Nationwide adding 1.5% to residential mortgage rate for let properties
#1
BE Enthusiast
Thread Starter
Joined: Jan 2005
Location: with the Carnaby cockatoos
Posts: 526
Nationwide adding 1.5% to residential mortgage rate for let properties
Just been on the Nationwide building society website to obtain the 'permission to let' form and noticed that they are introducing an additional 1.5% fee on mortgages where the property has been let for 3 or more years, effective 1st Dec 2010.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
#2
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Just been on the Nationwide building society website to obtain the 'permission to let' form and noticed that they are introducing an additional 1.5% fee on mortgages where the property has been let for 3 or more years, effective 1st Dec 2010.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
#3
BE Enthusiast
Joined: Nov 2009
Location: Dullsville
Posts: 672
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Consider carefully what you are doing as there rumours of CGT being increased to 40-50% in UK on buy to let properties. The UK Govt is trying to claw back as much as possible from the financial crisis, make sure no stone is unturned as you don't want to be up for loads of tax if you do eventually sell it or if a ton of properties flood the market and you are left with a property that is unrentable becuase of increased competition.
http://www.independent.co.uk/money/m...e-1980387.html
http://www.independent.co.uk/money/m...e-1980387.html
A capital gains tax rise could spark an exodus of landlords. Chiara Cavaglieri and Julian Knight report
Sunday, 23 May 2010
Sale taxed: Second home owners and landlords are fearful that capital gains tax may rise to as high as 50 per cent
The plan to raise capital gains tax (CGT) from 18 to 40 or even 50 per cent sends a red alert to Britain's buy-to-let investors. Profits made on the sale of property that is not used as a main home are subject to CGT, and with the emergency Budget a month away, there are some who suggest a fire sale of buy-to let property could be under way.
"The suggestion that capital gains tax could be as high as 50 per cent next April could hinder many buy-to-let investors who are looking to leave the market, as well as those looking to make their move into it and who plan to sell in the short term. This problem is likely to be compounded later this year as interest rates begin to creep up," says Dominic Toller, managing director of PropertyEarth.net.
A surge in property sale instructions could cause UK house prices to fall, offering more opportunities to other homebuyers and new investors who can take advantage of existing landlords with several properties on their books looking for a quick sale. These investors face a hefty increase in their tax bill once the increase kicks in, and they may well decide to sell and be taxed for any gain at the current CGT level. This decision will be based largely on how they think the property market will fare as a whole.
Sunday, 23 May 2010
Sale taxed: Second home owners and landlords are fearful that capital gains tax may rise to as high as 50 per cent
The plan to raise capital gains tax (CGT) from 18 to 40 or even 50 per cent sends a red alert to Britain's buy-to-let investors. Profits made on the sale of property that is not used as a main home are subject to CGT, and with the emergency Budget a month away, there are some who suggest a fire sale of buy-to let property could be under way.
"The suggestion that capital gains tax could be as high as 50 per cent next April could hinder many buy-to-let investors who are looking to leave the market, as well as those looking to make their move into it and who plan to sell in the short term. This problem is likely to be compounded later this year as interest rates begin to creep up," says Dominic Toller, managing director of PropertyEarth.net.
A surge in property sale instructions could cause UK house prices to fall, offering more opportunities to other homebuyers and new investors who can take advantage of existing landlords with several properties on their books looking for a quick sale. These investors face a hefty increase in their tax bill once the increase kicks in, and they may well decide to sell and be taxed for any gain at the current CGT level. This decision will be based largely on how they think the property market will fare as a whole.
#4
Forum Regular
Joined: Apr 2009
Posts: 59
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Just been on the Nationwide building society website to obtain the 'permission to let' form and noticed that they are introducing an additional 1.5% fee on mortgages where the property has been let for 3 or more years, effective 1st Dec 2010.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
See attached link for details http://www.nationwide.co.uk/mortgage...on/letting.htm
Will now consider trying to sell it rather than continue to rent it out and pay another 60GBP/month from December.
#5
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Consider carefully what you are doing as there rumours of CGT being increased to 40-50% in UK on buy to let properties. The UK Govt is trying to claw back as much as possible from the financial crisis, make sure no stone is unturned as you don't want to be up for loads of tax if you do eventually sell it or if a ton of properties flood the market and you are left with a property that is unrentable becuase of increased competition.
http://www.independent.co.uk/money/m...e-1980387.html
http://www.independent.co.uk/money/m...e-1980387.html
Q9. I am leaving the UK shortly, am I liable to capital gains tax in the year I leave the UK?
