Flat or House

seren77

I'm thinking of buying a flat for between £45k and £60k to rent out to my son who can't afford the going rent. I can get a decent 2 bed flat in an ok area for that price. I've double checked the service charges which are very low (£150 per annum) and would be hoping to rent out one room under the Rent A Room Scheme. I haven't looked at houses because I'm worried about the maintenance responsibilities I would have with a house and I'm not sure how much money I should have aside for that. Also, houses of a similar value aren't always in the better areas and are sometimes the same size overall as the flats. Looking in the North of Greater Manchester although I don't live there myself. A large amount of houses there seem to be leasehold for some reason, but I would only go for freehold. Sorry to ramble a bit, but can anyone give me any ideas/advice on whether a flat or a house would be more sensible in these circumstances (am reading conflicting info online)

Cakeguts

If you let a flat to your son he will be the landlord of the person in the rent a room it will be his lodger not yours. What you seem to be thinking is letting your son and another person share a flat so a flat share?

hazyjo

Cakeguts wrote: »

If you let a flat to your son he will be the landlord of the person in the rent a room it will be his lodger not yours. What you seem to be thinking is letting your son and another person share a flat so a flat share?

I took it that they were attempting to use the rent a room for the son lol - actually I'm not sure which is right (when I say 'right' I mean the OP's question. Both would actually be 'wrong'. I'm going round in circles here :rotfl:)


OP, can you clarify?

tizerbelle

seren77 wrote: »

Looking in the North of Greater Manchester although I don't live there myself. A large amount of houses there seem to be leasehold for some reason, but I would only go for freehold.

If you are looking at Victorian terraced houses and seeing leasehold - don't panic. It is the norm in the northwest for the vast majority of them to be leasehold but they will (99%) of the time be 999 year lease (so a good 850 years left) with a peppercorn ground rent (mine is £1.14 a year) and no service charges and no ability in the lease for the freeholder to charge for anything other than the ground rent. It is the new property leaseholds that you should be wary of.

saajan_12

seren77 wrote: »

I'm thinking of buying a flat for between £45k and £60k to rent out to my son who can't afford the going rent. - so you'll be a LL, son will be a tenant.. don't forget all the responsibilities e.g. gas safety checks,
deposit protection, income tax on any rent income.. I can get a decent 2 bed flat in an ok area for that price. I've double checked the service charges which are very low (£150 per annum) - check ground rent currently and how much it can change. and would be hoping to rent out one room under the Rent A Room Scheme- The RAR scheme is for live in landlords, so you can't use it.
(a) Son can let a room under RAR to a lodger. You let the whole property to son who pays you the full rent, which is all taxed as your income.
(b) You let the two rooms separately and collect rent from son and stranger, all taxed as your income. .

I haven't looked at houses because I'm worried about the maintenance responsibilities I would have with a house and I'm not sure how much money I should have aside for that. - flats also have maintenance to the interior as well as the building which will be fed down to you via service charges
Also, houses of a similar value aren't always in the better areas and are sometimes the same size overall as the flats. - as a rule of thumb, houses of the same size tend to be cheaper but how 'nice' / where they are varies depending on the developments in the area.. you'd have to look at what you can afford and what fits what you want. Looking in the North of Greater Manchester although I don't live there myself. - who would deal with repairs etc? Even if you agree with your son informally, ultimately these are your responsibility and if relations break down you are liable for repairs.
A large amount of houses there seem to be leasehold for some reason, but I would only go for freehold. -
a flat would (almost always) be leasehold too.. with all the restrictions / having to ask permission, ground rent, services charges, etc that entails. Don't rule anything out but actually consider what the charges / restrictions are of any lease Sorry to ramble a bit, but can anyone give me any ideas/advice on whether a flat or a house would be more sensible in these circumstances (am reading conflicting info online)

Re flat v house, any suggestions we can give are generalisations.. look at what is available in the area that fits your criteria / budget and make sure to consider the ongoing charges and restrictions.

With renting the property out to son, you'd pay income tax on any rental income you receive, and can't use the Rent a Room scheme.

seren77

hazyjo wrote: »

I took it that they were attempting to use the rent a room for the son lol - actually I'm not sure which is right (when I say 'right' I mean the OP's question. Both would actually be 'wrong'. I'm going round in circles here :rotfl:)


OP, can you clarify?

Ok lol. I might have misinterpreted the info on the Govt website which says you can have a lodger even if you don't own the property yourself under the scheme. Will have to look again and sort it out. Can always rent to 2 people ie son plus one other instead.

seren77

tizerbelle wrote: »

If you are looking at Victorian terraced houses and seeing leasehold - don't panic. It is the norm in the northwest for the vast majority of them to be leasehold but they will (99%) of the time be 999 year lease (so a good 850 years left) with a peppercorn ground rent (mine is £1.14 a year) and no service charges and no ability in the lease for the freeholder to charge for anything other than the ground rent. It is the new property leaseholds that you should be wary of.

Thanks, that's very helpful

seren77

saajan_12 wrote: »

Re flat v house, any suggestions we can give are generalisations.. look at what is available in the area that fits your criteria / budget and make sure to consider the ongoing charges and restrictions.

With renting the property out to son, you'd pay income tax on any rental income you receive, and can't use the Rent a Room scheme.

Thanks. I knew I would be liable for tax, but think I've been bamboozled by the info on the Rent a Room scheme.

hazyjo

Do you need a mortgage? If so, they prob won't let you rent to family - presuming you're taking money off your son as rent. EDIT - they also won't accept rent from a lodger as payment to the mortgage either, it'll have to be affordable for you to get. If cash, ignore me.


£150pa is very cheap. Are you sure it's not ground rent?! If it is service charge, beware of ex-LA properties which will hit you with a large bill when maintenance is required. Not sure why you think a flat will have cheaper maintenance than a house - if the flat is cheap, it is because they do repairs as and when needed (same as if buying a house).

seren77

hazyjo wrote: »

Do you need a mortgage? If so, they prob won't let you rent to family - presuming you're taking money off your son as rent. EDIT - they also won't accept rent from a lodger as payment to the mortgage either, it'll have to be affordable for you to get. If cash, ignore me.


£150pa is very cheap. Are you sure it's not ground rent?! If it is service charge, beware of ex-LA properties which will hit you with a large bill when maintenance is required. Not sure why you think a flat will have cheaper maintenance than a house - if the flat is cheap, it is because they do repairs as and when needed (same as if buying a house).

Thanks, will double check re ground rent etc and that's helpful re ex-LA. No mortgage - cash buyer.

xylophone

As you have the cash, could you not lend the money to your son so that he can buy a property (and take in a lodger if he wishes), and repay you as required?

You would have a solicitor draw up the loan agreement and you would take a first charge on the property.