Can I rent my house to my retired parents

LiLMissSunshine_2

Hi
Any advice would be much appreciated.

My DH and myself have a mortgage with Chel and Glos and have worked really hard last few years to get this down to £50,000. We really want to move and have saved up a large deposit to buy another house. But we dont want to sell our current property we would like to hang on to it for our nest egg so to speak and my parents would like to rent it from us.

Would I have to get a buy to let on the property or can I just keep it in our names and let it with our current mortgage as at the moment it is on a standard variable rate of 2.5% and would be a shame to lose such a good rate.

My parents want to live in the house for the rest of their lives (currently both 65years old) and I dont want to charge them much rent we are quite happy to make up the difference. If we could do it without charging them anything that is also fine.

So after rambling I am basically wanting to know if I can let them live in the in the house without changing my current mortgage?

As I mentioned any advice would be great

Thanks

G_M

You need either Consent To Let from your lender, or a BTL mortgage.

Renting to family is a bad idea.

More here.

paddedjohn

will they be using housing benefit to pay the rent? if things went wrong would you be prepared to evict them?

Werdnal

Residential mortgages are just that - you should be resident, and if you are not, then you would be breaching the terms. However, you do not necessarily need a BTL either. Ask for consent to let, and explain it is to family members, and see what they say. Some lenders agree, some impose extra clauses and costs, some refuse. But you must ask their permission, even to let to your parents, as not living there yourself would be an issue if they later found out.

Your house insurance would also need to be changed accordingly.

Whilst you may not need a formal tenancy agreement to let to your parents, if you are receiving rent, you need to declare this to HMRC for tax.

LiLMissSunshine_2

Wow fast responses thank you very much.

I know in most cases renting to family is probabily not the best idea but I trust my parents and would rather they live in the house than strangers. We have a very good relationship and they would be doing me as much of a favour as I would be them as I know they would take care of the house.

To be honest I also wanted to let them live there as I was hoping it would save hassle of having gas checks and contracts etc.

If I charged no rent would that mean I wouldnt have to inform HMRC?

Thanks

McKneff

Are they claiming any means tested benefits.

Werdnal

I think you would still be wise to have a gas check regardless of whether you have a formal contract or not.

Would they be paying the utility bills, council tax etc in their names? If so, I am sure I read somewhere that this constitutes a letting agreement, even if no rent actually changes hands, so you would be bound by the letting legislation anyway.

If you are not receiving an income from the property, then you will not need to inform HMRC.

Just out of interest, where do your parents live now? Are they home owners in their own right or tenants somewhere else?

LiLMissSunshine_2

No they claim no benefits / housing benefit etc.

Yes they would pay all other bills such as utilities and council tax and be in their names.

They currently rent off local council as the job my Dad has means he has to live there. When he retires they will have to move and rather than them having to live in a rundown flat in a bad area (not much hope of getting anything much better) I would rather them live in my house.

Annisele

LiLMissSunshine wrote: »

To be honest I also wanted to let them live there as I was hoping it would save hassle of having gas checks and contracts etc.

If the property has gas, you still need gas checks. Ignoring the legalities, it's not a good idea to poison your parents with carbon monoxide!

Yorkie1

I know it's not what you actually asked, and you've probably thought about this, but I'll mention it anyway. The other thing you do need to consider is what happens if your own fortunes take a nosedive financially - you may be in a position where you need to sell the second property but do to so will make your parents homeless.

LiLMissSunshine_2

Yes I had thought about it and if the very worse happened I would bung them off to an OAP home... no just kidding I would invite them to live with me.

I think I will give Chelt and Glos a ring tomorrow and explain my situation and take it from there. If I explain it's family hopefully they will let me consent to let.