If you are planning for your future, you may be considering purchasing a bigger residential property within the next few years and with that you may also be considering whether to keep your existing property and let it out or sell it. There is not a right or wrong answer to this scenario, and it all depends on your personal circumstance.

There are many things to consider, however in this article we will discuss the option of keeping your existing property. Firstly, if you are to keep your existing property with the intention of letting it, you need to be aware of the Stamp Duty Land Tax (SDLT) which you will need to pay on the purchase of your new residential property. You would be charged an additional 3% SDLT on top of the standard SDLT rates because you will own more than one property, this can be a significant amount of money dependant upon the purchase price of the new property.

If you keep your existing property, you would generally need a minimum of 10% deposit for the new purchase, so you need to contemplate how you would fund this. Do you have enough savings to fund the new purchase? Or would you need to raise additional funds on your existing property? If you need to raise money on your existing property you should be aware that the maximum mortgage available on a let property is usually 75% of the value of the property, although sometimes this can be higher. Would this give you enough to repay your existing mortgage and fund the new purchase? There are also rental calculations that the lender would use in relation to the affordability of the mortgage for the let property.

Also, you would pay tax on the income received from the let property so you may wish to consult an accountant when considering your options.

Although these are just a few points you should consider, these are not extensive and there are many other things that should be investigated. Whatever you decide it is worth contacting an Independent Financial Adviser to discuss this further.

Jenny Ennis Cert CII(MP&ER)
30th September 2019

Let to Buy
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