Buy to Let for Relative

pseudopensioner

My daughter and I are in the process of doing what the OP wants to do.

I have provided the deposit and she has been granted a mortgage with Abbey.

Can't comment on the housing benefit availability because it isn't applicable in my circumstances.

Hope this helps.

maypole

I bought a house on an ordinary mortgage, then later decided to let it with the lenders permission. I rented it to relatives and that was no problem with the lender, as long as the rent covered the mortgage and it did.

I think the problem is, the council may not let you rent to relatives on Housing benefit. Nothing to do with the mortgage lender.

SaveMe2

silvercar wrote: »

AFAIK there are only one or two lenders who will let you do a BTL with 100% mortgage. The rates may therefore be uncompetitive..

100% interest only I hope to have a 15% deposit

silvercar wrote: »

Putting the BTL in your wifes name won't help reduce CGT. You only get CGT exemption on your principal private residence. A married couple can only have one PPR. You can't claim your wife lives in the let property, especially if its got a BTL mortgage and a tenant!

The general advice is to put it in joint names so you can use two CGT allowances (worth £9,200 each) when you sell...

Great advice didn't think of putting it in joint names.

SaveMe2

SaveMe2 wrote: »

100% interest only I hope to have a 15% deposit



Great advice didn't think of putting it in joint names.

Hows does this work with Income Tax. I'm a basic rate tax payer and my wife pays no tax (at home with kids). Could we use her allowance for income tax if it was in joint names?

Regards.

SaveMe2

I have just spoken to our local council and re; housing benefit and as long as it is a commercial arrangement i.e. tenancy agreement and proof that you are charging a reasonable rent they are happy to allow a benefit claim.

The only real question now is whether a lender would go with this arrangement. From some of your comments it seem this is so.

Great!.. I take a look in the local papers to see what is available and how much!.. Thanks for all your contributions.

payless

midas_pooch wrote: »

Could you please ignore the user 'Poppycat', he/she has been rude and agressive to me and I've only just this evening joined the forum. Unfortunately I've had to report them, just because I don't know who they are or why they've taken it upon themselves to be so unhelpful. I don't suppose their response helped your query one bit! Take care

NO
This sites has rules , and CARLA/ MIDAS POOCH has ignored them by advertising

silvercar

When you sell a property that is not your PPR there is a CGT liability.

When you rent out a property there is the potential for an income tax liability. Generally speaking you can offset the costs of the property (insurance, lettting agent fees maintenance and mortgage interest) against the tax liability. I would have thought that with an 85% mortgage there will be little profit to be taxed on.

If you do have taxed to pay, on a jointly owned property it would be split between you.

SaveMe2

pseudopensioner wrote: »

My daughter and I are in the process of doing what the OP wants to do.

I have provided the deposit and she has been granted a mortgage with Abbey.

Can't comment on the housing benefit availability because it isn't applicable in my circumstances.

Hope this helps.

Very interesting! On the back of your comments I contacted the Abbey who said they could only do this as a 2nd resdiential mortgage and not a BTL. Because she was a direct member of my family. This would also scupper any chances of HB.

silvercar

I can see the lenders concern. If your mother was unable to pay the rent you would not evict her, so it makes sense to make a lending decision based on affordability calculations.

Whether or not a council would give a relative HB would depend on the council not on how the funding was arranged.

Ems*Honie

I rent to my sister and her family, we used a broker to find the best deal with a lender who would lend to btl/relative. We have a formal tenancy agreemant, and the rent is not mates rates.

The one piece of advice I would give is to remember that if your mum and you should ever have issues/ fall out then it does put you in a difficult position, you would have to be hard enough to evict or take court if needs be. See now the way I see it is, if they dont pay the rent/ ruin the house, they abused the relasionship anyway. I'm sure it wont happen in either of our cases, but you have to think about it.

Remember to account for your buldings insurance too, and decide who will pay the council tax.