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Bridging in probate

Bridging loans are incredibly flexible and may be put to a variety of uses including resolving probate issues when concluding a will.

When a will is presented between various parties, it can throw up financial hurdles. There are numerous benefits to be gained by fast tracking the settlement process and using a short-term finance solution to meet resolution.

Annual bridging lending grows for third consecutive quarter

By using bridging, beneficiaries of a will are able to pay legal fees and inheritance tax straight away, releasing 70% of the value of the property immediately without making any interest payments which are covered by the loan facility.

This ultimately allows the beneficiary to market the property for a longer period of time to maximise its value which will be far greater than the interest payments on a bridging loan, rather than discounting the property for a quick sale or through auction.

Resolving debts

Carrying out someone’s will is not always as straightforward as we might like. Although the ownership of their various assets might be easy enough to resolve, the average person will take on a network of debts and credits which must be resolved in their will.

Bridging finance offers a person’s family some breathing space and they can use the loan to pay off debts instead of being forced to sell assets as quickly as possible. Bridging lenders are also highly flexible and quick to put solutions in place. There’s no red tape and it’s possible to create a loan structure that’s perfectly suited to individual circumstances

In many ways, a bridging loan for probate finance is very similar to a standard bridging loan. The loan will generally be for a short fixed term, commonly less than 12 months (though longer terms are available), and can be of any value from tens of thousands to tens of millions of pounds.

Inheritance tax

When concluding a will, beneficiaries will inevitably face tax implications which must be factored into the overall process. Again bridging can help streamline and manage this inevitable challenge by providing a quick fix solution.

Many estates in the UK become liable for inheritance tax, which must be paid within six months and typically a 40% share of the estate upon liquidation. Again, this financial pressure can be eased through the use of bridging finance, as it enables the will’s executors to restructure and refinance to meet the cost of inheritance tax.

Conclusion

Without bridging finance it would be very difficult to resolve the financial affairs that can be brought about in a deceased person’s will.

The time pressures that quickly become apparent would require that many estates be quickly broken down and sold, rather than being realised at their full value. Bridging loans are therefore a helpful tool that enables individuals to pass on their wealth through generations, and allows inheritors to benefit more from their parent’s estates.

Source: Mortgage Introducer

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How to deal with the proposed amendments to HMO licensing in England

The Government recently published the outcome of their consultation regarding changes to HMO licencing and it is anticipated that amendments will be made in line with their findings. The big question facing landlords is what will these changes to mean for them? Many landlords that are not currently affected by licensing will suddenly require one and I doubt very much that Landlords are even aware!

The current situation

At the moment, properties classified as large HMOs already have to comply with licensing. Your property falls into this category if it is rented to five or more people who are not from one household, it is three storeys high or more and the tenants share bathroom/toilet and or kitchen facilities.

The proposed changes

The Government is proposing the following changes which will increase the number of properties that are subject to licensing:

• Removal of the three-storey rule

• Incorporate flats that are situated above or below commercial premises

• Put in place a minimum size requirement of 6.52sq.m which is in line with the current standard for overcrowding (Housing Act 1985). This size is likely to be 10 Sqm for HMO’s in which all tenants have their own bathroom but share other facilities such as a kitchen.

The driver behind this is to provide tenants with a better standard of accommodation and prevent the sort of problems that exist at the moment with sub-standard quality of accommodation and overcrowding. In order to support this further they are looking at putting in place additional proposals which include the following:

• In order for landlords to obtain a license, they will now have to undergo a Fit & Proper Person Test

• Landlords must provide sufficient storage facilities to deal with the holding and disposal of all household waste

How could it affect you?

Whilst it is worth noting that these are proposals only at this stage, they are likely to take from April 2018. At this point, it is expected that landlords will have a grace period of six months, providing them with time to make changes to their properties so that they comply with the rulings.  After this, those that do not comply will be subject to a fine of up to £30k as well as possible criminal prosecution.

Whether you already own an HMO or are thinking about purchasing one, you need to be prepared to deal with the new rulings.  Under-resourced Local Authorities are also going to find themselves struggling to manage the increased workload as it is estimated that the number of properties requiring a license will double.  It is also likely that additional licensing schemes will still go ahead capturing the multi-lets with only four occupiers, not five.  If you already hold a selective license, switching it to a mandatory one should not be a problem.

The good news

On a more positive note, if you are looking to get into the HMO rental market by purchasing a new property, the banks and mortgage companies seem to be looking upon these types of licensed properties more favourably.

By providing all landlords in the UK with plenty of advance warning, the Government are hoping that the changes will not be too difficult to comply with and will increase the quality of HMO accommodation generally.

Source: Simple Landlords