Can you use a buy to let mortgage to buy a right to buy house

Beka21

I currently live in council house with parents and we are entitled to 65% discount under right to buy scheme. I am looking to move into rented accommodation nearer to work by the end of the year.

The idea would be I would take out a buy to let mortgage for the remaining cost of the property and move out, my parents would remain in the property and pay me rent which would more than cover the relatively low cost of the mortgage repayments.

This was my parents idea and we've spent some time looking into the cost implications for all involved and it would make financial sense for all of us both now and long term.

This would only be possible if I am able to use a buy to let mortgage with the right to buy scheme. Does anyone know if I could do this?

Pixie5740

Are you named as a tenant or is the tenant your parents?

Beka21

Joint tenant with parents

unforeseen

In which case you will all be joint owners so a BTL mortgage would not be suitable. I would think that any mortgage would need to include them.

AdrianC

So lemme get this straight...

You're a joint tenant with your parents.
You want to RtB the flat on your own.
You want to then move out, and rent the flat to them.

Right, practicalities alone...

You would need a BtL mortgage. BtL mortgages very, VERY rarely allow you to rent to close family members, because of the predictable unlikeliness of evicting them if required.

You do realise this MASSIVELY reduces your parents security of tenure, right? If you hit financial difficulties, your parents can find themselves evicted in short order by your creditors when they take the property over or force its sale.

You also realise all the other implications of being a landlord? This makes you responsible for all the maintenance and improvements on the property. Now - the boiler has a sulk, they pick the phone up. After - the boiler has a sulk, you pay for the boiler to be fixed or replaced. You will also be responsible for all the other legal responsibilities of a landlord - including gas certification. If your area requires landlord licences, you will need one. If you buy a home for yourself, you're paying 3% extra SDLT. You need to pay income tax on the profit, so will need to complete self-assessment tax returns, no matter what your other income. When you sell the place, you will be liable for CGT on any value rise.

And that's without going near the moral and political issues over a RtBtL... INCOMING!

silvercar

Use RTB and buy with your parents on a residential mortgage. You all move in, then in a few months, you move out and your parents stay in the property as owner occupiers.

Your parents pay the mortgage.

No need to over complicate things.

Plenty people do this as married couples where one then finds they rent mid week near their work and the other is in the property full time.

Cakeguts

It might make financial sense to you but it is an extremely bad idea for your parents. If you find that you cannot pay the mortgage and the house is repossessed your parents will be homeless. They won't be rehoused by the council. How much could your parents afford in terms of market rent if you lose the home that they are living in now. There are no benefits to pay a mortgage if you lose your job. You might get the interest on the loan paid for a short time but if you don't pay the mortgage for some time the property will be repossessed. You have to consider that your parents could if this goes wrong finish up renting a double room in a shared house if they don't have much income. If you are renting privately and you lose your job you will need the rent from your parents to pay for your rent until you get another job so how would you then pay the mortgage.

Your parents at the moment have the right to live in their council house for the rest of their lives they probably don't understand the risks to their home in this scheme.

Red-Squirrel_2

Is this peak RTB?

Ellie1878

Hi was it fairly easy to be added to the tenancy as a joint tenant in the first place? Looking into a similar thing

Pixie5740

Ellie1878 wrote: »

Hi was it fairly easy to be added to the tenancy as a joint tenant in the first place? Looking into a similar thing

What, use your parents' RTB discount and then charge them rent for the privilege?

csgohan4

what if the parents stop paying rent? Money and family should never mix