Buying off my Mum

isbllsmnr

I want to get on the property ladder and live in London. My Mum lives in Manchester and wants to buy-to-let in London. As house prices are so high here and her deposit isn't huge I suggested that she...

1. Sells her current flat to me for way less than estimated value but for an amount I can afford, which puts me on the ladder- she continues to live in the flat.
2. She then uses that lump sum to get a buy-to-let in London which I will live in and rent off her.
3. When we resell her flat we can make a profit and use that money to buy her a new house with a garden!

Does anyone know if this would work/if it's even legal?!

Guest101

There's alot at play here, but the two first points.

Her Flat - currently mortgaged? & Will you need a mortgage?

If the answer is yes to one or both or those, it's going to get tricky

Pixie5740

Both of you will need to get Regulated BTL mortgages if you are going to let to one another.

I'm not sure how lenders would feel about your mum gifting you a deposit (the equity in her flat) and then continuing to live there. You'd need to look into that.

Do the sums stack up in terms of rent and mortgage payments?

When you eventually come to sell either of the properties there could be Capital Gains Tax to pay.

Would it be possible for your mum to remortgage her current home and put the money towards a Regulated BTL in London?

Annisele

Pixie5740 wrote: »

Would it be possible for your mum to remortgage her current home and put the money towards a Regulated BTL in London?

That sounds to me like a much better way of going about things. It wouldn't work if OP's mum doesn't have enough income - but then OP's plan also requires her to have substantial income.

OP - can you give us any idea of figures? The approximate value of the two properties, how much cash you and your Mum each have, and how much you each earn?

isbllsmnr

Mum owns her flat so no mortgage.

Would we still have to get a BTL mortgage if I "lend" her my flat and she "lends" me hers? We are not actually renting at all I'm just allowing her to live in my flat and she is doing the opposite.

I reckon she would have to sell to me for around £160,000 so that I can afford it and so she has a big enough lump sum.

Hoploz

I don't think you'd be able to get a BTL mortgage if it isn't going to be actually 'let' as there's no rental income to cover the costs.

Could you not just get a residential mortgage?

xylophone

Your mother appears to have spare capital. As you have been hoping to buy a property, presumably you have savings.

Explore the possibility of a joint residential mortgage in London as tenants in common?

Pixie5740

Hoploz wrote: »

I don't think you'd be able to get a BTL mortgage if it isn't going to be actually 'let' as there's no rental income to cover the costs.

Could you not just get a residential mortgage?

I think the OP would find it difficult to get a residential mortgage for a property in Manchester when he/she is working in London and vice versa for the mother. Lenders wouldn't believe that they work within a commutable distance from home.