Moving in together... now have two mortgages!

hen12y

Hello all, was looking for a bit of advice.

6 months ago I lived with my fiancee in a part-buy part-rent flat which was all in her name. We got married in october and i purchased us a house (on mortgage) all in my name. Myself and my, now wife, live in the house and her sister rents the flat off us at cost. We cant put it on the rental market as it stipulates that in the part buy terms and conditions, in fact we are probably in breach of something just letting it at cost to her sister.

Idealy I'd live to buy out the rest of the equity share in the flat and rent it out properly, but this would involve me raising an additional £110k which i dont think i can borrow.

We dont want to sell the share in her name as while it's not in negative equity, there is a loss on it, and as its in the olympic cachment area we'd like to hold onto it for a 2-3 years at least as believe it should be a good investment.

Alternately on rare occasions the housing association can grant you permission to rent it out at cost on the open market, but i dont want my wife to ask and then get turned down.

Her sister is probably going to be in the flat for another 6 months to a year tops, so need to start thinking about a plan and i'm not too sure whats best!

anyone got any ideas!?

go_cat

Why don't you sell it?

19lottie82

go_cat wrote: »

Why don't you sell it?

We dont want to sell the share in her name as while it's not in negative equity, there is a loss on it, and as its in the olympic cachment area we'd like to hold onto it for a 2-3 years at least as believe it should be a good investment.

19lottie82

OP, if the housing association don't grant you permission to let, you have the following choices.

A - let it sit empty and continue to pay the mortgage.

B - let it out anyway and risk the consequences if you get caught (do you know what these would be?).

C - sell it.

Werdnal

But it is on the rental market as you are renting it to your SIL, and you are already breaching the terms of the part buy/part rent deal as you are subletting!

You are infact a LL, with all the legal obligations that entails. I hope you have a Gas safety certificate, that you have advised your mortgage that you are no longer living there, and your insurance has changed to a LL based policy. I hope you are declaring the income for tax.

Sorry I know that is not what you want to hear, but it is fact and time to sell it asap before the rental arrangement you have comes back to bite you!

JimmyTheWig

I would have thought that now was the time to sell somewhere in the olympic catchment area that you don't want.
Olympic catchment area is going to be meaningless in 2-3 years time!

kingstreet

Even if you staircased up to 100% ownership, you'd still need the Housing Association to give consent to let and that is very unlikely to be given. They simply don't want owners using social housing for letting purposes.

If you can't continue to let it informally to a family member, the options appear to be to sell, post-Olympics, or leave it unoccupied.

Werdnal

kingstreet wrote: »

.

If you can't continue to let it informally to a family

Still breaches residential mortgage regs and the original HA lease arrangements.

The idea of cheap HA buy/rent schemes are to help those not fortunate enough to be able to afford a home to get on the housing ladder. This type of "fraud" - because frankly that is what it is, is undermining the already hard strapped HA and Local authority housing budgets and now you are fortunate enough to have bought your own home, you should release the other home to someone who actually needs it.

Is there any way your wife's sister can buy it? Otherwise, sell it and move on!

hen12y

Werdnal wrote: »

But it is on the rental market as you are renting it to your SIL, and you are already breaching the terms of the part buy/part rent deal as you are subletting!

You are infact a LL, with all the legal obligations that entails. I hope you have a Gas safety certificate, that you have advised your mortgage that you are no longer living there, and your insurance has changed to a LL based policy. I hope you are declaring the income for tax.

Sorry I know that is not what you want to hear, but it is fact and time to sell it asap before the rental arrangement you have comes back to bite you!

-in fact we are probably in breach of something just letting it at cost to her sister.

I'm aware of that, technically she is the LL not me, and as it is at cost there is no profit to declare, and as we're in tax year Apr12-Apr13 it would not have to be declared untill Jan 14 so is not of too much concern yet anyways.

JimmyTheWig wrote: »

I would have thought that now was the time to sell somewhere in the olympic catchment area that you don't want.
Olympic catchment area is going to be meaningless in 2-3 years time!

you might be right, but i'm not going to suggest we kick her suster out!! There will be plenty of extra services in the area after the olympics finishes which i hope will help add value. And buyers are not very aggressive at the moment I think.

kingstreet wrote: »

Even if you staircased up to 100% ownership, you'd still need the Housing Association to give consent to let and that is very unlikely to be given. They simply don't want owners using social housing for letting purposes.

If you can't continue to let it informally to a family member, the options appear to be to sell, post-Olympics, or leave it unoccupied.

It's not 'social' housing reserved for teachers and alike, its part buy, there are 2/6 flats in the building which have been staircased up to 100% and are rented out to i'm sure we would be allowed to do the same as there is already precedent.

I am aware I am in a bit of grey area of law, like driving 71mph on the motorway, and dont particularly like it which is why as stated my first choice is:

"Idealy I'd live to buy out the rest of the equity share in the flat and rent it out properly, but this would involve me raising an additional £110k which i dont think i can borrow."

immoral_angeluk

I think you need to check the mortgage and housing association agreements to find out what the implications are if they were to find out you were letting to the sister as it's likely you're in serious breach of contract.

19lottie82

hen12y wrote: »

-my first choice is:

"Idealy I'd live to buy out the rest of the equity share in the flat and rent it out properly, but this would involve me raising an additional £110k which i dont think i can borrow."

But if you can't raise the extra £110k, then it's not really a choice.