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Sell property with Help to Buy to Limited company for BTL


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Hi,

I'm selling my 2 bed house in Manchester and all was set up and ready for completion, when buyer was furloughed in beginning of March. Her bank didn't approve the mortgage until she goes back to work. Will bank release the mortgage money as soon as she will go back to work? Or does she have to bring few payslips after she starts to work to prove that she can afford the mortgage? While waiting for buyer to go back to work, I am thinking about plan B. 

Plan B:

I potentially don't want to sell the house but to rent it out. It is 2 bed house bought for £115k as a new build 5 years ago. Currently appraised at value £135k. I bought it with Help to Buy (HTB) as my first and only property and so government org owns  20% of selling price. HTB properties can't be rented, so I assume, I have to buy the 20% share for HTB. I could do that easily, if I would remortgage the house. As an employed person I pay higher 40% tax and therefore I would like optimise profit and to set up company and sell the house to my company. I think you call this BTL. Because I live now in Edinburgh I would like to hire an agency which would find tenants into house and look after house. 

Can you tell me if this all makes sense? What would be the steps to make this happen and what would all this cost me to set up?

Thank you for any help.

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8 hours ago, stefan_k said:

Hi,

I'm selling my 2 bed house in Manchester and all was set up and ready for completion, when buyer was furloughed in beginning of March. Her bank didn't approve the mortgage until she goes back to work. Will bank release the mortgage money as soon as she will go back to work? Or does she have to bring few payslips after she starts to work to prove that she can afford the mortgage? While waiting for buyer to go back to work, I am thinking about plan B. 

Plan B:

I potentially don't want to sell the house but to rent it out. It is 2 bed house bought for £115k as a new build 5 years ago. Currently appraised at value £135k. I bought it with Help to Buy (HTB) as my first and only property and so government org owns  20% of selling price. HTB properties can't be rented, so I assume, I have to buy the 20% share for HTB. I could do that easily, if I would remortgage the house. As an employed person I pay higher 40% tax and therefore I would like optimise profit and to set up company and sell the house to my company. I think you call this BTL. Because I live now in Edinburgh I would like to hire an agency which would find tenants into house and look after house. 

Can you tell me if this all makes sense? What would be the steps to make this happen and what would all this cost me to set up?

Thank you for any help.

Hi,

This makes sense. But if you sell the property to your company, this will be treated as a normal transaction. E.g. It will come with your normal costs such as Broker fees, Solicitor fees, Stamp Duty etc.

What you need to do is calculate how much this will all cost and compare it with the savings you would make from a personal tax savings perspective. Then see if it is worth doing.

Personally, I ended up selling my 2 personally owned BTL's and starting fresh with my Ltd company!

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Agree with Onkar on the second point, you need to speak to an accountant and understand the costs, i dont do many because the upfront costs can be significant.

As for the initial point, i dont know for certain its a new circumstance, but generally lender want to see a most recent payslip if there have been delays to ensure they are still employed. I doubt this would be any different. It would need to go back to an underwriter and be assessed and then reoffered. Be careful as she might have accepted a reduced wage and this might affect affordability.

043_logo_final_03.png.0cdf828351f81e6097208048ac2d018d.pngStuart Phillips

Independent, Whole of Market Mortgage Broker & BTL Specialist

AALTO Mortgages Ltd

Web  www.aaltomortgages.com

Email  sales@aaltomortgages.com

Call  020 7183 1101

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