ASK521: Is bridging my only option? PLUS: How do I pass a portfolio on?

0:02Rob D:Hi, I'm Rob. And I'm Rob. And this is Ask Rob and Rob. Welcome to Ask Rob and Rob. It is that mainstay of your Tuesday where we have two questions and we give two answers. We have some great questions coming up today. But first, a quick reminder of how you send in a question of your own.

0:19Rob B:Yes, this is super, super simple. Whether you want to appear in the Sunday Times or be featured on this very podcast, the same destination as where you need to go. And that's propertyhub.net forward slash ask. You can leave your questions there in a variety of ways. And once you have, you may get your question answered. Okay, so let's listen to our first question in from Luke. Hi, Rob and Rob. I've only just started listening to your podcast. I've just bought my ninth rental in a limited company. Just heard one of your listeners asking about bridging loans. And I've just bought a property that was rented out and managed by a letting agent, got a mortgage on it.

0:57Rob B:And when the valuer came around, they deemed it unfit to live in despite the fact someone was living in it. And it's become apparent now that the lenders for rentals on limited companies, unless the property is fit to rent within two weeks, you will not get a mortgage. So my mortgage broker now has said that most of his clients are using these bridging loan mortgages to buy the initial property, do the property up, then remortgage. You're usually paying 9 % or 10 % and that you will pay 6 to 12 months of the rent in advance, which you can then claim back. So if you get your property done in three months, you then claim back nine months rent if you pay 12 months.

1:41Rob B:So they're very expensive. He said that also they allow the exchange is much quicker. you're looking at three to four weeks instead of three to six months so i think that seems to be the standard now when buying a rental unless the property is in mint condition all right thank you luke very interesting that your mortgage is as clustered as inhabitable and you've got somebody in there already you whatever needs addressing will will certainly need addressing soon if it's deemed unfit to live in but i'm sure you're all over that now bridging loans are used by investors for many different reasons and in your circumstances you could absolutely do that if you want to proceed with this transaction and the type of rates that you're being quoted sounds about right that's roughly where that market is there might be some slightly more competitive products out there but there's certainly more expensive ones as well and your broker is correct that you'll get to exchange a lot quicker also what i would be doing in this circumstance though is using that information to negotiate a stronger deal, pointing out the fact that it's classed as unfit to live in, and using that to my advantage to push for a stronger deal because I'm sure it wasn't sold to you as this property is unfit to live in.

2:55Rob B:And the fact that a lender won't give you money against this property in its current state suggests that if you're not already getting a very, very good deal in this market and in those circumstances, I would be pushing a lot harder. you're in a position of strength and i would take full advantage of that as far as the bridging loans concerned well if you do take advantage of that and you do use your position of strength then you should more than offset the additional lending costs that you'll have for the first six to twelve months while you sort the property out and remortgage it so is it a feasible strategy absolutely yes should you be taking advantage of this situation you're in absolutely yes sometimes when you're presented a problem or a challenge like this, Luke, in business or property, it's a way of looking at the situation and go, okay, how can I turn this from a negative to a situation that actually we win from or learn from?

3:46Rob B:And I feel this is one of those situations. So best of luck.

3:49Rob D:Okay, let's have our next question now from Alex.

3:51Rob B:Hi, Rob and Rob. It's Alex here in sunny Devon. I just wanted to ask you about legacy. I've listened to every one of your episodes and many of them twice. So thank you very much for all of your fantastic help. I've managed to buy four BTLs, buy-to-lets through ERRs, and I've now hit an age where I'm having to get my heart checked regularly thanks to some family medical history. Thinking about my family, what is the best way to pass on a limited company and these properties to my wife and my son should anything go wrong? We've got wills, etc., but is it best to go to set them up as shareholders or to set up a trust?

4:26Rob B:Or if any other information you've got would be fantastic. Thanks very much for everything you've done, Alex.

4:32Rob D:Alex, thank you for your question. It's not a pleasant thing to be thinking about, but you are doing exactly the right thing by thinking about it early because that means you're going to have more options. The other piece of good news is that with a limited company, rather than properties in your own name, that also gives you more options. You've got a lot more flexibility there. Now, I'm not going to start giving detailed tax advice on the podcast because I can't. So this is very much a talk to a tax advisor situation. But before you do that, you can do your own research. So yes, this is going to be another use AI answer, but I really believe this will be helpful.

5:04Rob D:Get AI to interview you about your situation, where you are now, and what it is you want to achieve. What is the ideal outcome you're looking for? That alone will give you something structured that you can pass to an advisor and make their life a lot easier because they're not having to pull all the information out of you. Then the next thing you can do is actually ask for its recommendations. Now, important, its recommendations will likely be wrong in some way. And even if they're right, you have no idea if they're right or wrong. So do not take what it gives you as tax advice but what it does do is build up your knowledge ahead of having a conversation with an advisor so when they're talking to you about trusts and share classes and all this stuff it won't be completely foreign to you you're more likely to be able to follow what they're saying and ask the right kind of questions something i'll be aware of in this process that i know from looking into this myself is that there are always going to be trade-offs you'll ideally want a solution that is flexible that's not complicated that keeps your options open and means that you won't be paying much tax in the future that's not going to happen there will be trade-offs there will be tough decisions to make and i think it's worth knowing that to set your expectations but also so you can be very cautious of anyone who gives you the impression that there won't be hard decisions to make so alex not an actual answer that's beyond our remit but hopefully a useful process that will get you towards the answer you want thank you for your question well that is us done for this week and we'll be back to do it all again next tuesday but before then you can join us for the property podcast on thursday so we'll see you then bye bye bye Thank you.