Returning to the UK

[RiNye]

Property>Equity 

Hi everyone, posting my query on this thread as ive seen several discussions around property finance.

My wife and I bought and lived in our flat in London 2011-2018 before emigrating Down Under (Melbourne). Been renting it out since then. Now we’re looking at the market forces for buying in Melbourne vs London and, amongst other UK-London pull factors, think it’s a good time to return and buy again in London. We’d like to keep our flat and to take out equity from its worth to enable us to buy a new home big enough for us + our 2 kids. Not looking to become property magnates or buy-to-letters, just a slightly bigger place and keep the old flat as an asset for our kids etc. We’ve been advised by our mortgage lender that UK property law asks that you must have lived in your property as your primary home to free up this equity and this period is for minimum ‘6months’. We have all the info on ‘things to consider’ when using property equity to buy second homes (Stamp duty etc) but I cant seem to find any info online that corroborates this stipulation, or similar information on this.

I wonder if anyone else has moved back to UK/London and borrowed against their old property for this reason and if so how long did you have to live in it before getting your mortgage lender to provide the equity? Sparing the gory details, we’d like to avoid/minimise moving back to our property as we had a nightmare neighbour who really hated the fact we had two young kids running around (they adopted a campaign of intimidation for which the Council and Police did zip) ); so don’t want to put them through that again! But without using our properties equity we’re not going to be able to afford a new home.

Any advice on equity borrowing in this situation, or insights into similar experience greatly appreciated.

Thanks for reading.
 

[Jon the Hat]

Sounds to me like your mortgage lender is talking nonsense.  I suggest you speak to a buy to let mortgage broker.

[FirstWorldProblems]

4 hours ago, RiNye said:

Property>Equity 

Hi everyone, posting my query on this thread as ive seen several discussions around property finance.

My wife and I bought and lived in our flat in London 2011-2018 before emigrating Down Under (Melbourne). Been renting it out since then. Now we’re looking at the market forces for buying in Melbourne vs London and, amongst other UK-London pull factors, think it’s a good time to return and buy again in London. We’d like to keep our flat and to take out equity from its worth to enable us to buy a new home big enough for us + our 2 kids. Not looking to become property magnates or buy-to-letters, just a slightly bigger place and keep the old flat as an asset for our kids etc. We’ve been advised by our mortgage lender that UK property law asks that you must have lived in your property as your primary home to free up this equity and this period is for minimum ‘6months’. We have all the info on ‘things to consider’ when using property equity to buy second homes (Stamp duty etc) but I cant seem to find any info online that corroborates this stipulation, or similar information on this.

I wonder if anyone else has moved back to UK/London and borrowed against their old property for this reason and if so how long did you have to live in it before getting your mortgage lender to provide the equity? Sparing the gory details, we’d like to avoid/minimise moving back to our property as we had a nightmare neighbour who really hated the fact we had two young kids running around (they adopted a campaign of intimidation for which the Council and Police did zip) ); so don’t want to put them through that again! But without using our properties equity we’re not going to be able to afford a new home.

Any advice on equity borrowing in this situation, or insights into similar experience greatly appreciated.

Thanks for reading.
 

I'm struggling to wrap my head around this one.  Did they give any more details?

If you were selling the property, you'd have to pay capital gains tax on any growth between the time you used the property as your primary residence and the sale date, but I've never heard such a thing for a mortgage.  

As the other respondent said, I'd speak to a specialist lender. We certainly didn't have to do this when moving out of what was our primary residence a few years ago into a new residence and retaining the first one for rental.  If you have a good chunk of equity you can get really, really low interest rates - though you might have seen the Bank of England hinting at interest rate rises coming to help curb the very high inflation we have here so you might conclude it's worth trying to get that done very quickly.

 

[Marisawright]

Do you think they mean you have to establish legal residency in the UK first, before they can lend to you?  

[Cup Final 1973]

We bought our house in the UK in June having returned from Oz at the beginning of May.  We had to pay a surcharge of 2% because we were classed as non residents and will be able to claim it back once we’ve lived here for 6 months. I wonder if there’s something similar for taking out equity.

[Amber Snowball]

23 minutes ago, Cup Final 1973 said:

We bought our house in the UK in June having returned from Oz at the beginning of May.  We had to pay a surcharge of 2% because we were classed as non residents and will be able to claim it back once we’ve lived here for 6 months. I wonder if there’s something similar for taking out equity.

Really? I didn’t have that when I moved in 2018. Is it a new thing? 

[Cup Final 1973]

I just assumed it was one of those taxes which had always applied but I wasn’t aware of it until it applied to me!  However, I googled it and it only started on April 1 2021 .  Apparently foreign buyers are the source of inflated house prices so the government thought a tax of an additional 2% would put some off.  Thankfully it is refundable once we’ve been here 6 months.

[Amber Snowball]

46 minutes ago, Cup Final 1973 said:

I just assumed it was one of those taxes which had always applied but I wasn’t aware of it until it applied to me!  However, I googled it and it only started on April 1 2021 .  Apparently foreign buyers are the source of inflated house prices so the government thought a tax of an additional 2% would put some off.  Thankfully it is refundable once we’ve been here 6 months.

Well every day’s a school day!
Good you can get it refunded but an extra cost when you least need it.

[RiNye]

On 18/10/2021 at 20:12, FirstWorldProblems said:

I'm struggling to wrap my head around this one.  Did they give any more details?

If you were selling the property, you'd have to pay capital gains tax on any growth between the time you used the property as your primary residence and the sale date, but I've never heard such a thing for a mortgage.  

As the other respondent said, I'd speak to a specialist lender. We certainly didn't have to do this when moving out of what was our primary residence a few years ago into a new residence and retaining the first one for rental.  If you have a good chunk of equity you can get really, really low interest rates - though you might have seen the Bank of England hinting at interest rate rises coming to help curb the very high inflation we have here so you might conclude it's worth trying to get that done very quickly.

 

Thanks for your feedback FirstWorldProblems. We will consult a specialist broker to understand if there is a UK gov or similar stipulation around homeowners living abroad, or returning expats, looking to take out equity on properties they own and rent out in order to buy a second home/property. It may be something to do with affirming residency status as someone else has commented re 'foreign buyers'.  We are aware theres a storm brewing with the UK interest rates and it feels like a good time to buy - especially London -  so fingers crossed we can capitalize. Cheers,