The End Game

The End Game

14:53 PM, 23rd July 2014, About 10 years ago 6

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I am keen to hear more experienced Landlords view on their exit strategy’s. The reason I am thinking about this now is that it is time to refinance a couple of HMO property’s that I purchased with cash (property’s were not mortgageable).

I am now 41 so have plenty of years left to obtain mortgages though I understand that it would be almost impossible to obtain finance when in my 70’s. I also want to purchase another 4 over the next couple of years

Therefore I see I have 2 options
a) Refinance all 6 HMO’s with repayment mortgage which may be initially less tax efficient but will mean I will have a good steady income in retirement and a fully paid off estate to pass down to off spring.
b) Refinance with interest only which will initially be more tax efficient but will mean that the banks will be calling in their money when I’m 70 meaning I will have to sell in order to service the debt. So I will have less property and a capital gains tax bill.

I do not expect the property’s to have large capital appreciation over their lifetime as they are terraced property’s in the North.

I am not sure if I am missing something as all advice seems to point to high gearing but the way I see it this will lead me to having to sell property in order to pay back the banks.

Any guidance would be much appreciated


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Neil Patterson

15:04 PM, 23rd July 2014, About 10 years ago

Dear Ian,

There options that could work other than selling well into your retirement.

In fact there are BTL lenders that will lend to aged 80 and some I have no age criteria.

However Mark has written a page for your reference on Buy to Let financing beyond retirement age see >>

It starts: "Most landlords believe that if/when they reach the age of 75 they will have to sell at least some of their properties to pay off all remaining mortgage balances. However, that needn’t be true.

If you can get your LTV down to around 33% by the time you reach the age of 75 you may never have to make another mortgage payment! At age 85 the LTV is 42%"

But please do read on 🙂

30 years is a long time and it could be a very different picture out there by then.


15:56 PM, 23rd July 2014, About 10 years ago

Another thought would be to alter your model to a limited company and finance on commercial terms. Incorporation Relief will reduce most of the issues with a sale and a purchase with the new limited company, the only fly in the ointment is Stamp Duty Land Tax.
This sort of transfer is both a blessing and a curse; it enables some effective tax planning over a number of years, but the costs are front end loaded which can be rather uncomfortable. Once done, the ability to pass assets down to offspring is almost unlimited, as you gift shares in 7 year cycles. The more ambitious will have multiple shares classes with different rights to dividend, so income can be turned on and off at will.

Les Charneca

17:13 PM, 23rd July 2014, About 10 years ago

Depends on your dependents if you have any to a massive extent. I have a few so I have a limited company and will gift my kids shares as I get older.

If I had no dependents I would leave as is and make sure I am somewhere outside the UK when I sold up in retirement and never come back taking all my money tax free as an non dom!

Extreme but those are the 2 ends of the spectrum. There are loads of halfway house solutions out there, but most involve charging you for the pleasure!

David Mensah

10:31 AM, 26th July 2014, About 10 years ago

Unfortunately moving out of the UK and gaining non dom status will no longer protect you from CGT -- any gains post April 2015 will be taxable, details still to be determined, see this position paper from HMRC

or, for example this explanation:

Sam Addison

17:32 PM, 26th July 2014, About 10 years ago

can I suggest starting from the other end? Decide what money you want from your investments and when(this covers income and also leaving to dependents). You can then set your strategy. In my case the portfolio is my pension and buying one more property will give me the income I seek as long as the mortgages are paid off. I am still working so while less tax efficient I am on repayment mortgages which will be paid off by the time I retire. My final exit strategy is not to sell at all but leave it as someone else's problem when I pop off!

Ian Murton

19:52 PM, 27th July 2014, About 10 years ago

Reply to the comment left by "Sam Addison" at "26/07/2014 - 17:32":

Hi Sam

I think that sounds like a sensible plan. I would like to be in a position to gift a property to each of my children and then have enough to have a comfortable retirement. I think the repayment plan is likely to work the best for me.

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