Buy to let – say nothing, do nothing, be nothing

by Readers Question

4 weeks ago

Buy to let – say nothing, do nothing, be nothing

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Buy to let – say nothing, do nothing, be nothing

For around 2 years I’ve plagued myself on and off with the idea of ‘taking the leap’ and investing in my first buy to let property.

I’m a 27-year-old Engineer and true to form, I must research everything inside and out to understand the market before I can decide to get involved or even pass comment.

So after focusing on this topic on and off, I keep coming to the same conclusion – form a Buy-to-let ltd company or transfer beneficial interest to my wife, who is a lower rate tax payer (just about). I’m quick to rule out the latter, as I’d like to start with two properties in a manageable time frame and expand as and when the finances allows to make-up for our poor pensions, which this will no doubt push my partner into the higher tax band.

So X X X Ltd, needs to be formed. More research. Bang, the journey comes grinding to a halt.
I cannot find any company, which will provide mortgages to a private ltd company in Northern Ireland.
I’ve spoken with my own bank, who stipulated the company would need 12 months trading history before they would consider lending.

And then my engineering head comes into play and I think I could just pursue one of the other options, but my personality complex is holding me back through fear of making the wrong move, and I must admit, it’s crippling.

I’d like to hear from anyone who is in a similar position.

Cheers,
David



Comments

Hello David

You need to make your BTL investment / tax decisions based on your current and future requirements and of course if you don't need to raise finance and you buy for cash, then this is all much more simple for you.

However, if you need mortgage funding, I don't know of any traditional BTL lenders who lend to Ltd Companies in Northern Ireland, although I do know of (and work with) 5 'high street' banks who do lend to personal name borrowers in NI.

The tax position for personal name borrowers can possibly be addressed via the 'tenants in common' split I believe, but you'll need to get that confirmed with your accountant.

So, yes, some lenders are lending in NI although only to personal borrowers at the moment, and of course interest rates and fees are normally lower than the mortgages offered to Ltd Companies so the tax bills / vs mortgage costs sometimes weigh in favour of personal named borrowers / owners on occasions too. Again, check out your own personal tax situation with your property tax specialist.

Mortgage advice available from my Team via my profile link.

Mark Alexander

4 weeks ago

If you don’t risk anything you risk everything!

H B

4 weeks ago

If Mark doesn't know it then I think it doesn't exist.
Have you thought about buying in your own name or just one property?

The thing that unnerves me about buying through a limited company is that tax law on BTL in Ltd companies can be changed just as easily as it was for personal mortgages, but with the added risk of always being stuck on a higher rate.

Do you feel comfortable that this tax allowance will not be removed in the future?

Phil Atkinson

4 weeks ago

We've been doing this for just over 1 year now. For the best part of that time, we've dithered and changed strategy with each new bit of research we were doing and have been cautious. Or so we thought. Ultimately what we were was fearful. Most people we talked to said 'don't do it' and layered their own fears over owns reinforcing them. The breakthrough for us was a change of mindset. If you haven't already read a couple of books. The Slight Edge from Jell Olsen and Feel the fear and do it anyway by Susan Jeffers. Often doing the wrong thing isn't the issue. Doing NOTHING can be far more damaging...

Alison King

4 weeks ago

My advice would be to buy in your own name any pay whatever you need to into your pension to keep you within the lower tax bracket.

Amjed Khan

4 weeks ago

I agree with all the above. Also look at SSAS and maximising tax relief and even invest in property through SSAS. I want to do this but my pension pot is too small. Also for commercial property the tax treatment currently is different.


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