THE QUESTION

We are in the process of purchasing a property that we are planning to use as a furnished holiday let (it is already currently used as an Airbnb). 

We will be purchasing it in joint names.  My husband's income is close to tipping into the next tax bracket, whilst mine is far from it.  

I have been told that we would need a deed of trust to say that the taxable income from the property will be in my name i.e. 0% of the income for husband and 100% for me.  However, having looked at the government website it would appear that a deed of trust is not necessary for a furnished holiday let and only for regular rentals.  It would appear that for a furnished holiday let we can just decide between ourselves who's getting the income and pay tax as such. 

Am I reading it wrong? 

THE ANSWER

The simplest solution is to buy it jointly, but set it up on a 'tenants in common' basis rather than the normal 'joint tenants' basis.  I know you are the landlords/owners not the tenants but ...

When you’re investing in a leasehold property the number of years remaining on the lease is an issue for a number of reasons.

Mortgage lenders like to have a comfort zone of years left on the lease – usually somewhere between 30-55 years – on top of the mortgage period.  As most people take out a 25 year mortgage, that means that 80 years plus on the lease may well keep your lender reasonably happy.

However, it is worth noting that some mortgage lenders will decline to lend once the lease ticks down below 85 years. As each year of the remining lease lessens, the choice of lenders diminishes still further. Once you get below 55 years – you’ll need to purchase by some other means (i.e. cash or bridging finance) as getting a mortgage will be nigh-on impossible.

What are your options with leaseholds below 80 years?

Avoid them like the plague!

OR see them as a profitable opportunity.

The challenge for owners of short leasehold properties is that their property is reducing instead of ...

THE QUESTION

If a landlord had a normal mortgage, with a Lease Option Agreement (LOA) to just rent the property rather than buying it, would they need to change their mortgage to a BTL/HMO/SA mortgage?

1) I assume they would. If they would, how have you found explaining this to the home owner?

2) What about those home owners who are on a really good rate from an old mortgage and changing would mean they don't get such a good deal?
Also with a LOA, say if the term is 5 years. Can you purchase anytime with the 5 years, so even after say 3 years?

THE ANSWER

The whole point of an LOA should be that is gives you the opportunity, but not the obligation, to purchase a property - and you can exercise that option at any point during the agreement.

But not all option agreements allow for that.

Actually there are LOAs and PLOAs. The P being the purchase part and, unless you have it written into the option contract that you have the right to purchase at a price agreed at the inception of the...