Room to build?

by Readers Question

9:04 AM, 30th August 2018
About 3 weeks ago

Room to build?

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Room to build?

As a BTL investor I have turned recent attention to refurbishment and development. The aim has been to generate more cash to buy more BTL. I have just finished a 2 storey extension to my main residence and reaped the financial benefits of this.

During my search, I have recently viewed a Victorian semi detached property with land to the side accommodating a gateway to the rear garden and a double garage – approximately 6.5m wide in total. This got me thinking – would there be enough room to build a new property? Would I be allowed to turn the purchased Victorian semi (and the neighbours existing) into a row of terraces or would this not be required with 6.5m anyway?

There is no other immediate planning restrictions that spring to mind as the side elevation is next to a car park and there is ample rear garden space. There would be enough room for one car on each driveway.

Any advice would be greatly appreciated before I submit my offer.

Also current situation is thus:
full time employed with 5 BTL properties in sole name and 1 home residence.
1 x btl property in ltd company

What would be the best strategy for the semi?

Buy semi in sole name and move in whilst build new in sole name/LTD?
Then move into new build and sell semi?

There would be potential to stay living where I am although I may struggle with finance to fund the build.

I’m single and flexible in terms of where I live. The houses in question are on my road anyway so happy to move!

Any advice would be greatly appreciated!

Joe



Comments

Neil Patterson

9:07 AM, 30th August 2018
About 3 weeks ago

There are many many factors here and just one is that if the property is genuinely your main residence there is no CGT.

However as you also have other BTL property you may want to consider a full tax consultation with Mark. Please see >> https://www.property118.com/tax/

matchmade

17:49 PM, 6th September 2018
About 2 weeks ago

I'm a small developer: you really, really need to talk with an architect or a planning consultant. So much depends on the local built environment - not just next door - and local planning policy too. Look at the planning records at your local council and choose an architect who has recently got a similar scheme through planning, or use word of mouth.

If a new-build is a no-go, it sounds like an extension would be viable, so at least you'd get a much bigger BTL out of the site, and some increased value.

As regards shuffling your Principal Private Residence CGT exemption around by moving between the existing and new houses: this can be a dangerous game! You need to be able to prove not just actual residence - all furniture moved, your existing PPR rented out, all bank and utility addresses changed, etc - for at least 6 months but preferably a year - but also motivation.

The tax officer, or tax tribunal if you get that far, will ask: "So, Mr Joe, why exactly did you need to move a few doors down the road from your old address to the semi, especially as you were just about to start building work on/near it? Why not just stay in comfort at your original home?" You are single so can't claim "relationship breakdown", so I think you will be on a sticky wicket. Better to move into the new property once it's built, and save yourself £1000s in Community Infrastructure Levy (if your council operates this) because you will qualify as a "self-builder". My council charges £365/m2, so CIL is a hefty burden on all small developers and goes a long way to explaining low local rates of new-build.


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