Updating post from Reddit.
Hi All,
I wanted to get some advice from the experienced members on this forum on the best approach to buy a property.
About me
- I am a 30yo m working in finance and have a fairly decent salary ~£100k and investments ~£200k
Situation
- I live in a Maisonette leasehold house which is semi detached and a maisonette house above.
- This is purchased in my name as my first house and have been living here with my family for around 5 years.
- The house above has now come up for sale and I am interested in buying and renting it out in the interim with the long term objective of selling off both houses once I freehold.. FYI there is a lot of space being a corner plot so could be an opportunity for a developer.
- My long term goal is to keep my current house and put it on rent when I look to buy my next long term family home.
Q - What advice can you give me on how to legally/corporate structure the purchase and rental if I decide to keep both houses? I was thinking to buy the house above in my wifes name and use her 1st time buyer relief etc... alternatively the other option is to start a Ltd company but I am not too privy to this i.e. whats do I just start a SPV and purchase the house next to me like this? is this the most effective and tax efficient way of doing things?
Open to all feedback, advice and guidance from all.
Thanks!
The SPV route mainly concerns income held in the company and not paid to you (or your wife). If your wife were unemployed or a homemaker, an SPV would be less necessary; however, if Mrs. were a higher-rate taxpayer, it could be more tax advantageous.
However, think about your long term plans too. If you want to build a BTL Portfolio and keep re-investing the rents and profits into buying more units, then SPV is often the best answer. If its a short term thing, and you plan to sell the unit eventualy? then maybe its not the best route, the company would have the funds from a sale and you would be taxed in the company and taxed again when you withdraw it out.
You can set up an LTD Company BTL on Monday and get a Mortgage on Tuesday. They base all the checks on the company's owner, the property the mortgage is secured on, and the achievable rent.
Are you currently leasehold? Buying the other unit in the block would not give you the freehold. Some random third party likely owns it. If both units co-own the freehold, then you will have ultimate control.
Hope this helps.
If you do require a BTL Mortgage feel free to discuss options with Cyborg Finance ( [email protected] ) they can provide you a quote for both routes, in personal name or in an SPV. To give you an idea of costs and if you can make it work.
There is no one correct generic answer, it depends on your circumstances, future circumstances and plans.
Regarding terminology, a "second property" refers to people who have two homes. One in London and one by the Sea for example.
You seem to be talking more about a Buy-to-Let property.
I don't want to worry you, more of a FYI as there are options but lenders dislike lending to neighbouring properties. They get worried you will start knocking down walls making your home bigger.