A. Yes, but if you cease to be resident or ordinarily resident in the UK, you may, by concession (extra statutory concession D2), not be liable to capital gains tax on gains arising to you from disposals made after the date of your departure. However, you can only qualify for this concession if you were neither resident nor ordinarily resident in the UK for the whole of at least 4 of the 7 tax years immediately preceding the tax year in which you leave the UK
A. Yes, but if you cease to be resident or ordinarily resident in the UK, you may, by concession (extra statutory concession D2), not be liable to capital gains tax on gains arising to you from disposals made after the date of your departure. However, you can only qualify for this concession if you were neither resident nor ordinarily resident in the UK for the whole of at least 4 of the 7 tax years immediately preceding the tax year in which you leave the UK
Last edited by coolshadows; May 24th 2010 at 7:36 am.
#6
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
I think that an extra 1.5% is not bad to be honest, my mortgage rate is less than 1% at the moment and would probably have to move to a rate of about 5% if I let it out. I would bite my bank's hand off if they offered a rate only 1.5% higher.
Anyway to this tax thing. Firstly UK CGT is not paid by people that have not been resident in the UK for five years. If that does not apply to the OP, then if the property was their main residence at some point in the past then Inland Revenue will first of all treat the final three years of ownership as if they had still lived there anyway. Then, if it has been rented out for more than three yars there is 40k of "letting relief" that would be allocated against any capital gain, which itself would be pro rated over the entire period of own occupation versus letting out. Then there is an annual capital gains allowance and x 2 if the property is in joint names
I know that is not explained in great detail but I am in a rush . But in a nutshell what I am trying to say is that one would have to make a ginormous profit on a house that was previously a main residence before UK CGT would kicks in.
I think there is a lot of scaremongering in the media about this 40 / 50% CGT thing to be honest. My understanding is that CGT is expected to be charged at the taxpayers *marginal* rate of tax which yes for some people would be 40 or 50% and this is exactly as it was 18 years ago at least (when I started training as an accountant) up until about 18 months ago when it was reduced to 18%.
Anyway to this tax thing. Firstly UK CGT is not paid by people that have not been resident in the UK for five years. If that does not apply to the OP, then if the property was their main residence at some point in the past then Inland Revenue will first of all treat the final three years of ownership as if they had still lived there anyway. Then, if it has been rented out for more than three yars there is 40k of "letting relief" that would be allocated against any capital gain, which itself would be pro rated over the entire period of own occupation versus letting out. Then there is an annual capital gains allowance and x 2 if the property is in joint names
I know that is not explained in great detail but I am in a rush . But in a nutshell what I am trying to say is that one would have to make a ginormous profit on a house that was previously a main residence before UK CGT would kicks in.
I think there is a lot of scaremongering in the media about this 40 / 50% CGT thing to be honest. My understanding is that CGT is expected to be charged at the taxpayers *marginal* rate of tax which yes for some people would be 40 or 50% and this is exactly as it was 18 years ago at least (when I started training as an accountant) up until about 18 months ago when it was reduced to 18%.
#7
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Any updates on this? I have a variable rate NW mortgage on a UK property. Has anyone managed to avoid paying this extra 1.5%.
What stops NW raising it to 10% next year?
What stops NW raising it to 10% next year?
#8
BE Enthusiast
Thread Starter
Joined: Jan 2005
Location: with the Carnaby cockatoos
Posts: 526
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
I still have the house in the UK and have just checked my mortgage statement online and it appears that I haven't been charged the extra 1.5% yet. Will see what happens when they take the monthly payment later this month.
#9
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
i received an "application for permission to let" document, it contained the requirements for a temporary let, i have not yet returned it although my letting contract conforms to the requirements. have you seen or returned this document?
#10
BE Enthusiast
Thread Starter
Joined: Jan 2005
Location: with the Carnaby cockatoos
Posts: 526
Re: Nationwide adding 1.5% to residential mortgage rate for let properties
Yes and had their reply confirming I can let the property for another 3 years. Will wait to see what happens this month.