the apartment empty, paying back the mortgage, service charges, council tax and hoping to sell at a profit later on.

And how long before those ongoing costs outweigh the loss you would make on sale now?

If the OPs username is indicative of where they work, short notice opportunities to work abroad are still quite common in investment/corporate banking. And those opportunities are often ones that it's not wise to refuse from a career standpoint.

That said there is generally the option to negotiate some relocation expenses, in which case the OP would be wanting to have their cake and eat it here.

But of course I'm just guessing...

grumiofoundation

MoJoeGo said:

AdrianC said:

JPMorgan said:

I am moving abroad to start a new job

Why apply for a job in another country so soon after buying a flat in London?

and was looking for the different options I could have:

1) Let the apartment. I understand it is forbidden because it is a HTB.

Buy the equity from HtB.

2) Sell the apartment. I will be losing money selling now, less than one year after the purchase

Part of the financial decision you're making to relocate, surely?

3) Keep the apartment empty, paying back the mortgage, service charges, council tax and hoping to sell at a profit later on.

And how long before those ongoing costs outweigh the loss you would make on sale now?

If the OPs username is indicative of where they work, short notice opportunities to work abroad are still quite common in investment/corporate banking. And those opportunities are often ones that it's not wise to refuse from a career standpoint.

That said there is generally the option to negotiate some relocation expenses, in which case the OP would be wanting to have their cake and eat it here.

But of course I'm just guessing...

If you are correct I would also assume a) the salary is pretty good (so although a loss from selling would hurt would liekly not be an issue in the long run) and b) career profession could be greatly curtailed if found to be tax evading etc