In-laws buying house and renting to us

BeckyC2be

(this is also in the mortgage and endowments page, didn't know where it would be best!)

Hi all, I was wondering if anyone could give me some advice.

Me and my husband are currently renting and would like to get on the property ladder, we were going to borrow a deposit from the in laws in a couple of years to do so.

However, they have been talking and have offered to buy a house, or at least put a deposit down and then rent it to us (basically us just paying the mortgage).

We would then in 5/10 years or so sell the house and split the proceeds somehow.

What I a wondering is, what is the best way for them to do this, in terms of mortgages and such. Would it have to be a buy to let mortgage?

I'll probably be back in ten minutes when I've thought of sixteen more questions!

Thanks in advance

P.s I know a lot of people wouldn't recommend doing something like this with family members but we have a terrific relationship and things going wrong aren't a worry.

drummer_666

get them to 'gift' the deposit to you? that's what my folks did for me

BeckyC2be

They are buying the house now as we don't earn enough to get a decent mortgage, I was just wondering the best way to go about it for both parties. What you suggested was what we had intended to do, but this sees us out into our own house quicker

G_M

Putting aside the whole question of the relationship/trust (will they sell to you in 5 years or change mind? How will they price it? etc)...

they have to accept they will be landlords. This comes with legal obligations.

They'll need a BTL mortgage (costs more than domestic).
Their lender will have to agree to renting to family (some don't).
They'll need to get annual gas certificates etc
They'll need LL's insurance (costs more than domestic)
etc Read this post.

And, of course, when they sell/transfer the property to you there may be Capital Gains Tax to pay since the property will not have been their primary residence.

BeckyC2be

Thankyou G_M, I suppose my other question now is - is there anyway around this (legally of course)

The plan isn't to sell the property to us, but sell it to someone else then take their deposit back and somehow split the rest - just to give us some sort of deposit without actually saving! They just want to see us on the property ladder and out of renting. More to do with the rental market around here rather then actually renting.

I just want to make it as easy for them as possible.

G_M

Of course there is a legal way to avoid the responsibilities of being landlords.

Don't be landlords!

I don't really see the point of this. Why don't they just give you the deposit now. You invest it in, say, the Emerging Markets, for 5/10 years, then sell your investment and buy yourself a property.

BeckyC2be

Basically it's so we can get into a house now. They are doing a really nice thing and I was just trying to make it easier for them.

I'll pass along the link you sent me (I've had a quick look) and send them to a broker! Thank you for the advice.

casualwalks

They will also have to pay tax on the rental income.

mildred1978

BeckyC2be wrote: »

They are buying the house now as we don't earn enough to get a decent mortgage, I was just wondering the best way to go about it for both parties. What you suggested was what we had intended to do, but this sees us out into our own house quicker

In your first post you said you'd be paying the mortgage. How will you afford that then?

This scenario is a disaster waiting to happen.

Yorkie1

What happens if, in 5 / 10 years' time, the house hasn't appreciated in value and doesn't release enough money for a deposit?

Or if your income hasn't gone up enough to get a mortgage then, so you're back to where you are now?

Or if they have financial difficulties and have to sell the house early?

Yorkie1

Actually, I see you've double posted this and got all your answers on that thread.

In future, OP, please don't duplicate threads. It wastes people's time and efforts when you've already got answers - which may or may not be consistent - on an identical thread elsewhere.

https://forums.moneysavingexpert.com/discussion/4138895