housing benefit / buying a "cheap house" to rent out for income...?

wayne0

hey guys,..

im not sure where this would stand...

but: yesterday or the day before, somebody linked to some houses that cost like 13 grand to buy ... (13,000) but they are up in north yorks etc... which is obviously out of the way. and so on...

but, then i mentioned this to my wife...

her dad would actually be interested in investing some money in some of these cheap houses to rent out ... (obviously, need to investigate as to why they are so cheap. is there work etc, is it worthwhile will we be able to rent them out etc)

and has actually said to us that if we wanted to he would actually loan us the money to buy some houses as an income for us...

ive never been a landlord etc, but am always willing to put my hand to something - so could learn...

the problem though: we currently claim housing benefit etc

if he did loan us money, to set up a "business" of properties how would this effect a claim for housing benefit.. - would they expect us to move into one of the properties we "own" despite working 200 miles away from them, or would it be considered as "capital" and therefore £ for £250 deductions or ?

i knew a few people who rented out properties in birmingham and claimed HB etc (but they were owned by parents etc) - but we are looking into actually "setting up a business" doing this... (obviously we will look into that) but perhaps you guys would be able to offer some advice on what effect this might have... whilst setting up etc... would a council see a loan arrangement lke this "a good investment" to help ourselves off of the system... or would they cut all ties with us?

shegirl

Either way, if you done this the rental income would be used in calculations.

I'm pretty certain you would lose your housing benefit. I believe you can't get it if you own a property unless there are certain circumstances and,even then, it would only be short term.

It probably would be deemed as capital.

Also,as I know you've been posting on the child support board re maintenance you have to pay, don't forget that the income from this would also be taken into account.

You may want to check the conditions attached to purchase of the properties also. I know there was talk of some going very very cheap a while back but they came with the proviso that you had to live within the house yourself for a minimum period of five years or something.

wayne0

the property would be owned by my wife, and profits would be hers as it would be a project for her to work on from home (she wants to get back into work, and once our lil girl starts nursery in jan it will give her the opportunity) ... and i would be happy with this to be used in calculations (and as her income wouldnt be used in calculations for CSA, only my income from work - however, this is something we would clarify before the "move" anyway...)

the conditions etc are cool.... and obv are some of the things we would look into - there are lots to look into...

the housing benefit thing to me seems that if i own an house: why cant i live there... but then the sensible part of me thinks "if i work here... and only get some of my rent paid etc... and am trying to increase my income using a loan..."

i guess it might be worth a trip to housing office monday / writing an email to query this etc for a "from the horses mouth" response. however, then we have the universal credits coming in soon...

also , most of these houses we have seen state "no upward chain" - this would imply that there are no conditions, right? or?

for 13 grand though, i might be inclined to buy one, and move (it would be cheaper to pay back a 13 grand loan over 5 years, than the rent im paying (interest free might i add - 220 a month...) but the only problem being finding work...

my rent in stratford is 625 / month on a lil 2 bed...

however, the distance from my son, would be a big cripple... so :P - theres always that to consider in a move

shegirl

wayne0 wrote: »

the property would be owned by my wife, and profits would be hers as it would be a project for her to work on from home (she wants to get back into work, and once our lil girl starts nursery in jan it will give her the opportunity) ... and i would be happy with this to be used in calculations (and as her income wouldnt be used in calculations for CSA, only my income from work - however, this is something we would clarify before the "move" anyway...)

the conditions etc are cool.... and obv are some of the things we would look into - there are lots to look into...

the housing benefit thing to me seems that if i own an house: why cant i live there... but then the sensible part of me thinks "if i work here... and only get some of my rent paid etc... and am trying to increase my income using a loan..."

i guess it might be worth a trip to housing office monday / writing an email to query this etc for a "from the horses mouth" response. however, then we have the universal credits coming in soon...

also , most of these houses we have seen state "no upward chain" - this would imply that there are no conditions, right? or?

for 13 grand though, i might be inclined to buy one, and move (it would be cheaper to pay back a 13 grand loan over 5 years, than the rent im paying (interest free might i add - 220 a month...) but the only problem being finding work...

my rent in stratford is 625 / month on a lil 2 bed...

however, the distance from my son, would be a big cripple... so :P - theres always that to consider in a move

You started by saying 'us', 'we' and 'I' now it's your wifes venture

I take it you're on CS2 then. If a joint venture I'm not sure if there is a variation applicable on CS2 to look into other income from property ownership that isn't declared,but there quite probably is. Obviously,really, it should legally be joint ownership - you never know what will happen in the future.

No upward chain just means the vendor doesn't have to worry about finding something else for themselves.

It would be better getting the info you need from the horses mouth but I do believe it will cease. If it didn't (and that's a huge if) then the rental income would be classed as income for benefit calculation purposes anyway.

