Buy to rent to pregnant daughter

Jowo_2

Your devil's advocacy is fine but I don't think the authorities could detect if the landlord gave his relative regular cash sums, anyhow, so long as the documentation trail doesn't show this.

The main problem I foresee is if the landlord raised the rent during periods of LHA and dropped it when they worked as this example is often cited as a no-no.

I don't think the couple will thank the father if there is some kind of obligation to pay a steep rent while they work, just to qualify for a similar sum on LHA when not in employment.

The other thing we forgot to warn the OP is the basic hazard of mixing business and family. When there are tenancy related issues and responsibilities get confused because of social relationships that cloud the landlord/tenant roles, minor tenancy issues can ruin family relationships. The OP has to think how tenancy issues can be magnified due to family pressures.

For example, what if the daughter demands repairs are paid for by the landlord when the landlord (father) thinks she was responsible for damaging something and should pay? Or dad raises the rent and the daughter is shocked at what she sees as the dad's greed and cheek, for example. Or the landlord has a major bill and must sell the property and so forth.

I know it sounds horrible to consider the risks but the landlordzone forums are full of novice landlord threads that start 'I let a friend/relative move in, I thought I was doing them a big favour with cheap rent/no deposit but they haven't paid their rent/are in arrears.'etc.

99blooming9

Wow thanks for all the advise I really am not out to defraud the local authority and only want to provide a comfortable home for my daughter,they probably wont qualify for LBH any way its just that I can see them coming to me with a sob story about not being able to pay the rent and feed the grand child and I would be forced to pay a proper landlord £450 rent
where I think I could put a roof over their heads for around £300 and at least have a little investment for my old age I am only 45 maybe the charge them £400 on the rent book and give them £100 pocket money idea is a bit daft.

KeepYourChinUp_2

The £100 pocket money is a daft idea, they would come to rely on it, a bit like people that do regular overtime end up the same way. Charge market rent put the extra to one side and you have a buffer to help them in an emergency or you get a nice holiday after all you have to replace that EIGHTY THOUSAND pounds some how and you would have on going maintenance costs,insurance, gas safety certificates and other rental costs. You will also need a proper lease. Even though its for family you will still have to do it by the book.

hope this helps

99blooming9

Thanks all
We have decided to get the pair of them in a rented place first while mife and I consult a mortgage consultant about our ideas

zzzLazyDaisy

Just to add to this:

1 If you 'charge' £400 rent, you will have to pay tax on it, regardless of whether you then give some of the money back as a gift (I am ignoring the potential fraud argument for the moment)

2 the exception to this is interest on the mortgage is deducted, so that, for example, you have an interest only mortgage, then that part of the rent will be offset and no tax will be payable. You will also have to carry out checks and maintenance such as the annual gas safety certificate if there is gas in the house, and those costs would also be deductable

3 LHA is set by region - if it is possible to but a house in your area for around £80k then it is likely that rents and therefore LHA is also low compared with other parts of the country, so you may find that even if they qualify for LHA, the upper limit for a couple under 25 may be lower than £400, and if the husband is working (and/or the wife goes back to work after the baby) they may not qualify for LHA anyway.

4 it is worth going on entitledto.com and checking what benefits/tax credits they will entitled to once the baby arrives

bobby-boy_2

Hi you said a 2 bed place the LHA will only be payable for a 1 bed and as stated as they are both under 25 may only get the "Shared room" rate which is significantly less!

m_13

bobby-boy wrote: »

Hi you said a 2 bed place the LHA will only be payable for a 1 bed and as stated as they are both under 25 may only get the "Shared room" rate which is significantly less!

I think the baby will change that:

Size criteria will be based on allowing one bedroom for:
a) every adult couple
b) any other adult aged 16 or over
c) any two children of the same sex
d) any two children regardless of sex under age 10
e) any other child.
The number of living rooms, kitchens and bathrooms is ignored for the purpose of the size criteria.

zzzLazyDaisy

This is correct, as a couple under 25 with no dependents they are only entitled to the shared room rate of LHA, although with both of them currently working they are unlikely to qualify anyway.

Once the baby is born, LHA will be calculated on a two bedroomed place, even though they are under 25yrs.

EDIT: cross posted

theartfullodger

Hope it all works out, especially the baby...

However, a maxim for any new Landlord: "Only rent to someone if you are prepared to evict them - and their dependants - if it all goes wrong....".

Otherwise you are writing daughter/son-in-law whoever a very very big blank cheque....


Cheers!

Lodger

99blooming9

Yes you are right! nearly 2 years later and not one penny of rent received!
Nor any contrived rent money oh well I cant say you never told me so! Hey Ho its only money