Flat or House

seren77

xylophone wrote: »

A 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.

Good idea, hadn't thought of that. Thanks

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).

Have double checked and that is the Service Charge. Have just checked another property which is £300 per annum service charge and on a 999 year lease. The area I'm looking is very reasonable and most of the vendors will take lower offers according to the Estate Agents I've been in touch with.

Thrugelmir

seren77 wrote: »

Have double checked and that is the Service Charge. Have just checked another property which is £300 per annum service charge and on a 999 year lease.

Although it's a flat you will be responsible for contributing to a whole lot more. If there's no sinking fund or reserve built into the standing charges. You may in time receive unwanted surprises.

seren77

Have had another at the Govt website and others re the rent a room scheme and they all say this - 'The scheme is not just for homeowners – people renting a property can sublet and take advantage of rent a room tax benefits. But tenants need to check that their lease allows them to take in lodgers'. In other words if my son is renting the property from me he can take in a lodger as long as the lease I give him allows him to sublet.......or at least that's how I understand it!

aneary

seren77 wrote: »

Have had another at the Govt website and others re the rent a room scheme and they all say this - 'The scheme is not just for homeowners – people renting a property can sublet and take advantage of rent a room tax benefits. But tenants need to check that their lease allows them to take in lodgers'. In other words if my son is renting the property from me he can take in a lodger as long as the lease I give him allows him to sublet.......or at least that's how I understand it!

This is correct. I think it's because your original post suggested that you would be receiving the income from the tenant/lodger.

If your son is receiving the income to help to pay bills and 'rent' to you then he will not have to pay tax.

saajan_12

seren77 wrote: »

Have had another at the Govt website and others re the rent a room scheme and they all say this - 'The scheme is not just for homeowners – people renting a property can sublet and take advantage of rent a room tax benefits. But tenants need to check that their lease allows them to take in lodgers'. In other words if my son is renting the property from me he can take in a lodger as long as the lease I give him allows him to sublet.......or at least that's how I understand it!

Yes, son can take in a lodger, use the Rent a Room Scheme and pay no tax in income from the lodger upto £7.5k per year.

What people are trying to say is
1) you cannot have a lodger as you don't live there
2) If son passes on rent from his lodger to you, you would pay income tax on that. e.g. if rent for a 2 bed flat is £1000pm, lodger pays son £400 (£4800 pa so no tax), son contributes £600 from his wages and passes the full £1000 to you, then you'd pay income tax on the full £1000.

Lysimache

Also, bear in mind if your son passes you rent that you pay tax on, while your son can use rent a room allowance, you cannot. That means you have to pay tax on any rent that exceeds the mortgage interest payment (not the whole mortgage payment, just the interest bit).

KiKi

If you gift him the money and organise a loan for him to pay you back and have first charge on the property (as per post 11), then you won't have the responsibilities of being a Landlord, either.

Personally, if it was a leasehold house with peppercorn ground rent and no service charges allowed as per post 4, I'd pick that over a flat any day. Flat will also be leasehold - but with all the issues of no control over maintenance costs, and other flats co-operating etc. At least you won't have that with a leasehold house if it meets the conditions of post 4.

quotememiserable

seren77 wrote: »

The area I'm looking is very reasonable and most of the vendors will take lower offers according to the Estate Agents I've been in touch with.

What area are you looking at...some parts of North Manchester are pretty undesirable as a place to live.

seren77

quotememiserable wrote: »

What area are you looking at...some parts of North Manchester are pretty undesirable as a place to live.

He needs to be nearish to Rochdale so am looking around Castleton, Whitworth, Milnrow, Littleborough. Please give me some clues if you know the area.