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richard brown

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About richard brown

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  1. Foundation Home Loans (also FHL lol) are quite competitive at the moment..I know they do holiday let / serviced accommodation mortgages and also lend to limited companies. There are others, but it's best to check with a decent broker more familiar with the subject for the best current products, as I am not a mortgage broker myself To be fair, FHLs are actually a good foil to a BTL when buying in an individual name due to the ability to offset mortgage interest and certain tax breaks. Buying an FHL in a company is no different from buying individually from an interest relief point of view and you could get some additional tax breaks as well, such as capital allowances on certain expenditure, for example. Costs of operating a rental property through a company mean accounting charges (c£1k or so pa) and typically higher lending rates (typically 0.25% to 0.75% higher rate). But it's not as simple as that, especially if you plan to scale your property business above say 4 or more properties, are a higher-rate tax-payer and don't need to draw the income for a long-time as well. In these cases, it could well be better to set up a property investment company. Attached is an article that I wrote a couple of years ago and so things have moved on again since then but it illustrates that it's not a 'one-size-fits-all' approach. Hope that helps the OP... Best Richard Property Investing - Is It Still Worth It.pdf
  2. If you buy the first property in a company and the resi in your personal name, you will avoid the 3% SDLT premium on the resi property but you will still pay the 3% SDLT on the FHL. If you do it the way you describe, then you will pay the 3% SDLT premium on the resi property (unless you sell the first one first or if it was your home). So...pick which one you want to pay the extra 3% on Best Richard
  3. She should simply remortgage if she wants the cash. Clearly, she may need to pay CGT at a future date if she needs to, so she should retain enough equity to allow for that. Then, if she later wants to gift the equity to the children, it will be net of the mortgage She can of course gift cash...as long as she lives another 7 years it should be IHT free. ALWAYS check such things with a qualified tax adviser though to be safe. Best Richard
  4. Hi phandley These sort of 'what strategy should I follow' questions are always difficult to answer when you don't have a holistic view of the person, their goals, preferences, etc. So, all I can offer is that option 2 is probably more likely to produce a higher revaluation figure at the time of a revaluation than option 1. The reason for this is that with such a light refurbishment you probably won't do enough to persuade a valuer to uplift the value too much more than purchase price plus the cost of works, even if there are some higher value comparables. It might not be your goal to lift the value much more than this...but the best part of a BRR strategy is to extract as much of your initial funding as possible and that is usually arrived at by combining a discount on purchase with adding genuine value beyond a cosmetic refurb. Replacing kitchens and bathrooms does count as adding genuine value...it's just that persuading a valuer to give you the premium on top of the cost after say 3-6 months from when you bought the property is often the tricky and uncertain part. There is less pressure on the valuer to look at your original purchase price after say 1-2 years have passed and so they are more likely to give you the true market value and so also a 'developer's margin' by that time. Option 2 also gives you quicker cashflow should you need that. If you were undertaking more a project and spending say £20k+ each time, then I would probably say option 1 as then you would be more likely to persuade a valuer to uplift the revaluation figure and would also remove the cost of financing from the project costs (you would pay cash instead of bridging finance...you can't do such a project using a BTL mortgage product typically). Hope that helps. Richard
  5. Sell. Invest the equity either in a doer upper family home to 'force the appreciation' or alternatively in better performing rental properties through your company. Best Richard
  6. Hi Eamon Nope, not exactly but the nature of the facts raises quite a lot of suspicion in itself. Good call on the 'safe and well' check Ben by the way. If not a safety issue, this could potentially be avoiding financial action, criminal activity, immigration control or even terrorist-related instead. Did you meet her in person, check original IDs and undertake thorough background rent checks? Given that the tenancy has not technically started, you can probably void it (put in writing to last known address) and set the money aside until you hear back from them, if at all. If you don't hear back from them, then you may need to put it down to experience and re-advertise the property. I would also not spend the money either...could be laundered or deemed to be theft if not too careful. The police might also be interested... Tread carefully and when people look to pay large sums up front, there is often a degree of risk in their background anyway. Sorry if sounds like a bit of egg-sucking, also writing for other readers of this to some extent. Good luck! Richard
  7. Only a 1%er can really think like a 1%er, although we can learn a lot about 1%ers by studying them as well Strange that you cannot reach me here, although my inbox was nearing storage capacity as I recall (will check into that, so thanks for alerting me). Meanwhile, you can try admin@thepropertyvoice.net as the first port of call...please reference our various threads and it will find it's way to me...
