The decision to buy a second property for buy-to-let, long term capital growth or maybe even a holiday home is one that is taken by a huge number of UK property investors in the UK every year.
In DevDosh Ltd opinion, when purchasing a second UK property it is vital to know all of the costs that will be incurred whether to work out your investment return or to stay within your budget, depending on what the property will be used for will determine the costs involved.
If you are purchasing a UK property other than your primary residence you will most certainly have to pay at least 3 percent in addition to the normal stamp duty rates, the normal rate is dependent on the value of the chosen property, a list of the levels of stamp duty are shown below:
Property value Stamp duty rate Second home rate
Up to £125,000 0% 3%
The next £125,000 (the portion from £125,001 to £250,000) 2% 5%
The next £675,000 (the portion from £250,001 to £925,000) 5% 8%
The next £575,000 (the portion from £925,001 to £1.5m) 10% 13%
The remaining amount (the portion above £1.5m) 12% 15%
When purchasing a property for the intended use of buy-to-let, DevDosh Ltd also think you will need to calculate exactly what the rental income will be, and that you would be able to afford higher mortgage payments if interest rates rise in future.
Criteria for a buy-to-let mortgage have become significantly more stringent.
DevDosh Ltd also see if the intention is buying a second property that will not be a rental property, and you’re keeping your primary residence, you can fund the purchase through a re-mortgage or by taking equity from the original property.
If you are thinking of taking the route of equity release please take advice from a professional as this could influence your entitlement to state benefits and will diminish the value of your estate.
For more information on UK property investments visit DevDosh Ltd today.