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stamp duty | Baya financial

stamp duty

What is going on with the stamp duty deadline and Jackie’s update

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I keep saying this – but I can’t believe it is Friday again!!

I am starting to venture out and its taking some getting used to… We had one night out for a very belated November birthday this week and I’ve needed a good few days to recover!

We are now at the stage when the last cases will get through for the higher SDLT discounts ending 30th June. 

For the £250k and under purchase prices, there are still a few months to go – but be wary, the conveyancing side is starting to bubble over. We are being asked by clients for solicitors details to take on cases when their own are simply too busy to help.

What’s the best way forward if you get a good opportunity?

I would suggest, if it’s available, going dual representative. This is where the solicitor acts for both the lender and yourself.  I wouldn’t be holding your breath for a speedy completion, but it may knock off a good few days/weeks, which could be vital.

It is also important that you make sure you have a solicitor in the bag BEFORE considering an auction timescale case.

I have recently exchanged on a Manchester property. I has all been a bit quick after a year with an option.  With the planning application taking so long, together with a change of tack due to a Housing Association now wanting the plot, things have not been straightforward.  Planning has had to be resubmitted due to the changes so its now going to take even longer!  When we were ready to proceed, the original solicitor simply couldn’t take the case for completion on the 18th June. That has caused a real headache.  Thankfully my go to solicitor (Phillip Adam) took the case after I begged him! Honestly it was a really kind deed, as I know he is as busy as anyone.

So why have I changed direction with my portfolio?

The reason for going for this property and plot was to expand my portfolio. I have had vanilla buy to lets for some considerable years and although they are lovely and safe, I wanted take a bit more risk to get the higher potential rewards.  I am selling one of my flats as the return on Manchester site is worth the cost of selling the flat.

It’s interesting that your pension pot doesn’t tend to go on the radar… until you realise that your years left to fill it suddenly get very short.  Having had a financially difficult divorce in my 40s, time was short if I wanted the option to retire at a reasonable age.  I try to keep a split between earnings, pension (very tax efficient to put money in from a company) and properties.

Enjoy your weekend and I hope you give yourself time to recover 😊

How does an 85% LTV bridge sound?

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Here we are at Friday again, although the days all seem to be merging into one! I hope you are all doing ok, for those home schooling like me we’ve got one week left before a slight break of half term which I am so excited about! The irony of children’s mental health week being in the middle of a winter lockdown is not lost on me…

This week we genuinely do have some good news though. After a bleak January and with the stamp duty relief deadline inching closer we really do need it.

Shawbrook Bank have this week re-launched their 85% loan to value bridge. There are a few caveats to this, which I will go into but this is a great sign of confidence in the market moving forward. It allows you to borrow an additional 10% on top of the 75% (net of lender fee) for refurbishment costs.

What you need to know:

  • The 10% is for refurbishment costs, so you need to be spending at least that amount on the refurb. You can spend more (and fund it yourself), but if you spend less than the additional loan will be capped at that.
  • This is for a light refurbishment, so nothing which involves planning or building regulations or any structural changes.
  • You do need some experience, one similar project is enough
  • The maximum loan is capped at 75% of the post works value, so we need to give the valuer a copy of the schedule of works and they will give us a figure to work with.

This is brilliant for so many scenarios:

  • It allows you to borrow additional funds for the refurbishment and this is be upfront rather than in arrears which we often see with typical refurbishment bridges.
  • It suits conversions to small HMOs (up to 6 bedrooms)
  • Any residential internal refurbishment which can include kitchens, bathrooms, heating systems and re arranging layouts where no structural works are required.
  • You don’t have a cap on the amount you can spend on the refurbishment, and the additional funds will go towards this.

As always, we are happy to chat through any enquiries you have. We can let you know whether we think your project is something suited to this sort or product or whether something else would work.

 

Stamp duty changes and portfolio drawdowns

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Hi everyone, I can’t believe it’s Friday again – time really does go super quick in a pandemic…..

As you will all know, the Chancellor has given some SDLT help by increasing the threshold to £500k.  It hasn’t removed the fee completely for second properties, but It has significantly lowered the amount needed to be paid.

This really does help, because the new rules will continue through until March 2021.  This will allow investors to take advantage of the downturn, with time to monitor the market rather than rushing into decisions.

So how does that work with lenders regarding capital raisin?

I appreciate this sounds like a cracked record, but lenders are changing their appetite constantly.  As we all know, we as individuals don’t always get the pick of the bunch when it comes to lenders – you and your property dictate your panel and some are restricting capital raising.

There are, however, lenders who will allow you to capital raise and what you as investors need to work out is the cost versus reward – is it worth borrowing in order to look at other opportunities?

Now is the time to look at your existing portfolio, and really look at the opportunities available

  • Do you want to refinance now, or start looking at the options in 6-12 months? What do you think might happen in that time?
  • What could you do as a ‘cash buyer’? Will capital raising and putting yourself in that position help you grow your portfolio?
  • Could you take advantage of the market changes over the next 6 months? Especially with the SDLT holiday until the end of March 2021
  • Could you use this time to diversify your portfolio? Do you think that for example HMOs or serviced accommodation could be more appealing over the next few years and if so, what can you do about it?

As sad as the current situation is, as an investor we must look at the opportunities– and how we can take advantage of those.

Good ground work is key to being in the position to act, or others will!