  8. Hi Rockwood OK, so as a husband and wife, you can choose to split your rental income as you wish simply by notifying HMRC, so if you want/need it all (or most of it) to boost your personal income, that's an easy fix. Now, I am going to say something that many will disagree with...and this is completely to be expected when you read it. To be a 1%er, you need to listen to 1%ers and not 99%ers. I want you to think about that a LOT... So, for example...to the 1%, they tend to go all-in...at least, to begin with. Personally, until fairly recently, I did not have a home that I owned, but now I have three! I sacrificed the comfort and security of 'owning' my own home and rented instead, using 'geo-arbitrage' in my favour and also using my capital and equity as investment capital for my property business. Anyway, that's just a 1% thought for you, as said. The 99%ers will tell you not to do this...and it can all go horribly wrong to be fair, so choose wisely If you really want to attract a JV partner, consider merging your own-home-to-BTL idea with raising funds and providing security in doing so at the same time. You could offer a fixed rate of return, first-charge security on an income-producing asset and then potentially also a profit share on top (not necessarily 50%) based on a new project. There should be plenty of takers with that sort of 'hybrid, secured approach' I expect, as long as you and the project you invest in also make sense. Message me if you want some suggestions as to where to find such people and how to go about it but you could start with friends and family, business acquaintances and then 'the property circuit'. Remember, it's all about positioning yourself: http://www.thepropertyvoice.net/soundbite-6-things-to-consider-when-it-comes-to-joint-venture-discussions-in-property/ and http://www.thepropertyvoice.net/soundbite-10-of-the-more-unexpected-places-to-find-property-deals-and-investment-partners/ Best Richard
  9. Hi Rockwool Do you have a 'burning platform' here? In other words, is there a desperate rush that requires a drastic solution? The answer to that will make a big difference to what you do. Also, as Matt has said...what is the context...what are your goals and by when for example? If it were me, I would be considering the additional points: 1. Rental affordability - you raised affordability with your mortgage, but it also applies with renting. Typically, a landlord/agent will consider a max rent of 40% of your net pay. 2. Opportunity cost - what you have to give up to get the funds; you already mention capital growth. There is also a 'cost of financing' equivalent with your option 1 as you will pay £660 in incremental housing costs (rent) in return for c£210k in funds raised. That's an effective cost of financing at 3.8%. That's cheap compared to bridging finance, just over par compared to a BTL mortgage and possibly a reasonable amount above par compared to a resi mortgage. The resi mortgage route seems closed though anyway, so compared to BTL it comparable BUT you lose the capital growth, which makes it expensive and compared to bridging it is cheap but you also lose the capital growth, which makes it closer. A similar argument applies to the convert to BTL and rent, which I am sure you can work through. 3. Using your equity as security - you have c£210k in equity, which you could use as security to a lender. There are some institutional lenders that will advance on your home for a property project on a short-term bridging basis (it is a regulated transaction, so not that many can). Alternatively, a private lender might do likewise. This means you can offer second charge security if the existing resi loan is left in place or even a first charge if the resi loan is paid off at the same time. 4. Lending options - put simply, you have fewer lenders open to you when you don't own your own home. However, there are still quite a lot open to you, especially when you own at least 1 rental property, so it's not a killer. 5. Taxation - this is a consideration as you have identified. Interest inside a company is a business-deductible expense, whereas individually it gets more complex as you identify. If you are lower rate taxpayers, it won't change too much. Equally, PPR relief and your annual capital gains exemptions are a way to improve your net after-tax position 6. Transaction costs - the more 'transactions' you do e.g. buy, sell, finance, refinance, etc. the higher your transactions costs. In property, transaction costs are relatively high at 2% to 5% depending, so keep this in mind too. If it costs 5% to raise the funds, then factor this into your numbers on the other end. So, more to consider (sorry), but what you do needs to be in context to what you are looking to achieve and by when and whether you do have the 'burning platform' or not. Best Richard
  10. You will likely need lender permission (if applicable) and you should also notify/check with your insurer to void invalidating either terms/policies. Best Richard
  11. Heavy refurbs and genuine value-adds are usually better to split into two clear transactions anyway I believe: cash/bridging and then if retaining a BTL mortgage. Sure, that's two sets of fees but if you read the small print of the bridge-to-let type of products, they place a restriction on how much you can release when refinancing. There are some providers that will do heavy refurb or development bridge-to-let though if you still fancied that route. Valuations are so unpredictable is what Dennis and I are both saying really, so if you are 'at peace' with the prospect of having to leave equity in the property, then you will still do OK in the long run. I might be inclined to speak to another broker, given two clear alarm bells in the responses you have had there...maybe try Simon Allen, who is a member here and knows the market inside-out.
  12. Hi, again Rockwood I am attaching a couple of recent articles that will give some general pointers of managing projects and a property business remotely. Obviously, there is a LOT of devil in the detail, so feel free to reach out if you want to. better understand how I go about things Best Richard YPN-Dec-2018-Issue USA.pdf Living A Location Independent Lifestyle.pdf
  13. Hi Ivan Well, you probably need to do two things then. Shop around, which you are already doing, and getting proper advice on the implications of Sharia Law, which I cannot advise you on. The latter will have an impact on the cost of the legal conveyancing though for sure. Sorry that I can't offer more than that...a very specialised area. Best Richard