Turning houses into rented flats

BS writes: I wish to learn about running a business based on buying houses, converting them into flats, and renting them for income. Do you know of any books on this subject and on the financial and tax issues? Also, please advise on what mortgages are available for this type of house purchase. Can a 100% mortgage be obtained?

Answer

Ask a business book store for titles dealing with investing in property. Many will cover trading in commercial property and larger-scale development, but there may be chapters in these that are relevant to what you are planning. Tax guides may also have sections on property, covering both capital and income. Another possible source of information will be your local Business Link (0345 567765 or www.businesslink.co.uk), which will give information about the basic principles of property trading and can provide a list of useful contacts. In addition, from time to time, articles on property conversion appear in the personal-finance sections of newspapers and these can be a useful of source of information. On the question of finance, it is unlikely you will be able to obtain a 100% mortgage to finance a house purchase with a view to conversion. Typical lending terms will be up to 70% of the purchase price and up to 60% of conversion costs. It may also be possible with some lenders to arrange for the interest to be rolled up, but this is normally only agreed when the property is to be sold at the end of the conversion. Whatever the specifics of a particular transaction, a lender will look extremely closely at your financial position. Once the conversion is complete and rental income is flowing in, it may be possible to refinance the property on different terms, opening up the possibility of buying a second house for conversion.