1st time buyers, BTL, any suggestions?

Dekazer

Good afternoon all,

I have a rather niche question and thought I'd try it out on you lot, having completely stumpted my bank's mortgage adviser.

We are a couple in our 30s with a joint annual income of around £55k p.a. We currently live on a boat that we own, and have reasonably small outgoings. We have some debt, but nothing major.

We have no desire to move into a land-house at the moment, but we also feel it would be sensible to buy a flat before my husband turns 40. We had an idea that made logical sense to us, but doesn't seem to please the bank, sadly. If anyone has any alternative ideas/suggestions/personal experiences I'd be really interested in hearing them.

We had hoped to buy my grandmother a warden-controlled flat for about £125k, using as a deposit some of her savings (about £20-30k). We wouldn't charge her any rent, as the monthly repayments would be less than we currently save each month.

So, does anyone i) know of away of getting a BTL mortgage as a FTB, ii) have any alternative suggestions from your own experience or iii) want to confirm that the only way we can buy a place is if we are willing to live in it?

Thanks MSE-ers

Dave_Ham

Hi there - does the boat have a fixed postal address that you are credit searched to, or do you have a separate land based address?

The_J

You can buy a BTL as a first time buyer. Only with a select few banks.

You aren't looking for a BTL though, you are looking to buy a home for a dependent relative. This can be done on a residential basis.

The problem you will encounter is that the deposit is coming from the person who will be living in the property but not named on the mortgage. Do you have your own savings (you must do living on a boat with 55k income)? Use that and then perhaps your grandmother can give you that money. Be wary of IHT liabilities.

You need to speak to a broker.

zzzLazyDaisy

Also warden controlled retirement places tend to have high maintenance charges and a lot of restrictions on who can live there. They can also be extremely difficult to sell. So if/when something happens to your grandmother (sorry) you could find yourself with a place costing money that you can't live in bec ause of age restrictions, you can't rent out because of lease restrictions and you can't find a buyer for.

Dekazer

This site really is wonderful, only a couple of hours and already very useful replies

@Dave Ham, yes, fully residential and therefore (to all intents and purposes) the same as living on land. The only confusion arises when asked if we're homeowners - we own the boat but rent the mooring...

@The J - very helpful, thank you for your answer. It seems that it's possible in theory, and it's worth speaking to a broker. I have a list of reputable ones nearby, but wa reluctant to do it if it'd be a complete waste of time. Thanks.

Thanks also for the comment about inheritance tax - again, more research needed.

@xxxLazy Daisy, again, thank you. I think my main concern at the moment is making sure Grandma's OK, so yours is timely comment. I have been so hung up on the mortgage thing that I've not got much further with the property issue. The charges are fine, but I shall certainly look into the T&Cs and into how healthy the market is for these sorts of flats. As we're in London I tend to assume that things will sell - at the right price of course - reasonably swiftly. I'll do some further research.

Thanks again all,

Deks

kingstreet

AFAIK warden-controlled social housing is only available to owner-occupiers. The OP won't be able to purchase it as he/she plans.

Research this before wasting time worrying about mortgages.

Dekazer

@kingstreet - Thanks for your comments. We did speak to one development where they were happy with the family's idea to buy a flat for my grandmother, who doesn't have the means to buy it for herself.

The place we spoke to, the only restriction was on the age of the resident, rather than their ownership status. Thanks for your comment though, clearly they're not all the same.

It's a bit chicken and egg isn't it - sometimes it's better to do a very quick feasibility study on all aspects rather than in-depth research on one, otherwise you can later discover you've wasted a lot of time.

While I had received the impression that the mortgage issue was a deal breaker, if it's feasible, then I'll do some more in-depth research on other potential sticking points

PS, isn't "social housing" council or housing association housing, which would be rented anyway?

The_J

Saleability in the future is an important consideration but this country ain't getting any younger so if it's an age restriction only, and it's a nice place, I think it could be a worthwhile purchase.

Mrs_Z

I think your idea is bonkers. Why would you want to burden yourself with a place that it potentially very difficult to sell and has high service charges? Equally, you need to find out how a BTL lender would like your suggestion that you'd let the property to a relative and not charge any rent (!) Usually for BTL properties the rental income must be 125% of the mortgage payments. BTL is a business, not something you do as a favour to your relative.

Have you checked out what local housing associations have on offer? Sometimes there are no waiting lists at all for sheltered accommodation and many even allow pets. And if I'm not wrong, I think your grandmother could even claim for housing benefit if she came to struggle with her rent at any point (depending on her savings of course).

Dekazer

All comments welcome, so thanks too to Mrs Z, although your manner's a little blunt.

We never had any intention of charging rent, because we don't see it as a business, just an alternative to putting our considerable disposable income into ISAs and savings accounts. ATM we save over £1000 per month, at pretty rubbish interest rates.

Our original idea was to put our money into an asset instead, which would also help my grandmother live more securely into her old age. She's in her late 70s, so it wouldn't be forever, and we would hope at least to recoup our investment. It would mean my grandmother could live a better quality of life for her remaining years. The ONLY reason we started talking about BTL was because the bank said we couldn't get a normal mortgage unless we lived in the property, despite paying the mortgage ourselves and not charging rent. Funny old world we live in

One day we might be more interested in BTL-as-a-business, if we continue to live on our boat for the foreseeable future, but not yet... At this rate, we'll be able to buy somewhere for cash by the time we want to move back onshore.

kingstreet

Warden controlled housing of the type you are discussing tends to be provided by charitable trusts, such as Bethh Johnson. They have taken on the title "registered social landlord" and this is why I use the social housing tag, albeit only loosely.

I'm not familiar with builders/developers taking on such a role. They would normally build for such providers, or sell such property to the HAs, rather than making them available directly.

I would certainly expect the lease to such property to specifically prohibit sub-letting.

Here's a link to Housing 21's ownership page;-

http://www.housing21.co.uk/housing/buying-your-home/

for you to read further.