Renting From My Mother

MrsMinx_2

Hi,
My mother is moving out of her house because her ex partner is frightening her. She is going to move in with her new partner, and has asked my husband and myself to rent her house. It would be great if we could do this as it would afford us a lot more space, we currently live in a tiny house, and have 3 kids.

I have done some research about this, as we are on housing benefit, and understand that this would have to be done as a commercial arrangement with an official tenancy agreement and that it has to be not a contrived tenancy. At present, she has a significant mortgage and could not sell the house as it would cause her to lose out financially, there would be no equity.

What sort of evidence would we need to provide to show that this was not a contrived arrangement?

Fire_Fox

Does your mum have consent to lease from the lender? Usually they will not allow you to let to immediate family.

MrsMinx_2

No idea. I will have to check that. Why does this have to be so flipping complicated?

MrsMinx_2

Ok, I have looked and can find stuff about buy to let lenders not wanting to let to family but nothing about restrictions on a residential mortgage. I guess that would be more of an issue when it came to housing benefit, and proving commercial set up.

Jowo_2

MrsMinx wrote: »

Ok, I have looked and can find stuff about buy to let lenders not wanting to let to family but nothing about restrictions on a residential mortgage. I guess that would be more of an issue when it came to housing benefit, and proving commercial set up.

Not sure I understand what you mean - your mother needs consent from her lender to let the property out as she has a residential mortgage and therefore they may only give permission for your mother to have tenants with certain conditions attached.

Also, the lender may not give their consent if there's not sufficient equity in it, too.

MrsMinx_2

What I meant is that one of the things that HB take into account is that the property is let commercially - and evidence of a commercial arrangement has to be present. That in itself would prove complicated as she already has a lodger and so couldn't reasonably let the property out to anyone commercially, whereas it wouldnt bother me that he was there, he has separate living quarters.

There is very little equity in the property at present. She extended the mortgage with her ex-partner before he went totally doolally pie, on the basis of his wages, she was older than him by some margin and is due to retire soon.

It's all beginning to look FAR too complicated. What annoys me is that if we weren't related it wouldn't matter a jot. I could rent the exact same property from someone else and it would be just a straightforward agreement.

poppysarah

If you plan on paying rent (your own money or HB) then it would be a "commercial let"

MrsMinx_2

But when it came down to answering the questions from HB about the tenancy, would they see it that way when the only evidence would be a tenancy agreement?

What I cant afford to happen is for us to give up our shoebox and then find out that our rent wont be covered. As things stand, without throwing out her existing lodger, she couldnt rent the property out in its entirety in the commercial market.

And if the mortgage lender doesn't give her permission to let anyway, this is all a bit of a moot point.

It's a shame, but I suspect that she will just have to sell and lose the house in order to escape her ex partner. She cant afford to run two properties, and she's coming up for retirement soon.

poppysarah

Yes I suspect she will too.

It's a shame but will she get equity from the sale? Sometimes a clean sweep is easiest.

Jowo_2

MrsMinx wrote: »

What I cant afford to happen is for us to give up our shoebox and then find out that our rent wont be covered. As things stand, without throwing out her existing lodger, she couldnt rent the property out in its entirety in the commercial market.

She should ask her lender upfront for permission and they will make clear any restrictions before it gets to the stage when the lodger is served notice and you give up your current property...

Also, how 'self contained' is the lodgers annexe? Generally, a lodger (excluded occupier) shares amenities with the landlord, such as kitchen, living room, bathroom - they don't have exclusive occupation. If they do, it can create a tenancy which confers upon the occupant stronger rights than a lodger has.