Second home mortgage versus Buy to Let

VIGILANT22

You're not really interested in what I have to say because I am not giving you the green light....when I outline pitfalls I am called a troll, do you think I am making up the rules?
Believe it or not I won't lose any sleep about this property.
You are going to face major problems trying to buy this under value..so many people have been trying to do this and rent back...this is why Sale and Rent Back criteria has been put in place...Don't think you're the first person to come up with this idea to "rescue the family"!
Many networks have prohibited their advisers from conducting such transactions.
Lenders are aware of these, they only have to look at the figures....Valuation 150k Sale Price 75k.....If it is not SRB why else would someone sell their property at a deflated price!!.....Many lenders will not do this.
As I have already stated in cases where property is selling way under value, solicitors have a legal obligation to ensure this is not a SRB if it has not been declared.
What are you going to do with the equity you inherit?

Pincher

To ohwattagosiam,

Regardless of what your intentions are, you have to understand that there are Housing Benefit scams that the rules try to weed out, and if you rent to your brother based on Housing Benefit payments it will look very suspicious. You could be a saint with the best intentions, but the local council will simply refuse payment the moment they find out. They also have the right to demand back payments.

If it was just buying from your brother, and he pays rent with his own money, you just have to get approval from the Inland Revenue, who could look sympathetically on a bail out. After all, if you bought the house and rented to a stranger, there is no difference to the tax benefits.

VIGILANT22

If it was bought at market value you would also have to go with a lender who allowed renting back to family as all lenders do not allow family BTL'S.
Like on this forum you will find the occasional advisor who says no problem...If they say that find yourself another adviser.........

ohwattagosiam

To Vigilant 22: I am interested in what anyone has to say, however, outlining the pitfalls is only half a job. You haven't offered any answers. You say I will face major difficulties in doing this, and that sentence in itself implies, at least, that it can be done. But how? What circumstances is it reasonable in? Also, I have never called you a troll.

To Pincher: I'm not that closely related to him. We're related by marriage as I'm on the other side of the family so don't share the same name. Don't know if that would make any difference or not..?

What if the mortgage for this was in my partners name? We're not married so there's no family relationship there. It would also circumvent the HB issue. On purely business terms this would be a good deal for a lender, as when looking at our ability to cover the mortgage (even if there were never any tenants in the property), we would easily be able to cover the mortgaage as between us we have around £1,000-£1,200 per month spare cash.

Pincher

I think you know the issues.
Buying him out is not the only solution, remember.
If Housing Benefit pays part of his existing mortgage, all you have to do is lend him some money until he gets another job. A lot simpler.

ohwattagosiam

VIGILANT22 wrote: »

If it was bought at market value you would also have to go with a lender who allowed renting back to family as all lenders do not allow family BTL'S.
Like on this forum you will find the occasional advisor who says no problem...If they say that find yourself another adviser.........

At last! Something I can use!

So, buying at, or closer to the market value would be looked more favourably upon. How close do you think the price would need to be? The property needs around £5k (at least) spent on it for improvements, and obviously due to the situation (i.e. being desperate to sell quickly), he would take any reasonable offer.

What are your thoughts on my partner being the buyer? We're not married so no relation to my aunt.

EDIT: I meant uncle.

ohwattagosiam

Pincher wrote: »

I think you know the issues.
Buying him out is not the only solution, remember.
If Housing Benefit pays part of his existing mortgage, all you have to do is lend him some money until he gets another job. A lot simpler.

Lending money is not something that I am particularly interested in.

Would my partner buying the property still not satisfy Housing Benefit then? I thought that would be an appropriate solution?

VIGILANT22

I am sorry I'm not posting all the answers you want....however I

ohwattagosiam

VIGILANT22 wrote: »

I am sorry I'm not posting all the answers you want....however I

I realise this may be walking down the garden path but: You...what?

VIGILANT22

Sorry about the mis-post earlier..i was dashing out & never checked my post.....Their are many many factors involved here....I understand your simplistic view of "but I am helping someone out" etc"......

You are free to ask what you want here, but you must understand if you ask a question, you're not always going to get the reply you want...that doesn't make me a bad person or a troll

I am not going to post too much on here...as some people take information from these forums and use for the wrong reasons....

Imagine this scenario, yr family sell to you...They apply for HB....

Making a claim for HB...
Q Previous address pls....A Same as now
Q You have been unemployed for x amount of time, but only now applying for HB A...Yes, I owned my house before I have just sold it
Q ok we'd like to see your bank statements, we'd also like to see yr paperwork/solicitors for sale of house
Q Why have you disposed of an asset?
A What do you mean
Q We have a right to look at all assets and liabilities when considering your claim. However we see you have disposed of a property way below market value. Why have you done this.............

This is only the tip of the iceberg........