Can I sublet to a family member without having to get a Buy to Let mortgage

Soontobehomeowner

Hello ,

My partner and I want to buy our first property during 2018, we almost have a decent deposit (not enough for a buy to let mortgage at 40%) and have started looking at mortgages and property’s. We both work abroad on a private yacht which we also live on for the majority of the year. We also have most living expenses paid for food, phone etc so are in a comfortable position for paying back our mortgage. Our registered addresses are still with our parents as the boat is not necessarily an address as such.

My brother has a family (wife and 2 babies) and currently renting a small property, I would very much like him to live at our house whilst we continue with this work but with him paying a contribution to our mortgage (we both win in the end). What we would like to know is what is the legal standpoint on this... would my mortgage lender accept someone else living in the property? As I said we can more than cover the mortgage on our own but it makes no sense for the property to be empty.

I understand we would need to declare any income on my brothers payments in our tax return.

Many thanks for anyone’s help in adavance

Ozzuk

You'll need to check your home insurance, many are void if there are gaps in people living there. Also, why not ask your lender, they are better placed than us to tell you what they will accept. I think its unlikely though.

00ec25

perfectly possible but you need a very specific type of mortgage product called a Regulated Buy to Let mortgage . These are based on your own personal income, not the amount of rent generated by the letting.

In other words they work the same way as a "normal" residential mortgage in that the amount you can borrow is based on your income multiple, but the crucial difference is they do allow you to let the property out to someone who is related to you. An "ordinary" BTL mortgage prohibits letting to family and an "ordinary" residential mortgage requires you to reside there so neither would be possible in your circumstances.

Naturally the number of lenders willing to grant such a mortgage is smaller, and I have no idea if they would consider someone in your financial circumstances - do you declare all your earnings in the UK or do you claim the mariner's/seafarer's exemptions for example, or even more simply, just claim non UK resident status?

PS if you want to become a LL then learn what "subletting" means as you are entering the world of legalise and it isn't what you mean by the way you use it.

Rambosmum

You'd need permission from your lender - they usually don't like renting to family, however often if you explain your circumstances (e.g the property will be void for long periods due to your work) they would prefer it occupied by someone.


You'd need 'permission to let' from the lender and appropriate landlords insurance. You'd also have to conform to the legal aspects of being a landlord - annual gas safety certificate, register with HMRC etc.

SuzieSue

It might be worth ringing RBS as when a friend was getting a BTL mortgage with them, they said that he could have a residential mortgage if he was going to rent to a family member. This was a couple of years ago though so their rules might have changed.

eddddy

You situation sounds a bit complex.

Are you UK residents (paying UK tax)? If not, you'll need to find a lender who lends to ex-pats.

Are you paid in GBP? If not, lenders might see that as a risk that impacts affordability, and therefore how much they will lend. (i.e. In case GBP exchange rates tumble.)


Depending on your exact circumstances, at one end of the spectrum...

You might be a UK resident, buying your sole/main residence, to be occupied by you and your extended family (i.e. brother etc) and you travel away from home a lot - no tenancy agreements etc, but maybe your brother contributes to household costs.

(You mention your brother paying a contribution to the mortgage. Would you even consider making your brother a joint owner, and therefore joint mortgage borrower?)

Or at the other end of the spectrum...

You are an ex-pat looking for a BTL mortgage suitable for renting to family members. You will provide a tenancy agreement etc.

G_M

Most mortgage issues already covered above, so I'll just add:

* New landlords: advice, information & links

FBaby

Good luck finding a regulated BTL, as stated above, very few do and their requirement are high.

Also, renting to family/friends whilst you are away is a VERY bad idea. You will see it as a favour to your brother with the expectation that they move immediately if/when you come back and need the property as your main home (and change the mortgage). They will see it as cheap renting and will adjust their budget accordingly. This mean that they might find themselves in the situation of not being able to move and afford a higher rental, leaving you with no choice but to go through the eviction route, which will be stressful, long and costly, and clearly affect your relationship with your brother. However nice it sounds at this moment, it won't be if that situation arises.

theartfullodger

Never rent to friends & family: By all means help then rent somewhere from a normal landlord (eg rent & deposit - but not guarantee..) but don't rent to them.

EmmyLou30

Third vote for not mixing business with family. All sounds idylic but could go sour very easily and you just don't need that in the family.

chappers

regulated BTLs are like hens teeth as lenders don't like the lack of separation between LL and tenant, would have though consent to let to family members would be even less likely, lenders don't like the fact that people probably won't act as professionally towards family members.
Believe it or not repossession isn't the easy way out for lenders that everyone thinks it is they don't want deals between themselves and their borrowers falling down