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My home I want to rent part of it barn on property holidaylet

I have a house 70 percent loan to value with mortgage company, got planning for old barn at back of property for holiday let , had to sign 196 agreement with planning, bank signed. But said I couldn't let holidylet asked me where I would be living I told them my house, they said I would need to get revaluation done , the barn would add value to my property , also they wanted the barn separate title deeds was mention, call centre spoken to someone else said I can rent two years. What do I do I would like to borrow more money for holidaylet to build but on a interest only deal don't want to lose, second charge not sure about going about this ? Hope this makes sense.

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This has several complications which I am not expert on but here goes. Spitting the property between your own residence and land from the holiday let property and land would seem to be the cleaner approach. The tax treatment of the 2 portions will be quite different. You will not get further residential mortgage for developing your letting business and your lenders would not want someone else to have another charge over the property. Hopefully, a new valuation of the remaining residential property and land will be more than 11% above the current mortgage, in which case you should be able to split the property and retain the existing mortgage. You should then be able to apply for a business loan to develop the letting business, using the letting property as collateral. There may be a CGT liability on the letting property, whereas the residential property would have residential relief, at least up to a certain size of plot. Mike



Thank you mike for the information and the time you gave writing this . can you rent out the property if they have agreed to the terms in the 106 agreement,would I need to check with a solicitor. Sorry for my ignorance what is CGT liability is this to do with tax? I have a workshop commercial use same site would like to change to residential would it be good to split, access they would need to looked at shared entrance.a quantity surveyor to look at land and building In my planning agreement barn conditions state tied to the house.if so can it be rent ? We weren't wanting to borrow when bank said we couldn't let. Thank you



CGT is Capital Gains Tax. If you sell off part of your land and the total land before the split was more than 5000 square metres or part was used exclusively for business purposes then there would be CGT liability on disposal. That second condition would apply to the commercial premises and to the holiday let after its establishment. However the planning restriction tying the properties would appear to prevent a formal split. If you need the extra loan, it would be better to ask the Planning Department if it could be split, provided it remains under one ownership, explaining why you need to split it. They could vary the terms of the S.106 agreement. Holiday lets of an annexe, which this appears to be considered, are not usually considered as a split. Mike