How far from your son would it be?

wayne0

middlesborough area to oxford... quite a distance, otherwise i would happily move myself - its not a trip you could sensibly make in a day collect, then return etc, perhaps a weekend/week visit, but day contact would cut

i used the term we as for HB it would be considered as an income as a couple... as my wife would be doing it (i work full time, and would continue to do so)

i would be happy for rental income to be treated as income, even if we say a "sensible" 80 quid a week, then this is more than our housing benefit... and we would be able to pay the loan over a more flexible term than five years (i used five years as guide to how cheap the houses are...)

obviously for "business sense" there will be time the property is empty / repairs / etc - but thats something else to look into...

myself wrote:

and has actually said to us that if we wanted to he would actually loan us the money to buy some houses as an income for us...

true, i used the term, we , us, etc... we are married, so obviously, this income would be for us, but my wife would be doing the work etc... - therefore her business and income... and more specifically - her parents loaning the money...

but our thoughts are that if we buy a few in the same area, when it comes to our kids being of age, we would be able to gift them an house to set them up - and should my son from prev relationship not want to live there he could feel free to sell it and invest it wisely in another property / suitable venture etc (obviously, we wouldnt be happy for any of our kids to sell up and waste the cash on a car or w/e)

Obviously,really, it should legally be joint ownership - you never know what will happen in the future.

im guessing you mean so i have some legal stance if my wife and i split? - legally i do by default: 50/50 but the propery would most likely be registered under a company name...
and set up as a proper business... - which the may effect the gift thing etc... but thats something a tax advisor would advise on at the time in question...

my wife used to work in housing in indonesia, an her family still do... so its something she is used to working with (although uk law is different)

and obv : i will and do always provide the best i can for my kids, and the fact is, if my ex wants a slice of a business my wife will set up, dont you think thats unfair, considering my wife supports my son as if he were her own, and we always will do the best we can.

shegirl

wayne0 wrote: »

middlesborough area to oxford... quite a distance, otherwise i would happily move myself - its not a trip you could sensibly make in a day collect, then return etc, perhaps a weekend/week visit, but day contact would cut

i used the term we as for HB it would be considered as an income as a couple... as my wife would be doing it (i work full time, and would continue to do so)

i would be happy for rental income to be treated as income, even if we say a "sensible" 80 quid a week, then this is more than our housing benefit... and we would be able to pay the loan over a more flexible term than five years (i used five years as guide to how cheap the houses are...)

obviously for "business sense" there will be time the property is empty / repairs / etc - but thats something else to look into...


true, i used the term, we , us, etc... we are married, so obviously, this income would be for us, but my wife would be doing the work etc... - therefore her business and income... and more specifically - her parents loaning the money...

but our thoughts are that if we buy a few in the same area, when it comes to our kids being of age, we would be able to gift them an house to set them up - and should my son from prev relationship not want to live there he could feel free to sell it and invest it wisely in another property / suitable venture etc (obviously, we wouldnt be happy for any of our kids to sell up and waste the cash on a car or w/e)


im guessing you mean so i have some legal stance if my wife and i split? - legally i do by default: 50/50 but the propery would most likely be registered under a company name...
and set up as a proper business... - which the may effect the gift thing etc... but thats something a tax advisor would advise on at the time in question...

my wife used to work in housing in indonesia, an her family still do... so its something she is used to working with (although uk law is different)

and obv : i will and do always provide the best i can for my kids, and the fact is, if my ex wants a slice of a business my wife will set up, dont you think thats unfair, considering my wife supports my son as if he were her own, and we always will do the best we can.

I wasn't specifically meaning split, no

I think it's lovely to be considering your kids future in this too,a nice way to help set them up in life.

I have no idea whether you'll end up going ahead and how it will pan out, but good luck with it

aggypanthus

Its hard to imagine what kind house 13k will get you, must be in a run down area, if so check there will interest from prospective tennants. Ask rental agent in that area. can we see them?

wayne0

aggypanthus wrote: »

Its hard to imagine what kind house 13k will get you, must be in a run down area, if so check there will interest from prospective tennants. Ask rental agent in that area. can we see them?

it was links from this area, but search rightmove for middlesborough, theres TONS of houses for less than 15k... as with plenty of other areas...

obviously, this is my thought too... is it worth the investment? but then, lots of people sell up and move to london to find work... or w/e...

obviously, like i said, lots to look into, but ive lived in some "rough" areas where houses were about 50k to buy but the actual streets were good and no different to where i live now (reputation thing)...

but for that kinda money, its worth for ones self? hell a car can cost more than that? and so can a static caravan home... lol (my friend lives in a "mobile home" that cost her near 50 grand to buy. and she has to pay ground rent etc too)

LunaLady

Have you looked at average rents in Middlesborough?

real1314

Why are they so cheap?

Lack of demand. Simple.

princessdon

Wayne

I live (nearish) to the Boro. I have enough savings to buy many homes there and still have a rainy day. I am a landlord (albeit accidentally and not for profit) of 2 additional homes.

I wouldn't touch them with a bargepole and you really need to ring the EA as I think the top one was a shared ownership. That said, for the area you can get some 3 beds in rental condition for approx £30-32K.

Unless you are local enough to take each call out or have a good agent who won't take it all in fees, then other than investment to resell when market picks up, it may not be the money maker you think.