Can my boyfreinds Mum buy us a flat?

EmmaAbby

Hi all

I was just wondering if anyone knows if it's ok for parents to buy their son a flat if they can? I know this sound silly the way I'm saying it lol. But I ain't got a clue how it all works neither does my bf's mum.

She said she will do this and we just rent the flat and pay her back that way. If the money for the flat is paid out right we all be ok? As bf has not good credit rating.

thank u for ur time :j

Pixie5740

That depends, can she afford it? Does she have the cash to buy a property outright or will she need a regulated buy to let mortgage.

If she can afford it then the rent you pay her will be taxable income and capital gains tax could be due when she comes to sell the property.

HappyMJ

EmmaAbby wrote: »

Hi all

I was just wondering if anyone knows if it's ok for parents to buy their son a flat if they can? I know this sound silly the way I'm saying it lol. But I ain't got a clue how it all works neither does my bf's mum.

She said she will do this and we just rent the flat and pay her back that way. If the money for the flat is paid out right we all be ok? As bf has not good credit rating.

thank u for ur time :j

If parents are paying cash they can buy as many properties as they wish and let whoever they want live in them.

Parent must register with HMRC for self assessment to pay tax on the profit.

ognum

EmmaAbby wrote: »

Hi all

I was just wondering if anyone knows if it's ok for parents to buy their son a flat if they can? I know this sound silly the way I'm saying it lol. But I ain't got a clue how it all works neither does my bf's mum.

She said she will do this and we just rent the flat and pay her back that way. If the money for the flat is paid out right we all be ok? As bf has not good credit rating.

thank u for ur time :j

You post is a little confusing, your boyfriends mother appears to be buying herself a flat and then letting it to you. This simply means she is your landlord and needs to follow all the legal requirements of a LL and declare your rent for tax and pay capital gains tax when she sells.

However, if she is giving her son the money and the flat is in his name and then it is his flat. They could have a formal agreement to repay a loan. Your boyfriend will need to declare the source of funds when he buys the property. It will then be his property. His mother will need to live 7 years before the flat cost is free from inclusion in her estate and for CGT if she dies.

You need to be clear how this is going to work before entering into a purchase

agrinnall

If she doesn't have the money outright and will need a mortgage to pay for the flat then she will have to take out a Buy To Let mortgage (usually a minimum deposit of 25%) and the rent will need to more than cover the cost of mortgage repayments (often 125%). And the lender may not be happy about a BTL being let to a family member, which could restrict who will lend.

HappyMJ

agrinnall wrote: »

If she doesn't have the money outright and will need a mortgage to pay for the flat then she will have to take out a Buy To Let mortgage (usually a minimum deposit of 25%) and the rent will need to more than cover the cost of mortgage repayments (often 125%). And the lender may not be happy about a BTL being let to a family member, which could restrict who will lend.

That's why the first response by Pixie in this thread was referring to regulated mortgages which would be based on affordability instead of rental income. As it's a family member a tenancy agreement could be set up for twice the market rent and even fully declared for tax to secure a larger mortgage and an under the table cash payment transferred back so lending is done on affordability instead.

BTL mortgages are normally unregulated.

G_M

As others have said, you need to check:

1) is she 'buying boyfriend a flat' - ie giving/lending him the money and the flat then belongs to boyfriend? If so, is it a loan? Will there be a contract of some kind (see a solicitor) to ensure he pays it back or will she trust him?

Is he on any benefits? If so, ownership of a flat may well affect this!

2) or is she buying herself a flat (ie she will own it) and then renting it to him?

If she pays cash, fine. If she gets a (BTL) mortgage, usually this does not allow renting to family.

If she does buy it and rent it out to him, she will be a landlord - with many responsibilities (tax is one of them!). Read:


* New landlords: advice, information & links

TBagpuss

Also bear in mind that if she buys a flat and rents it to him, he is unlikely to be eligible for housing benefit to pay the rent.