Buy to Let - family

Brock_and_Roll

Dear MSEers,

My mother is currently renting a property whilst she is waiting to sell her business.

In a nutshell she would love to buy this property as it's perfect for her but she is unlikely to receive the full proceeds of the business sale for a year or two [having to provide a vendor's loan to the buyers]

In the meantime her landlord has decided that he needs to sell the property for valid personal reasons and she will need to move out in a few months.

So it occurred to me that I could buy the property as a buy to let then sell it to her down the line. Neither the deposit not the rent/interest cover are as issue, but I am aware that many lenders will not do BTLs involving family members for obvious reasons.

I presume there is a question is the mortgage application form somewhere?

Does anyone know lenders that will look at this or have any bright ideas?

Cheers

kingstreet

You may find the best route for this is as a second property for a relative to live in, rather than a regulated BTL.

I don't know who is left offering the latter, but TBH they will base lending on your income and outgoings, rather than any rent payable. That's the same as the second property route.

You may need a higher deposit than usual, but no more than for the BTL route and as you will own the property, any growth will be subject to CGT if above your annual gains exemption.

Brock_and_Roll

kingstreet wrote: »

You may find the best route for this is as a second property for a relative to live in, rather than a regulated BTL.

I don't know who is left offering the latter, but TBH they will base lending on your income and outgoings, rather than any rent payable. That's the same as the second property route.

You may need a higher deposit than usual, but no more than for the BTL route and as you will own the property, any growth will be subject to CGT if above your annual gains exemption.

Many Thanks Kingstreet.

I do not have the income to support a "second home" and my brother who is wealthy is resident abroad so not on electoral role etc in the UK. However there are ways and means of sorting this within the family.

If I were to put down a 50%+ deposit do you think there is someone out there that would look at this either as a BTL or a second home?

Cheers for your help.

buglawton

A straight BTL mortgage will probably not work though I believe there are one or two products out there that will allow family to rent if there was a very high deposit involved.

BTL mortgages are not regulated. But the lenders do set rules on them which can be quite strict in their own way. You may find there are other reasons a BTL would not be accepted to due to the property type or an attached lease or shared freehold situation.

I would rarely recommend going to a mortgage broker for well organised people, but in your special circumstances maybe find a good broker who knows the specialist products.

Brock_and_Roll

Thanks buglawton.

I think you are right that we do need broker advice.

As it happens my mother is already renting the place on a normal fully commercial shorthold tenancy and this would continue if we were to buy the property - however I understand why many lenders would disregard this due to blood being thicker than water etc.

betmunch

buglawton wrote: »

BTL mortgages are not regulated.

This type of BTL mortgage IS regulated, and thats the problem.

I'm with Kingstreet though, since MMR I cant think of a lender that will still do them off the top of my head.

GMS

buglawton wrote: »

I believe there are one or two products out there that will allow family to rent if there was a very high deposit involved.

BTL mortgages are not regulated.

Why not name the lenders for these products to assist the OP?

As has been pointed out, BTL when renting to family is regulated.

Brock_and_Roll

Sounds like some type of unregulated agreement is needed.

I am a banker myself so I know that regulations, AML checks etc increasingly make life like swimming through treacle for all but the most straightforward of transactions. Anything non-standard is just to much darn hassle after all the costs and aggro involved relative to the potential income.

I work on the corporate side but it breaks my heart to have to turn away so much potentially good & interesting business with strong credit covenants!

buglawton

GMS wrote: »

Why not name the lenders for these products to assist the OP?

As has been pointed out, BTL when renting to family is regulated.

I am not trying to be a mortgage broker, just suggesting that in this case, use one.