As a broker, I have been working with landlords for over 15 years and have finally decided (spurred on by the stamp duty bombshell from last week) to acquire my first buy to let.
Being honest, I have been thinking about this for a while – I genuinely believe that long term, property is a fantastic, solid and safe investment that will give me an income in retirement and provide an asset to pass down to my children.
However, I found even getting a viewing on a property nigh on impossible, as those which came up for sale were going under offer within a day of being put on the market (we know your game, sneaky estate agents!). Unfortunately, having a job, a family and not quite enough inclination meant that dropping everything to view a property within three hours of hearing about it, before someone else nabbed it proved too much like hard work, and I gave up for a while.
3% Stamp Duty surcharge on additional residential property purchases from 1st April 2016
Then Mr Osborne announced a 3% Stamp Duty surcharge on additional residential property purchases (so, buy to let and second homes) and I miraculously found renewed vigour. It’s amazing how the thought of saving several thousand pounds focuses the mind. And what do you know? I only went and found a property and got my offer accepted! This happened just yesterday (1st December 2015).
I have decided to write about my buying experience as a blog, as for once, I am not just the broker but the customer too, and I thought it may be worth sharing my experience with you.
So just 24 hours in and today has been spent agonising over whether to buy in my own name or a limited company. I have flittered between wanting to be tax efficient (Ltd Co) and can’t be arsed with the hassle of being tax efficient and just buying in my own name. I have played with tax calculators and I KNOW that I should buy in a company or face tax suicide but the thought of setting up a company, new bank account etc. feels like a LOT of hassle… So under duress from the chaps in the office, I am going down the limited company route - *pats self on back.*
Setting up a limited company
The first job was to set up the company. It took me around an hour to summon up the gumption to crack on with this. I *may* have tried bribing a few people in the office but they were having none of it. And so, aided by a coffee and a couple of digestive biscuits, I sat down, took a deep breath and got started.
I can’t begin to explain to you how easy it was! I went onto the Companies House website, filled out some details which took 15 minutes, (14 of which were spent deciding what to call the company – these things matter right?!?!). It really was a very simple process – maybe 20 questions but nothing remotely tricky to answer. At the end I paid £15 by PayPal to submit the registration and that was it.
By all accounts, the next step is that within 48 hours they will be back to me to confirm that it’s all been set up. So far so good… (famous last words).
Nearly setting up a business bank account
Next stop was the business bank account. Queue lots of moaning from me about not having time to go and sit in a bank and go through all of that rigmarole. However, I did a quick recce, and you can actually set these up online BUT you need the Ltd Co to be incorporated and have a company number, so I have fallen at the first hurdle with this – I will come back to this once Companies House have been in touch.
Engaging a solicitor
The last job for today was to sort out a solicitor. I am using Kent Reliance for my mortgage and they want their own solicitors to act for them (which is not unusual for Ltd Co transactions) and I also have to instruct my own solicitor to act for me. Sound expensive? I can confirm that it is. The lender’s solicitor is charging a total of £850. My lawyer’s total legal bill (excluding stamp duty) is a further £1500. Now this was a bit of a shock, even to me (who deals with this sort of thing every day). So I went back to my calculator, redid my numbers, adding in this extra set of fees, and, to my dismay, I am still better off going down the Ltd Co route. So it looks like being lazy, despite my best efforts of trying to justify it, is simply not option…
Preparing to apply for a buy to let mortgage
Tomorrow I will be doing my mortgage application. This will require a whole packet of digestives to go with the coffee. In fact scrap the coffee. GIN, served in a vat.
Diary of a Buy to Let Purchase
Follow Jeni as she recounts her experiences of becoming a buy to let investor for the first time.
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