Buying to Rent - advice needed please

Chain

Hello, first post so take it easy on me! A friend recommended I ask a question I have to you guys on this forum.

I am looking to buy a flat for my mother to rent. She is currently unemployed and turning 60 next year. She has enough money to pay the rent (which will cover my mortgage) until she turns 60 and retires, then we have been told the council will pay the rent.

So my first question is, are we collect in that the council pay the rent for someone who is retired (she has very little money put away).

And secondly, would there be a problem getting the council to pay the rent as the flat will be in my name.

It seems the most logical thing to do - my partner and I have recently had a partner, the flat we'll buying her she has been renting for 6 months and is 2 minutes up the road to help us out, and as I say she only has a small amount of money to keep her going through retirement.

Thanks in advance guys!:beer:

clutton_2

councils will not pay housing benefit to someone who lives in a property whic is owned by a close family member - sorry.

housing benefit is a means tested benefit, so not all retired folks get it.

Chain

OK thanks for the info. Not good news then.

She'll certainly qualify for housing benefit when she retires.

Are there any other avenues open to us? Between us we can't afford to pay a mortgage if we buy her a place unless there was some outside aide coming in. She's very settled in the flat she's been renting.

Thanks.

clutton_2

If she is settled where she is won't the council pay the rent for her where she is ? if she is unemployed at the moment and has very little savings she will be entitled to some housing Benefit (rent) right now - have you applied for this ?

Any landlord worth his/her salt will want your mum to stay where she is if she is planning to stay there for years and years !!!

real1314

clutton wrote:

councils will not pay housing benefit to someone who lives in a property whic is owned by a close family member - sorry.

housing benefit is a means tested benefit, so not all retired folks get it.

That's incorrect - they do look at tenancies with relatives more closely, but they cannot automatically refuse to pay.

The key factor is whether the tenancy is on a commercial basis.

Would you be able to buy this flat and let her live there rent free or would you only be able to do it if she/HB can pay the rent?

If the answer is that you can only do it based on rent coming in, then it should be ok.
The fact that it's you rather than a stranger who rents out the property is becoming less and less relevant thesedays. Would you be using a buy-to-let mortage though, because some lenders will not allow you to rent to a relative (although they probably don't bother checking).

The other issue that someitmes arises is whether it might be a "contrived tenancy" i.e one that has been made to take advantage of the HB scheme, but you could argue that for almost any tenancy where the tenant is getting HB, including LA property, HA and private.

Do some more reading - have a look for the guide to HB by Zebedee, Ward and Lister - often stocked in WHSmiths for about £14

Chain

Wow, thanks for that last post. That sounds very positive.

The owner of the flat she is in wants to sell it, and has offered her / me first refusal.

There is no way I'd be able to pay the mortgage, I could certainly show the council my financial records to back this up. So that should prove I do need the rent. And yes, I'd be getting a Buy-To-Let mortgage. It is certainly "commercial" and not viable without rent support.

Thanks again, feeling more optimistic now! I'll give the council a call next week I think, and certainly buy that book you recommend.

clutton_2

do get a "complete market" mortgage broker to advise you - there are thousands and thousands of BTL mortgages out there - good luck.

BUT, lenders may not allow you to rent to a relative, but, if the landlord name is not the same as the tenant name on the Tenancy Agreement how are they to know ?

Chain

Again, thanks so much for the info guys. I'll give a few brokers a call next week.

Tassotti

Clutrton is correct, and any insurance you get would be invalid if renting to relatives and not declared.

It can be done, but it is a risk.