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Let to buy

Thursday, 15th October 2015

Categories: Lettings Property Prices Selling Tips

Author: Justin Burns

The term buy-to-let is well known among all parties involved in property – from serious investors and opportunistic purchasers, to estate agents, banks and conveyancers. However, there’s another sector of the market that is appearing on an increasing number of radar, and that’s let to buy.

What does it mean?

Let to buy is where purchasers let out their existing home in order to facilitate the purchase of another property. They will often release equity from the property by way of obtaining a new mortgage, so this is an ideal arrangement if the current property has been in their ownership for a number of years and has increased considerably in value and has significant equity available.

Reasons to go down the let-to-buy route

Buyers opt for let to buy for a number of reasons, or it could be that a combination of factors has resulted in this being the best route for a new purchase.

Relocation

If you’re relocating for work or family reasons, let-to-buy offers the opportunity to invest in a new area, while still keeping your current house, should you decide to return at some point in the future.

Keeping a hand in the London property market

With the capital’s property ladder becoming increasingly difficult to ascend, you might not be in a hurry to give up your position. If you keep your London property, you won’t have to jump through financial hoops to get back in the action if you want to return at some point.

Finding it difficult to sell

If you’ve found your dream home but are having trouble selling yours, let-to-buy could take the pressure off – assuming your current home will net a decent rental return.

Better buying position

Vendors love a potential purchaser who isn’t in a chain so if you’re serious about a specific road or area, freeing up your current home will put you in prime position for your purchase.

Capitalise on predicted rental prices

With rental prices still looking healthy, you might be able to capitilise on future rises, as well as enjoying the capital growth of two properties.

Not all plain sailing

Let to buy will not be the answer for everyone but it does offer options for a number of buying and selling scenarios. If you do choose to go down this route, you firstly need to make sure your current home will command a rental income that will facilitate a second purchase. Quality homes in prime locations will always rent well but you should speak Peter Barry to find out likely income, fees and lead times.

You should also investigate the tax implications of owning two homes. Although different rules apply to capital gains in the let-to-buy market, any profit is still subject to taxation.