UK buy to let mortgages

[Cheeseman]

Thinking of buying a property in the UK to give me the option of retiring in either UK or Japan. Looking to get a loan for about 50% and rent out until return in 10-15 years, or not as the case may be.
I had property there about 20 years ago but sold long ago...
Things have certainly changed in the home loan business for non residents!
Does anyone have any advice on mortgage brokers or anything else that would be of help?
Thanks

[Sybil]

If Corbin ever gets to be PM, you would have to sell your buy-to-let at a discount to the people renting it....


Labour Party proposals for a “right to buy” for private sector tenants have been branded “ludicrous” by brokers who believe they are unworkable.

Shadow chancellor John McDonnell floated a policy that would effectively force landlords to sell property to tenants at a government-set “reasonable price”.
Buy to let mortgage brokers were less than impressed.
“This ‘right to buy’ idea is nothing short of ludicrous. It would overturn our capitalist system and send us into the dark ages. It would create a shortage of rental properties further compounding the problem they are trying to fix,” said Ying Tan, founder and chief executive of Dynamo.

[adamu]

If Corbin ever gets to be PM, you would have to sell your buy-to-let at a discount to the people renting it....


Labour Party proposals for a “right to buy” for private sector tenants have been branded “ludicrous” by brokers who believe they are unworkable.

Shadow chancellor John McDonnell floated a policy that would effectively force landlords to sell property to tenants at a government-set “reasonable price”.
Buy to let mortgage brokers were less than impressed.
“This ‘right to buy’ idea is nothing short of ludicrous. It would overturn our capitalist system and send us into the dark ages. It would create a shortage of rental properties further compounding the problem they are trying to fix,” said Ying Tan, founder and chief executive of Dynamo.

Is this a political discussion board now? This whole post seems to be 100% politics and 0% practical investment discussion.

Sorry I don't have any experience with property, but I am worried about the direction of some of the threads recently.

[Beaglehound]

I thought about keeping my flat in UK and renting it out after we moved here but was a bit daunted by the thought of things going wrong with it (old property) and being on the other side of the world. And also by the no doubt convoluted tax reporting involved.

Don’t know anything about mortgage brokers I am afraid, and I see you have done some research so you probably know this, but if you own a house in Japan the UK property will be treated as a second home and attract a 3% stamp duty surcharge. Mortgage relief on buy to let is also being phased out I think, though as a non resident this may not have applied anyway. It does seem the government is keen to discourage buy to let so other disadvantageous measures may come in too. That’s a lot of doom and gloom, apologies, it does make sense to invest in UK property if there is a decent chance of you retiring there, but lots to consider as well.

[Sybil]

Is this a political discussion board now? This whole post seems to be 100% politics and 0% practical investment discussion.

Sorry I don't have any experience with property, but I am worried about the direction of some of the threads recently.

Any good investor would take into account how political changes might change the investment environment. Any person thinking of buying to let should take into the account the policies of the main political parties if they announce drastic changes with regards to it. The comments I have quoted are the general consensus of the experts in the field of buy to let.

As you said yourself you know nothing about the topic so I'm not really sure why you would post your passive aggressive comments here. Plenty of 'political' Brexit related comments have been posted in various threads over the past couple of years I wonder why you didn't make snippy comments in those threads.....

[goodandbadjapan]

I bought a flat in the UK a few years ago. If you own a property here, it will be seen as a second home and thus subject to the 3% stamp duty. It will also be subject to CGT when you sell. I am not sure what happens if you sell up in Japan and the UK flat becomes your sole property. If you are living in the UK it may we'll then become your principal property and thus CGT won't apply.

As far as mortgages go, I found that no UK bank would lend me anything as I didn't have a UK income. It was as simple as that. I asked a Japanese bank and they didn't say no outright, but said it was highly unlikely they would lend to me to buy abroad (Despite having virtually paid off my Japanese mortgage at that point). Some of those dodgy financial planning companies you hear about can offer mortgages through certain brokers but I didn't feel right about them and you might also be getting tied into something which could fluctuate hugely depending on exchange rates.

In the end I was lucky to have sent home a bit of money when the pound really was very low (about 119, if I remember correctly) and as it was only about 130ish I think when I actually bought I could afford to send a bit more home and just buy in cash. I don't think I could have done it any other way.

One other point about buy-to-let mortgages in the UK, and I may well be wrong about this, is that if I recall correctly, for a specifically buy-to-let mortgage you have to take out an interest-only mortgage, meaning that you will never be paying down the capital on the loan with the monthly payments. Seems odd, but I'm pretty sure I read something about that somewhere. Certainly worth confirming.

[Beaglehound]

In the case of the UK home becoming a main home, I think the period from purchase to that date is still liable for CGT if you sell but not any gains notionally accrued after it becomes your main property. How the valuation is determined, I don’t know.

[goodandbadjapan]

In the case of the UK home becoming a main home, I think the period from purchase to that date is still liable for CGT if you sell but not any gains notionally accrued after it becomes your main property. How the valuation is determined, I don’t know.

Interesting. It would certainly be very hard to determine the valuation at a certain past date, especially since a lot of properties go for quite a bit over the asking price.

[Beaglehound]

Having had a quick look it seems to work on a percentage of the gain basis. If your capital gain in total was £100k, you owned it for 20 years and lived in it for 10 years, the chargeable gain would be 50k, minus the usual conveyancing and maintenance costs. Also the final 18 months (soon to change to 9 months) that you own it is not chargeable, whether you live there or not. There is also something called letting relief, which allows you to deduct the percentage of gain attributable to the letting period, but that may well be phased out soon, consistent with the move towards discouraging buy to let.

If you want to give yourself a headache it’s all explained here:

https://www.which.co.uk/money/tax/capit ... uq96u1500f

[goodandbadjapan]

Having had a quick look it seems to work on a percentage of the gain basis. If your capital gain in total was £100k, you owned it for 20 years and lived in it for 10 years, the chargeable gain would be 50k, minus the usual conveyancing and maintenance costs. Also the final 18 months (soon to change to 9 months) that you own it is not chargeable, whether you live there or not. There is also something called letting relief, which allows you to deduct the percentage of gain attributable to the letting period, but that may well be phased out soon, consistent with the move towards discouraging buy to let.

If you want to give yourself a headache it’s all explained here:

https://www.which.co.uk/money/tax/capit ... uq96u1500f

I suppose that does sort of make sense! But rules may change by time it comes to selling anyway.