can you.......?

melj16

Is it possible to allow a family member to live in a property that I have mortgaged, or would this have to be BTL?

I know if it were a normal rental then it would be buy to let, but wondered if it was different for family members (sister)

any advice please?

Thanks

ACG

Its a regulated BTL. not many lender do these though.

melj16

hmmm.....what about intending to rent out current property and buying another one for myself? Doesnt really matter whether my sister lives in current one or new one (they are opposite each other in same street)

holly_hobby

You will need consent to let from your current lender - but given that you're only moving across the street, I would be doubtful this will be given, as it is intended for accidential landlords (ie those displaced through work etc, and unable to sell their property whilst they move out to the area).

So, you're back to the regulated buy to let, whether you purchase your new property with it, or remortgage your current home onto a BTL, and purchase the one across the road with a standard residential mortgage.

Regulated buy to lets are required where the property will be more than 40% occupied by a family member(s), and what it means to you is that affordability is based on your earned income (taking into account all other commitments and mortgage/s), and not rental reciepts (as with a standard BTL) - which may or may not be an issue - but there are lenders whom do operate in this market.

The only way around this would obviously be if Sister shares the property and rental with 2 other unrelated individuals (ie to take her occupancy share under the pivotal 40%), but then you will have to locate lenders whom are happy with multi tenants not being 1 family unit (so you're looking at those lenders whom will accept a first time landlord with a HMO arrangement).

So, depdending on several factors, there are solutions, and given the complexitity of the matter, you will need a broker to asssit.

Question .... why can't sister buy her own home ? Or is this about her being in reciept of HB, which you would rather keep in the family, if you become her landlord instead ?

Anyhoo, if you need anything more pop back
Hope this helps

Holly

melj16

thanks for the reply hollie

My sister is 19 year old single mam, currently living at home with my mam. I want to be able to help her i.e trying to buy somewhere for her to rent from me (which HB benefit will pay). I will be taking less rent than what I'd be able to get from another tenant, but want to help her out.

what risk are involved with not asking for permission to rent out from my current mortgage provider......I would be getting mortgage from different lender for second property. (not saying this is what i am going to do, but just curious as to how they would find out and what action they would take, would they demand full payment of the mortgage amount?)

I read online that to include rental income as part of my income for assessing affordability, it is possible to 'intend' to rent out my home, and a letter from letting agent stating expected income, will be sufficient to evidence the rental income.


Sorry i'm going from one question to another here....

Dave_Ham

You are effectively trying to circumvent the system and unlikely to happen, see variables below:

• Many local authorities have an issue for a council tenant to be in a property of a relative
• If you suggest this will be a second property for you, the lender is highly likely to have a condition in the mortgage to satisfy the first one prior to completion
• Furthermore the fact you ask about rental income being included (which is a no go by the way) makes it further complicated if you cannot afford two mortgages

There are dependent relative mortgages out there, although with strict criteria.

melj16

thanks for the reply Dave Ham


Sounds like too many rules. I think i will be better off avoiding this situation.....oh well, was trying to help my sister out but looks like a no go! nevermind

Dave_Ham

Not saying it cannot be done, moreover very difficult.

First stop is ask local authority, if they are happy with arrangement then I would suggest you to chat through your situation with a broker who will quickly determine your options (if any)

Good luck

Annisele

melj16 wrote: »

I will be taking less rent than what I'd be able to get from another tenant, but want to help her out.

That sentence makes your plan look like a "contrived tenancy" (google for more details).

If you'd give your sister more favourable terms than you would give other tenants - eg lower rents - then it doesn't look like the tenancy is on a commercial basis. That makes it extremely difficult (probably impossible) for your sister to claim housing benefit on the property.

Even if you charged market rent, it would still be difficult to show it wasn't a contrived tenancy.

holly_hobby

Ah, thought from the details it was a HB driven exercise.

Notwithstanding a debtate on whether DWP will accept the HB application ....

You'll struggle to find a BTL lender who'll permit DSS tenants full stop.

If you rent your current home to sister without consent to let of your existig lender (and notwithstanding the above re DSS funding the tenancy), then if they find out, there are various penalties and courses of actions they can take, but ultimately they can demand immediate redemption (repayment) of the mortgage, which means that you will have to find an alternative lender to remortgage to, or sell the property if you can't locate one, and given the variables we're talking about here - that would be unlikely.

And thats without the issues of sourcing a residential mortgage for the house opposite, where you will live (?), when you'll be telling your new lender that you won't be selling your current home, and it won'tbe rented either (as if you tell them it is, they will generally want confirmation the existing lender knows - and that will kinda blow your cover !).

And that means that your salary (even if for some mad reason the new lender accepted the business), would have to cover both mortgages.

I could go on with more issues, but hopefully the above is enought to illustrate that this is really a no-go, given the current parameters we're trying to work within.

Solution - if Mums house is overcrowded with sisters and babe, then she should be quite quickly housed by the the LA/via Housing Assoc.

Sorry this won't be what you want to hear ..

Hope this helped in any event .... and it was nice that you wanted to help your Sister & Mum.

Holly xx

Dan-Dan

We get to pay your 2nd home mortgage for you ?

brilliant , sign me up !