Landlords and second homeowners rush to sell – Zoopla
2 years ago | 8 comments
Holiday let to private rental?
12:01 AM, 5th November 2024, 1 year ago
2
Hello, I bought a new build property in Cornwall 2 years ago and its now a successful Airbnb. However, I’m thinking of using it as a Buy To Let instead. This is largely because I want to move house myself but my trusted mortgage advisor tells me that, although the outgoings on the holiday let are taken into account when assessing affordability, my income from Airbnb is not, because it’s neither regular nor dependable.
This drastically reduces how much I can borrow to buy my next house, making it unaffordable, despite the fact that I have two other rental properties which are doing well and two pensions.
If I have a regular income from permanent tenants I can borrow what I need on a mortgage.
Has anyone had an experience of making this change? Is it a good idea?
Also, can anyone make any sense of the tax implications of disposing of furniture etc? The information on the HMRC website is pretty much incomprehensible!
Thank you,
Tricia
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Member Since December 2023 - Comments: 15
11:01 AM, 5th November 2024, About 1 year ago
There is no prescribed way a lender has to assess affordability the impact of holding BTL mortgages when underwriting a residential loan. It feels like a bit more spadework is needed by your broker to find a lender who employs skilled underwriters who have discretion to make flexible decisions within the confines of regulation. However, they may not be the cheapest as overheads are generally higher. Of course there may be other issues outside the holiday let but if this is the sole issue and you are flexible as to which lender to use I’d suggest more shopping around.
Member Since August 2016 - Comments: 1190
11:22 AM, 5th November 2024, About 1 year ago
Two scenarios here. Do you have a mortgage on the holiday let property ? If so then the lender would (assuming you declared it as a holiday let at application stage and not a long term rental) may have been happy with the projected holiday let income covering the mortgage payments. In other words a stand alone holiday let mortgage where your own income is not required. If this is the case it may be worth approaching this lender to see if they can agree a residential mortgage for you.
If you paid cash for the holiday let then there will be much more flexibility in a standard residential mortgage provider ignoring the holiday let outgoings as it will be covered substantially by the holiday income especially as there are no mortgage payments.
A good broker should be able to shop around and find a lender happy to assist. Or you may need to employ a better broker.