Renting to family - slightly complicated

shop-to-drop

From the information given it doesn't look like you can afford to buy a house to rent to your family member. Forgive me if I'm wrong but is this just something you have come up with to try to get the council to buy you a second property. Very risky gamble by the looks of it. I would advise your family member to rent from someone else.

luckyrunsofar

Just to clarify, my personal finances have not been mentioned and therefore nobody is in a position to comment on this. The low amount of equity is because the mortgage rate is low on that particular mortgage.

I mentioned raising capital because technically I could pay £25k off my mortgage, then remortgage it out again so I have borrowed for the deposit on the new property (and thus can claim the tax relief on this). But thats starting to make it a bit too complicated (and I dont know if this is even necessary). It would only be beneficial if the rate on my existing mortgage is higher, obviously.

I dont know why it sounds like a contrived tenancy. I may buy it even without letting to family..

pixie1

socrates wrote: »

Yes you can - this has been covered many times on the Benefits Board

Thanks for confirming this, we are currently looking to rent our property out and had previously discounted an offer from a relative who gets this allowance because we didnt think we could, now we know the correct answer. I knew i should of come here to confirm it!!

Thank you

Pix

socrates

pixie1 wrote: »

Thanks for confirming this, we are currently looking to rent our property out and had previously discounted an offer from a relative who gets this allowance because we didnt think we could, now we know the correct answer. I knew i should of come here to confirm it!!

Thank you

Pix

There are several experts on the Benefits Board who will be able to quote you the exact regulations - ask your question there

tbs624

pixie1 wrote: »

Thanks for confirming this, we are currently looking to rent our property out and had previously discounted an offer from a relative who gets this allowance because we didnt think we could, now we know the correct answer. I knew i should of come here to confirm it!!..

It is not as straightforward as you may think - there are certain exclusions and if the tenancy is deemed to be a contrived one the application will fail. You need to look throught the Housing Benefit Regs 2006 (9)1

luckyrunsofar

As for contrived tenancy, I dont see why this would be suspected as HB would be claimed either way once their savings run out. It is being setup to improve quality of life for the tenant based on the amount of HB entitlement, which would not get anything suitable for the area.

In case I didnt mention, their move is due to split up from relationship and they are within 5 years of retirement age

socrates

luckyrunsofar wrote: »

As for contrived tenancy, I dont see why this would be suspected as HB would be claimed either way once their savings run out. It is being setup to improve quality of life for the tenant based on the amount of HB entitlement, which would not get anything suitable for the area.

In case I didnt mention, their move is due to split up from relationship and they are within 5 years of retirement age

I do not think the tenancy is your problem - I think it is the purchase/mortgage.

luckyrunsofar

No, the purchase/mortgage is not a problem - could you explain how you reached this conclusion?

socrates

luckyrunsofar wrote: »

No, the purchase/mortgage is not a problem - could you explain how you reached this conclusion?

Have you an agreement in principle?

Its only a phone call.

Getting a BTL is not as easy as it used to be PLUS and this is the most important one - a lot of lenders do not accept tenants claiming benefits.

Should you withhold this info and it comes out later - well ....

luckyrunsofar

Socrates, the mortgage will be with an individual