Renting a property to daughter and sharer

paulpud

My partner and I currently have around 95k in a savings account and following by the recent interest rates cuts we've decided to try to do something else with it. We did consider putting it into our pensions, which would probably be the safest/most profitable thing to do, but we are now considering another option.

My partner's 28 year old daughter is currently living with her father, his partner and her brother; relations are strained so she is desperate to move out and rent a place but she is not particularly well paid and would struggle to find the money for a deposit, advance rent, fees etc. so we are considering buying a 2nd property to help her out.

The idea is for us to get a place with 2 decent sized bedrooms so initially she can move in and pay us a low rent that she can afford whilst she finds her feet and then find someone to share the property with her, the additional incoming rent hopefully making it a financially worthwhile exercise for us.

Does this sound like a workable idea and, if so, what would be the most efficient way of going about it? Would it be better for my partner's daughter to rent out the room herself under the Rent a Room scheme and use the rent to subsidise a higher payment to us, or is it better to do it a bit more formally and let her share a proper tenancy agreement with the other person so they both pay rent to us?

Also, is it easy enough to find people to share the property - are there websites out there geared towards this kind of arrangement?

This would be the first time we'd ever done anything like this so, even though I've done a fair bit of research, we're still a bit wet behind the ears and hope that those more with some experience could enlighten us as to any likely pitfalls with this kind of arrangement.

Guest101

It's simple (assuming she isn't claiming any housing benefits as she wont be entitled) you rent her the whole property for a fixed rent, she can then get a lodger as and when required.


Also find out about your obligations.


There's no benefit to you to having a stranger named on the tenancy

FBaby

What you need to take into consideration is that you will be her landlord, so as such, even though she is family, you will have legal obligations.

The other thing to consider is what will you do if things don't go as planned? What if you fall out and she stops paying rent? What if she loses her job and wants to claim benefit? What will happen if she gets a distant friend to rent the other room and they trash the place?

Unfortunately, such things do happen and when they do, you wish you would have consider the implications at the time.

G_M

paulpud wrote: »

Does this sound like a workable idea and, if so, what would be the most efficient way of going about it? Would it be better for my partner's daughter to rent out the room herself under the Rent a Room scheme and use the rent to subsidise a higher payment to us, or is it better to do it a bit more formally and let her share a proper tenancy agreement with the other person so they both pay rent to us?

Also, is it easy enough to find people to share the property - are there websites out there geared towards this kind of arrangement?
.

"better for my partner's daughter to rent out the room herself under the Rent a Room scheme" Yes.

Would you be getting a mortgage? If yes,
* it would be a BTL mortgage
* could you afford to pay the monthly repayments if she lst her job of for ant reaso did not pay the rent?
* would you evict her if tht happened (hard with family!)?

Read:

* New landlords: advice, information & links

from

* Tenancies in Eng/Wales: Guides for landlords and tenants

paulpud

I don't think she'll qualify for any kind of benefit and I did think that the lodger arrangement seemed the most straightforward.

There won't be a mortgage involved but we know we'll be liable for the 3% stamp duty and income tax on the rent, and about some of the expenses we can get tax relief on.

I have had conversations with my partner about the possibility of things going wrong and, although we think it would work ok, we will want to put a proper tenancy agreement in place so that some things are covered to avoid any dispute. She is 28 years old, a hard worker, quite sensible and lives reasonably independently (albeit in her father's house) so I'm not too concerned about the place getting trashed and we'd have the final say over who she shared with, who would most likely be sourced through a website or advert.

Non-payment of rent is probably my biggest concern, admittedly completely without foundation, but I have thought about the situation that it would create with my partner. I think we'd stop short of evicting her, but I don't think my partner would let it pass easily.

Guest101

paulpud wrote: »

I don't think she'll qualify for any kind of benefit and I did think that the lodger arrangement seemed the most straightforward.

There won't be a mortgage involved but we know we'll be liable for the 3% stamp duty and income tax on the rent, and about some of the expenses we can get tax relief on.

I have had conversations with my partner about the possibility of things going wrong and, although we think it would work ok, we will want to put a proper tenancy agreement in place so that some things are covered to avoid any dispute. She is 28 years old, a hard worker, quite sensible and lives reasonably independently (albeit in her father's house) so I'm not too concerned about the place getting trashed and we'd have the final say over who she shared with, who would most likely be sourced through a website or advert.

Non-payment of rent is probably my biggest concern, admittedly completely without foundation, but I have thought about the situation that it would create with my partner. I think we'd stop short of evicting her, but I don't think my partner would let it pass easily.

To be honest a tenancy agreement is the least of your worries, there's only a few things which it can include which would typically help you in a family circumstance. ( IE you're unlikely to take her to court) - most grounds for eviction are statutory anyway. The main point is the duration of the tenancy (can be any length) and the rent amount.

FBaby

Unfortunately, veting someone is not assurance that things can't go wrong, otherwise, there would be no landlord taken for a ride by tenants who stop paying/destroy the place. People change, people are different to what they say they are etc...

Also, benefits might not be an issue now, but what if she lost her job/became ill?

Not saying that you shouldn't consider it, but you need to be careful about the implications.

TBagpuss

Having no mortgage would simplify things - I believe that many buy-to-let mortgages restrict who our can rent to and family members may not be acceptable.

Make sure you read up on your obligations as a landlord, as they all apply even to a 'friendly' family arrangement, including obligations about things such as deposit protection, gas safety etc.

Have a formal tenancy agreement and make sure that you also talk to her and make sure that you are on the same page in terms of expectations, in particular, that she understands that this is an investment for you and that she will need to be as conscientious about paying rent etc as if she were renting from any other landlord, and that you may need to sell the property at a later date, or to increase the rent.

The advantage of having a second person on the tenancy agreement might be that you would find it easier to separate ‘family’ and ‘landlord’ if one part of the tenant was a non family member, but it would be more complicated in terms of changes to the agreement if/when a tenant wanted to leave,. It may be simpler to arrange with your daughter-in-law to rent to her, let her know she can rent out a room and let her make the choice about whether to do so or whether she can afford the rent alone.

PersianCatLady

assuming she isn't claiming any housing benefits as she wont be entitled
That isn't always true, people can and do rent housing to family members and still receive LHA but there is a lot of regulation to doing so.

Guest101

PersianCatLady wrote: »

assuming she isn't claiming any housing benefits as she wont be entitled
That isn't always true, people can and do rent housing to family members and still receive LHA but there is a lot of regulation to doing so.

It's incredibly rare, especially when it's a parent and child relationship.


OP already said they wouldn't evict, frankly housing benefit shouldn't be paid in such circumstances.

PersianCatLady

My partner and I currently have around 95k in a savings account
There won't be a mortgage involved
I am confused by these two statements and I just want to clarify that they are correct.


Are you actually going to be able to purchase a whole property without a mortgage for £95,000?


I only ask because where I live there is no chance at all of managing to do so but I do understand that in other areas of the country there are cheaper properties but I didn't know that there was much left for that price.