Buy to let for daughter and children on no fixed income

Evidence

Hi,
I wonder if anyone has any advice on the following:
My daughter is divorced with 3 children, 7 years of age and under. She is currently at college. She lives in a mortgaged property and I help out with the mortgage every month. I put up the down payment and paid for upgrading the property. She is now finding it difficult with the mortgage and it has been suggested that she gifts it to me. The property I live in is owned outright and I have got a mortgage to buy her property at £86.000 which is the amount of mortgage left in the property. There is £50,000 equity in my daughters property of which her ex husband wants £25,000. If I buy the property and then let my daughter and her children live in it, can she claim housing benefits and pay me rent as this is a buy to let mortgage. She will have to complete her college and will not be working. Does anyone know if this can be done?

marliepanda

No for two reasons.

1. You can't get housing benefit on a house you previously owned (in the past five years I think)

2. It will be seen as a contrived tenancy. As you have bought it for her to claim benefits.

What will happen to her £25.000? That will stop her getting benefits.

GwylimT

Due to the equity she will have too much money to entitled to income based benefits, as the above has said you also cannot claim housing benefit on a home you have previously owned in the last five years.

Dunroamin

If she is claiming income based benefits (IS or JSA) then she should be able to claim SMI https://www.gov.uk/support-for-mortgage-interest

She would either need to arrange to switch to an interest only mortgage or, if the lender won't do this, she (or you) would need to find the capital part of the repayments.

Kynthia

Although it's possible to let to family when they claim benefits, it would be very unlikely in this case. It would almost certainly be a contrived tenancy in the council's eyes, plus there's her share of the equity. Was the property and equity not dealt with as part of the divorce? Maybe the CAB or MAS could give her free financial advice in order to help her survive as a single mother without losing her home?

BigAunty

See the Shelter website which has information for struggling homeowners on how to prevent arrears and repossession.

A lone parent with 3 children tends to get around £1300 per month or so in IS, child tax credits, child benefit, plus either zero or next to nothing in council tax - see the Turn2us online benefit calculator to check her entitlements.

Her student income may slightly affect this but the student income should give her a greater income overall - is she getting student income, does she qualify for a student loan?.

If she is separated and hasn't reached an agreement with the non resident parent, she can take him to the CSA and they will expect him to pay 25% of his net income to her and this won't affect her benefits, it will be on top of this.

She should also see a divorce solicitor because she might find that she can get a court order that guarantees her occupancy in the property until the youngest turns 18 - the husband will have to wait for the equity then.

How much is the mortgage? How much is her net income - benefits, child maintenance, student finance?

Your original plan will not work for the reasons specified above.

Other options include selling the property and moving into rented property (any capital above 6k will start to affect means tested benefits like IS and council tax benefit, housing benefit).

Also, she should look into getting a part time job or giving up college to get a job where she will only have to work 16 hours to qualify for Working Tax Credits if her income is low (say she earns £150, she might get £130 WTC - use that benefit calculator to check).

You can get WTC while being a full time student so she will have employment income, student income (some qualify for a parental allowance or 5.5k loan, too), child maintenance, income support, council tax benefit, child tax credit, child benefit, working tax credit and perhaps some free or heavily subsidised child care allowance.

Dunroamin

BigAunty wrote: »

See the Shelter website which has information for struggling homeowners on how to prevent arrears and repossession.

A lone parent with 3 children tends to get around £1300 per month or so in IS, child tax credits, child benefit, plus either zero or next to nothing in council tax - see the Turn2us online benefit calculator to check her entitlements.

Her student income may slightly affect this but the student income should give her a greater income overall - is she getting student income, does she qualify for a student loan?.

If she is separated and hasn't reached an agreement with the non resident parent, she can take him to the CSA and they will expect him to pay 25% of his net income to her and this won't affect her benefits, it will be on top of this.

She should also see a divorce solicitor because she might find that she can get a court order that guarantees her occupancy in the property until the youngest turns 18 - the husband will have to wait for the equity then.

How much is the mortgage? How much is her net income - benefits, child maintenance, student finance?

Your original plan will not work for the reasons specified above.

Other options include selling the property and moving into rented property (any capital above 6k will start to affect means tested benefits like IS and council tax benefit, housing benefit).

Also, she should look into getting a part time job or giving up college to get a job where she will only have to work 16 hours to qualify for Working Tax Credits if her income is low (say she earns £150, she might get £130 WTC - use that benefit calculator to check).

You can get WTC while being a full time student so she will have employment income, student income (some qualify for a parental allowance or 5.5k loan, too), child maintenance, income support, council tax benefit, child tax credit, child benefit, working tax credit and perhaps some free or heavily subsidised child care allowance.

You're assuming that the daughter's in HE rather then FE. As the OP says she's in college, FE is the more likely.

dimbo61

EX wants 50% of the equity and they have 3 kids! Wishful thinking