Complicated situation!

Orangey1234

First of all thank you for helping! 

So we currently own a property it is where we live. We would like to move house, however the market is moving so fast, it is proving difficult to have a buyer for our house, and then find somewhere and have an offer accepted (did this, and then our buyer dropped out as they weren’t willing to wait for us to find somewhere). 

So we think the best way forward would be to change this house into a buy to let, and save up quickly for a deposit of 5% so that we aren’t dependant on this house being sold to buy somewhere else. Aside from the issue of being a landlord, what are the stamp duty implications? Is the additional stamp duty to be paid on the value of the new house? If so how can this be incorporated into a mortgage or temporary lending so we don’t need to save up for that as well? We would sell the buy to let ASAP releasing equity and we can get the sdlt refunded. Thanks 😊 

Slithery

Surely it's easier to just sell the property now and go into rented yourselves? You'll be in a much better purchasing position.

SDLT_Geek

Orangey1234 said:

First of all thank you for helping! 

So we currently own a property it is where we live. We would like to move house, however the market is moving so fast, it is proving difficult to have a buyer for our house, and then find somewhere and have an offer accepted (did this, and then our buyer dropped out as they weren’t willing to wait for us to find somewhere). 

So we think the best way forward would be to change this house into a buy to let, and save up quickly for a deposit of 5% so that we aren’t dependant on this house being sold to buy somewhere else. Aside from the issue of being a landlord, what are the stamp duty implications? Is the additional stamp duty to be paid on the value of the new house? If so how can this be incorporated into a mortgage or temporary lending so we don’t need to save up for that as well? We would sell the buy to let ASAP releasing equity and we can get the sdlt refunded. Thanks 😊 

Assuming you will be buying in England the extra stamp duty land tax will be 3% of the price of the new house.

Orangey1234

SDLT_Geek said:

Orangey1234 said:

First of all thank you for helping! 

So we currently own a property it is where we live. We would like to move house, however the market is moving so fast, it is proving difficult to have a buyer for our house, and then find somewhere and have an offer accepted (did this, and then our buyer dropped out as they weren’t willing to wait for us to find somewhere). 

So we think the best way forward would be to change this house into a buy to let, and save up quickly for a deposit of 5% so that we aren’t dependant on this house being sold to buy somewhere else. Aside from the issue of being a landlord, what are the stamp duty implications? Is the additional stamp duty to be paid on the value of the new house? If so how can this be incorporated into a mortgage or temporary lending so we don’t need to save up for that as well? We would sell the buy to let ASAP releasing equity and we can get the sdlt refunded. Thanks 😊 

Assuming you will be buying in England the extra stamp duty land tax will be 3% of the price of the new house.

Thanks for this. Is it possible to get the sdlt incorporated into the 5% mortgage?

brianposter

Slithery said:

Surely it's easier to just sell the property now and go into rented yourselves? You'll be in a much better purchasing position.

Normally this might be perfectly sensible, but given the current possibility of substantial inflation in the near future, moving into rented accomodation would seem to be strategically unwise.

Slithery

Orangey1234 said:

SDLT_Geek said:

Orangey1234 said:

First of all thank you for helping! 

So we currently own a property it is where we live. We would like to move house, however the market is moving so fast, it is proving difficult to have a buyer for our house, and then find somewhere and have an offer accepted (did this, and then our buyer dropped out as they weren’t willing to wait for us to find somewhere). 

So we think the best way forward would be to change this house into a buy to let, and save up quickly for a deposit of 5% so that we aren’t dependant on this house being sold to buy somewhere else. Aside from the issue of being a landlord, what are the stamp duty implications? Is the additional stamp duty to be paid on the value of the new house? If so how can this be incorporated into a mortgage or temporary lending so we don’t need to save up for that as well? We would sell the buy to let ASAP releasing equity and we can get the sdlt refunded. Thanks 😊 

Assuming you will be buying in England the extra stamp duty land tax will be 3% of the price of the new house.

Thanks for this. Is it possible to get the sdlt incorporated into the 5% mortgage?

No.       

canaldumidi

Post 7: New landlords (1):advice & information :see links in next post

Post 8: New landlords (2): Essential links for further information

Post 9: Letting agents: how should a landlord select or sack?

MaryNB

brianposter said:

Slithery said:

Surely it's easier to just sell the property now and go into rented yourselves? You'll be in a much better purchasing position.

Normally this might be perfectly sensible, but given the current possibility of substantial inflation in the near future, moving into rented accomodation would seem to be strategically unwise.

Unless you have experience being a landlord I don't think the alternative is much better. There's a lot of work and responsibility involved. You can pay an agency to deal with the work but you're still legally responsible for meeting requirements. Also you could lose a lot of money if the tenant stops paying rent. 

You also won't be able to sell it for at least 6 months (minimum Assured Shorthold Tenancy) unless the tenant agrees to leave early or you sell it with tenants in situ. That 6 months doesn't include eviction proceedings if they want to stay beyond the minimum term. The 6 months also comes it to play if your buyer needs a mortgage, a lot of lenders won't lend on a house if it's been sold within the last 6 months. 

newsgroupmonkey_

brianposter said:

Slithery said:

Surely it's easier to just sell the property now and go into rented yourselves? You'll be in a much better purchasing position.

Normally this might be perfectly sensible, but given the current possibility of substantial inflation in the near future, moving into rented accomodation would seem to be strategically unwise.

OK, you have a couple of choices here.

You pay 3% stamp duty, plus you'll almost certainly make a loss on the other other house (plus you'll have to pay tax, self assessment and so on). You might end up with a tenant that doesn't pay and it'll take you months to evict them. If you want to sell your house, it could take you a year or more.

Or you could rent for 6 months. You might find somewhere you want to buy in the first month and you're absolutely in the driving seat - you might even find that you don't put the highest bid in but still get it, simply because you have no chain.

Not to mention that a 95% mortgage is likely to be 3% interest or more (if you can find one).

Sistergold

Selling and or buying is very stressful at the moment. Since you are already in a house you own is it possible to wait until things “cool down a little”. Putting property into rental short term might turn into a problem later? 

ProDave

Buying and selling simultaneously in a chain is always difficult, it is a horrible system.

But if you think it is difficult then try doing it in a flat market.  You find a house that you want, so you put your house on the market and wait weeks and weeks and weeks for a buyer, and then the house you wanted has sold.  There is no easy answer and I suspect a lot of people moving home don't really get the house they want as they don't have the luxury of waiting.