Buy to let changing to residential /main home - considerations?

Helpmedecide45

propertyrental said:

Helpmedecide45 said:

propertyrental said:

Helpmedecide45 said:

.....

Things I’ve considered:
- I would need an additional mortgage for the increased amount. Would this be a new application, or is it best to go to my lender and ask how much more they could lend me, so I port the existing mortgage but then have a separate additional one? Speak to an independant mortgage broker, and/or ask your current lender
- I would need to be able to afford the mortgage without rental income - presumably once I leave our family home I will get out my 25% stake (probably £150k minimum), but can’t count on this happening straight away.

How? Would the current home be sold? Would/could your partner buy you out? Is the split going to be amicable or adversarial - big difference in potential timescales

 It’s hard to calculate this element now knowing what the rate on a residential mortgage would be though, but affordability is my main consideration speak to a broker
- I will need to pay 2nd property stamp duty but I think I can claim this back if it becomes my main property within 2 years? You can claim back the additional SDLT (in England) if you sell your current primary residence within 3 years

Is there anything I have missed? Also, I’m unclear if I would need a BTL mortgage if I know it’s going to be temporary; have I missed something? You are buying a new property in order to make it your home. Why BTL?

 I assume I would, but if I fixed for 1 year, considered interest only, this could then work presumably? I could then save all of the rental income to belp I've not understood your plan. But if you intend to buy a new property, let it (for a year?) and then split up and move there, what happens if the tenant does not leave......?
fund the move etc. 
I know that my children’s father would have some financial liability but I’m keen to do the maths to make this work without relying on this. We’re not married which I think makes any financial arrangements more complex.

As artful says, there'll be a CGT liability when you sell the existing BTL.

.......

 I understand that sometimes things don’t go to plan, but surely if tenants sign a 12 month agreement and then at the end of it I don’t renew it, then that should be straightforward? I did this when I sold my previous BTL in London and it was ok, but maybe I’m being naive! 

Without wishing to be rude yes, you are being naive. The (English) law is clear. When that 12 month term ends, if the tenants remain they automatically create a periodic (rolling) tenancy. Only a court can end the tenancy and eventually force the tenants out. This can take many months.

Before embarking on this plan I urge you to learn all there is to be learned about tenancy law so you know a) how to manage and b) how to end a tenancy. See

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?

Thank you so much - this is incredibly helpful, I don’t take it as rude at all - this is why I posted here, knowing that others with more knowledge than me could point out any holes in my idea, so I really do appreciate it.

Helpmedecide45

Bookworm105 said:

Helpmedecide45 said:

 

in terms of what I plan to do in the meantime, I’m staying in the family home, gritting my teeth and trying to save/plan/invest as much as possible while I try to get brave to leave an emotionally abusive relationship. Just trying to get the best setup for my children and I before we go.

as an investment option purchasing a BTL with a view to operating it for only 12 months is highly risky. 

are you going to advertise it with the clear statement there is no possibility of renewing the tenancy after 12 months?
in their shoes, if you were looking to rent would you take such a place knowing you'd have to pay another set of removal costs and fees in 12 months (plus suffer the cashflow problem of funding a new deposit before the old one is released)?

You need to play with some very detailed numbers before you can even begin to guesstimate if you would get a better return from a BTL investment rather than staying as you are with current income but invested in a "safer" investment product

Also, whilst it is true that rental are scarce, would a property that you want to eventually live in as your main home be one that is actually the best option to purchase as a prospective rental property?

Yes I suppose it would really cut down my options for tenants but might be an option as a sabbatical home for example, rather than a straightforward tenancy. Lots to think about here!
also I completely agree that it will be tricky to find a great rental investment that would also be my ideal family home. But currently feeling like if I can find a safe home (ie not a dodgy area) for us with a bedroom each it will be better than staying where we are now in the long term (even though current family home is large and has many benefits… but they don’t outweigh the damage to our happiness caused by staying).

RAS

Check because it used to be possible to issue a notice before a tenancy started (S1?), but only if you intended to return to live there immediately after the tenancy ended. Don't know if you had to live there before the tenancy started.

But that doesn't necessarily entitle you to automatic entry. If the tenant fails to move out you can seek court direction to remove them in short order. 

propertyrental

RAS said:

Check because it used to be possible to issue a notice before a tenancy started (S1?), but only if you intended to return to live there immediately after the tenancy ended. Don't know if you had to live there before the tenancy started.

But that doesn't necessarily entitle you to automatic entry. If the tenant fails to move out you can seek court direction to remove them in short order. 

You are referring to schedule 2 of the Housing Act 1988 which defines the S8 grounds to end a tenancy.

https://www.legislation.gov.uk/ukpga/1988/50/schedule/2

S8 Ground 1 says:

Not later than the beginning of the tenancy the landlord gave notice in writing to the tenant that possession might be recovered on this ground or the court is of the opinion that it is just and equitable to dispense with the requirement of notice and (in either case)—

(a)at some time before the beginning of the tenancy, the landlord who is seeking possession or, in the case of joint landlords seeking possession, at least one of them occupied the dwelling-house as his only or principal home;

Ground 1 (like a S21 Notice) requires 2 months notice before the LL can apply to court. As with S21, the court has no discretion but must grant the LL possession.

Bookworm105

RAS said:

Don't know if you had to live there before the tenancy started.

you do have to have lived there, it is about returning to after all