But to let for son to live in

Dan-Dan

Lol , Money does love a large pointless waffle

moneyistooshorttomention

One way or another - the DWP will be paying out for OP's sons accommodation if he becomes unemployed. It doesn't make a lot of odds whether its mortgage interest (because he owns the place) or rent (because he is renting somewhere). Either way - the DWP would have to pay out for his accommodation.

I doubt they would be paying extra if what they were paying was called "mortgage interest", rather than if it was called "rent" iyswim.

Dan-Dan

moneyistooshorttomention wrote: »

One way or another - the DWP will be paying out for OP's sons accommodation if he becomes unemployed.

He wont get a penny of HB if his landlord is a relative

theartfullodger

Dan-Dan wrote: »

He wont get a penny of HB if his landlord is a relative

Unless it is a normal, commercial, arrangement which this one sounds like it ain't...

There is nothing necessarily wrong or unlawful with a close relative being the landlord: Or for the tenant getting HB/LHA in such circumstances.. but it must be declared and normal commercial (ie evict if rent not paid...) and not "contrived" see.....
http://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member

Dan-Dan

Well there wont be by the sounds of it proof of any rent payments will there?

mlz1413

16confused wrote: »

Hello,


I am looking for some advice on what to do. I've read through some of the forums but still not sure what my options are. Any suggestions welcome. Hoping for some inspiration!


My son has savings I'm guessing this is over £20k by a later part of your post but is currently unemployed. again guessing this is short term, so 4-8 weeks at the end of each contract In the area that we live permanent jobs are difficult to find and so he has a had a number of rolling 6/12 month contracts to have saved so much he must work more than he claims JSA . I expect he will find work again soon from one of the interviews he has. However, these may well be 6/12 month contracts.


He has a deposit saved up that would cover a 15-20% deposit on a flat/house. I also have funds that I could lend/give him to help buy somewhere that could push his mortgage up to a 30%+ LTV.


The budget for the property is £120k - £150k. 20% of £120k is £24k, so £4k for fees and furniture leaves £20k deposit, so son needs to earn £29k pa (at 3.5xsalary) to get a mortgage on is own at 85% LTV

with your money £36k total deposit - £4k fees = £32k deposit, son needs £25k pa earnings and 75% LTV mortgage


So there deposit is taken care of his difficulty is getting a mortgage. He's approached lenders and they have said he'd need to have a permanent job. He could be waiting years for one of these to come up unfortunately.


We have come up with two possible options


1. I take his deposit and my savings and then use this for a deposit on a buy to let in my name. The cash each month will come into my account and will be taken by the lender. They would never know that I was letting it to my son.


Clearly if they did the checks and saw that I was receiving money from my son this would likely not be in the spirit of things and may be against their rules but how would they know?


This may not be possible? Also, the downside is that since I already own by house this would count as a second property and so I would be subject the 3% surcharge as there is no way I could complete before 1st April 2016.




2. I lend/give the funds to my son who buys a property on a buy to let.
My understanding is that as a landlord he would need to show that the rent covers 125-130% of the mortgage cost. We have had a good look locally and know what the local rental market is and think that if we fixed the interest rate for 2-3 years we could demonstrate that the rent would cover the repayments by the required percentage.


The difficult bit is that my son would then rent this to himself. The lender would have a big deposit and security over the house. Despite this I'm sure they wouldn't want him letting to himself.


When I have rented a property out the rent came into my account from the tenants and the mortgage went out of the same account to the lender. There was no relationship between the two.


If I were to buy on a but to let and then not rent the property out at all the cash would come from my savings and not from a tenant and so what would the difference be.




This is all pretty difficult but without a permanent job what other options are?
Is there anyway I could guarantee my son's mortgage payments?
He won't get a mortgage without a permanent job so what are the available options?


He's desperate to get tis own place and not be living at home but after many years saving for a deposit he doesn't want to go and spend it renting a place out.


Can anyone help?


Thanks in advance

Blimey there are a lot of people on here quoting fraud!
I've gone through and written in blue against bits of OP's post to try and understand, because it seems the son would have to have considerable earnings, way more than stacking shelves, to buy on his own.

The point about how will he pay the bills when he is between jobs is a really valid one as if you live in your own place you don't get housing benefit for 6 months.

Can your son look at buying with a friend or even 2 friends? A 3 bed terrace house maybe? If this is an option all the friends must sit down and decide how this will work when one of them wants to move out.

marliepanda

People are quoting 'fraud' because option 1 and option 2 are fraud.

Blimey you seem to have not read all the post!

mlz1413

A lot of them are quoting DWP / LHA fraud when OP has not suggested the son claims any benefits at all.

The OP is a newbie and we are asked to be nice to newbies, so I agree point out the flaws/fraud of their options just don't go running off accusing them of something they haven't asked or suggested.

theartfullodger

Being nice to people includes IMHO pointing out to them their danger of committing a crime: Pointing this out is to their advantage, surely, rather than leaving them oblivious of the danger? People have gone to jail for mortgage fraud (granted usually more extreme than this..)

Mossfarr

Dan-Dan wrote: »

He wont get a penny of HB if his landlord is a relative

This is not correct.