Mortgage Question

[Scruff]

You can get an Accountant's Certificate of earnings which is sufficient for many lenders.

[Mark McBurney@CMME]

Just incase anyone is searching the forum, the information I was given was that Halifax would be able to give me a mortgage, however it wouldn't be a BTL (which is what I wanted). They would be able to provide a mortgage providing I was moving in to the property. They would send out their own surveyor and decide whether the property met their criteria.

What they would want from me is a quick look at my CV to see that I have had 1-2 years of continuous employment within the same industry, and a signed contract from my latest agency showing days/hours per week, daily rate etc. Not a mention of an SA302 or P60's anywhere.

Halifax Buy-to-Let mortgages are direct-only, and not available through brokers.

BM Solutions however deal with BTL mortgages within the Lloyds Banking Group, and are introducer only, virtually mirroring the bulk of Halifax's criteria (although a big change in contractor criteria is to soon happen).

[bathingape]

You wanted a BTL mortgage on your own house? That wasn't going to work was it?

Obviously that wouldn't work, and it's not what I was after. I am looking at a property to BTL. Due to me not being a homeowner at present, the advice I was givne by freelancefinancials was that the only way round this obstacle was to apply for a standard mortgage (if that's the correct term for it) and after renovation of the property is complete, making it habitable, then I can change the mortgage to a BTL

[AnotherGuy]

Might be a stupid question but, can a Limited Company purchase a BTL property, and then rent out the property to the director of the company itself?
Is that considered a workaround or something ilegal?

The other question is if that makes any sense at all, of course.

[northernladuk]

Might be a stupid question but, can a Limited Company purchase a BTL property, and then rent out the property to the director of the company itself?
Is that considered a workaround or something ilegal?

The other question is if that makes any sense at all, of course.

Maybe you should run the numbers first to see if it's even financially viable to do so. You'll get your answer from that. But property through the business is rarely a good idea.

[JB3000]

Might be a stupid question but, can a Limited Company purchase a BTL property, and then rent out the property to the director of the company itself?
Is that considered a workaround or something ilegal?

The other question is if that makes any sense at all, of course.

It is perfectly legal but it would need to be declared on your P11D under the provision of accommodation for employees. Consequently you will end up paying income tax at your marginal tax rate (basic, higher or additional), have less basic rate band remaining for "tax free dividends", your company would need to pay Class 1A NIC at 13.8% on the cash equivalent on the provision of accommodation, and at some point your company will need to pay corporation tax at 20% on the capital gain when you sell the property to yourself when you need to close the company down. If the property increases in value a lot then more corporation tax will be due on the capital gain and no principal private residence relief (available to individuals only) will be due.

As annoying as NLUK is, he's probably right, i.e. not a good idea tax wise.

[AnotherGuy]

As annoying as NLUK is, he's probably right, i.e. not a good idea tax wise.

My goodness. I can see now why it is not a good idea.

I asked this because I might end up renting for a while in another city, where I wouldn't mind investing in property for the future.

So instead of just renting other person's property, thought of purchasing a property of mine to live temporarely. But if I take a residential mortgage, I guess when I move on after some months (probably less than 1 year) and decide to rent out the property I will need to convert the mortgage to a BTL one.

Also not sure what is best from a tax-efficient point of view as I would like to consider this as company accommodation expenses.

Thanks for the detailed explanation.

[Mark McBurney@CMME]

Might be a stupid question but, can a Limited Company purchase a BTL property, and then rent out the property to the director of the company itself?
Is that considered a workaround or something ilegal?

The other question is if that makes any sense at all, of course.

Not something that we get directly involved in for obvious reasons, however my understanding are there are a small handful of specialist lenders who will lend to a Limited Company, however it needs to be a company solely established for the purpose of property, so it doesn't work through a contractors Limited Company, in my experience.