The new stamp duty hike for all properties worth over £1m is just over month away. In a recent article Buyers rush to beat rise in stamp duty I mentioned the implications of the rise in stamp duty due to take place on the 6th April.
To avoid the increased rate of stamp duty buyers are preparing to rent back properties to sellers, after the completion date, which could be risky for buyers, especially if they are raising a mortgage to buy a house, as they could be in breach of their mortgage contract, as most mortgage companies insist on vacant possession of a property upon completion.
The risk of renting back a property could result in the mortgage company calling in the loan, and they would be within their rights to insist on converting it to a buy-to-let mortgage, which would be at a much higher rate of interest.
If you are considering this option then the best way to avoid any problems would be to contact your lender and get permission to rent back the property for a short period of time.
Many buyers will not take into consideration that the date of completion is the relevant date, which will probably result in the banking system being put under immense pressure in the run up to the 5th of April - potentially causing chaos for buyers, sellers and solicitors.
There are many factors that are being considered while selecting among more houses.
ReplyDeletebuy to let mortgage