Buying house for son to rent

MaybeMaybenot

Hi, I have some money left to me in an inheritance and my son rents a flat which he will be renting for many years and thought that my money would be best spent buying a house outright and him renting from us. Apart from him not paying his rent, what other pitfalls do I need to consider? Many thanks for any help and advice you are able to give

lincroft1710

You become a landlord and have to pay for annual gas and electricity inspections. Any repairs and maintenance will obviously be your responsibility and will need to be done fairly promptly.

Fosterdog

A family fall out could be an issue, or if he doesn't keep things to your standards, not agreeing on decorating, maintenance and home improvements.

A relative of mine rented to his niece and her young family, the place was a tip most of the time despite her growing up in a clean home she obviously didn't have the same standards for her home. When the relative decided to sell he offered her first chance to buy it as she had mentioned a few times she was ready to buy somewhere, she wanted money knocked off for a string of things caused by her and her family. She ended up buying a different house and he had to put right all of the problems she caused, he covered the cost because he didn't want a family argument if he took it out of the deposit.

He found it very difficult visiting her as a relative (kids birthdays etc. and he was invited rather than calling in unannounced) he would try to just concentrate on it as a family visit but couldn't help noticing things like broken floor tiles in the kitchen, a handle ripped off a door, bath panel damaged and other things wrong.

Keep_pedalling

Personally in your position, I would rather gift him a deposit to buy his own place, especially if the inheritance puts your estate into IHT territory.

MaybeMaybenot

Fosterdog

Yes that is something we have considered, but as he's my son I would ensure that the flat he's renting now was put back to a good order before he left had he left it in a bad way. My biggest worry is that he wouldn't keep it tidy!!!:rotfl:

MaybeMaybenot

Keep Pedalling

As my hubby retires this year, we need the money and try and get the best return possible on our investment and monthly rent would be a great boost to his pension. Also my son is not in a position to get a mortgage unfortunately, so we would have to buy it for him outright, something we can't afford (or want) to do.

Pixie5740

What makes you think that letting the property to your son will get you the best return on investment? What other investment vehicles have you considered?

Assuming you currently own your own home you'll have to pay the higher rate SDLT when you purchase the additional property. You'll need to pay income tax on the rental income and you'll need to pay Capital Gains Tax when you eventually dispose of the property. Property is highly illiquid so it won't be easy to release funds if you require them in the future.

PasturesNew

What if ... he moves in, so does a random gf, who is then up the duff, then they fight after the baby's born and turfs him out. 3am he's standing on your doorstep with his sorry face and carrier bag.

What then?

AdrianC

MaybeMaybenot wrote: »

My biggest worry is that he wouldn't keep it tidy!!!:rotfl:

Umm, you do know that's none of your business as his landlord, right...?

If this is going to work, you both need to understand the difference between parent/child and landlord/tenant relationships...

MaybeMaybenot

Pixie5740 wrote: »

What makes you think that letting the property to your son will get you the best return on investment? What other investment vehicles have you considered?

Assuming you currently own your own home you'll have to pay the higher rate SDLT when you purchase the additional property. You'll need to pay income tax on the rental income and you'll need to pay Capital Gains Tax when you eventually dispose of the property. Property is highly illiquid so it won't be easy to release funds if you require them in the future.

Your response is the reason I've posted on here, thank you. Want to ensure that we are putting our money in the best place possible and as people always say property is a good investment (and our son will rent for a very long time) seemed like the best option. You have given me things to think about, thank you

MaybeMaybenot

PasturesNew wrote: »

What if ... he moves in, so does a random gf, who is then up the duff, then they fight after the baby's born and turfs him out. 3am he's standing on your doorstep with his sorry face and carrier bag.

What then?

Thanks, food for thought - another scenario to think about!:eek: