Buying a house for a worker

[tom228]

We would like to buy a house for a worker, he would be on a salary including the house.

How would getting a mortgage work, would some of the partners need to get a private mortgage?

Does it need to be a buy to let mortgage?

Can the business get a mortgage and have the house as a business asset?

 

[farmerdan7618]

Business loan is your best bet, but take advice if the business is a limited company.

Standard residential mortgage generally needs the borrower to live in the house, and buy to let will want an income from it.

 

[chaffcutter]

If you intend to use this as a tied house going with the job, the business should buy it as a business asset.

Your bank should be happy to lend for the purchase I would think.

I would ask your accountant how it’s best done without falling into a tax trap when you eventually sell it.

 

[R J]

we bought a bungalow of a neighbouring farm last year for a worker , Was a business loan against the farm ,
easiest way

 

[onesiedale]

We looked at this. Business loan through hsbc worked out waaayyy more money than ordinary mortgage set against the business profits.
A saving of cica £500/month + arrangement fee, and the hsbc loan was over 30 years whereas building society would only loan for 22 (the remainder of our FBT)

 

[tom228]

So what's the name on the mortgage?

Is that a farm asset then?

Does that require farm security or just a deposit and the house in question as security?

 

[curlietailz]

I’d suggest you don’t do it
Protected tenancies etc
Give your man an extra housing allowance and let him find his own would be my advice

 

[Agrivator]

I would just buy the house using a business loan/overdraft, and if you lender (bank or AMC etc) already has a charge over the farm, wangle it so they don't also take a charge over the house.

This enables you to put the house in the name of whoever you wish, and to let anyone you wish live in it. If it's let to your employee, divorce the rental agreement completely from his/her employment contract, but that would need sound legal guidance if you wish to avoid future difficulties when you try to gain possession.

Also discuss all the VAT aspects with a specialist.

 

[Sid]

@Cows 'n grass

 

[onesiedale]

So what's the name on the mortgage?

Is that a farm asset then?

Does that require farm security or just a deposit and the house in question as security?

Morgage in the name of partners
Security is the house itself as we are tenants on the farm

 

[onesiedale]

I’d suggest you don’t do it
Protected tenancies etc
Give your man an extra housing allowance and let him find his own would be my advice

When I was a herdsman in a tied cottage boss put me on an assured shorthold tenancy. I had the rent deducted from my salary (£10/month) everything above board and formal fir the farmer who needed his house back when I left.
Boss also paid the council tax too
Everybody happy.

 

[4course]

buy the house in what ever way suits cash,business loan ,buy to let mortgage then rent the house to the staff member on a six month tenancy albeit at a low as possible discounted rent and pay him the rent figure plus share of tax etc as part of his salary , it means you will be paying more in wage costs but at the end of the day you will have a property bought and paid for and if the staff member moves for another job so be it either rent goes up or he moves . It will also mean you are more likely to have a sensible tenant than some of the scroats that are about

 

[Cows 'n grass]

@Cows 'n grass

Very apt timing because I've spent most of the morning in negotiations with an estate agent over a second house.

We are tenant farmers and trade as a limited company. The one house we own is done in my name and the ltd company rent it from me on a full repair and maintenance agreement. This has worked well because we've managed to put quite a lot or repairs through the company.

If we get a second it will all go through the company.

 

[farmerm]

I would just buy the house using a business loan/overdraft, and if you lender (bank or AMC etc) already has a charge over the farm, wangle it so they don't also take a charge over the house.

This enables you to put the house in the name of whoever you wish, and to let anyone you wish live in it. If it's let to your employee, divorce the rental agreement completely from his/her employment contract, but that would need sound legal guidance if you wish to avoid future difficulties when you try to gain possession.

Also discuss all the VAT aspects with a specialist.

A long term investment of a house using the short term high cost rates of an overdraft

 

[tom228]

CnG you'll just take out a conventional mortgage in the Ltd company name and the house will becone a company asset?

Does it need to be a different type of mortgage? Buy to let? Secured against the business or itself? Does the business just need his accounts for the last so many years to prove it can afford it?

 

[onesiedale]

CnG you'll just take out a conventional mortgage in the Ltd company name and the house will becone a company asset?

Does it need to be a different type of mortgage? Buy to let? Secured against the business or itself? Does the business just need his accounts for the last so many years to prove it can afford it?

Best thing here with these sort of questions is to speak to a number of lenders and get a feel for what they are wanting. They will all have different risk assessments. Some will run a mile at your proposal, others will understand and work very much with you..
You will need to brief your accountant in advance to make sure that your business numbers paint the right picture for any potential lenders.
We took the mortgage offer from The Stafford Railway Building Society. - a proper local mutual building society . Only one office, no call centres and you speak with the person that makes the decision.

 

[glasshouse]

we brought a bungalow of a neighbouring farm last year for a worker , Was a business loan against the farm ,
easiest way

How did u bring it?

 

[Agrivator]

A long term investment of a house using the short term high cost rates of an overdraft

But banks will do long-term loans at fixed interest rates. And often much quicker than AMC or other mortgage providers - particularly if you have a good track record.

 

[R J]

How did u bring it?

Cheers , glad one of us went to school

 

[farmerm]

But banks will do long-term loans at fixed interest rates. And often much quicker than AMC or other mortgage providers - particularly if you have a good track record.

ay but long term loans are very different to overdrafts and even long term loans are unlikely to be at rates as good as achieved on mortgages which give much greater security to the lender.