Buying flat to rent to daughter

melb

thanks for all replies and comments - all taken on board. It would be seen as an investment, with the knowledge that our daughter was getting a nice flat for her rental payment for whatever period of time she was living along, rather than paying the same for a dive which was paying someone else's mortgage.

The flat would be in our names - I know the LISA or whatever it's called would probably be better financially, but realistically she would not be able to save up enough money for her own deposit.

MoneySavingMission

don't underestimate landlord obligations. Although for your daughter, she'll likely move on and do you really want to manage a rental property overseeing all aspects.

re mortgages you'll def need a btl mortgage - more likely an interest only product and all depend on how much you can put up front. with arrangement fees etc it might be cheaper to buy back against your own mortgage and buy outright (property price indication not provided)

good luck

melb

I'll have to look into the options. Our house is worth at least 250,000 with no mortgage and the flat would be no more than £85,000. Are you meaning to release equity from our house? That would be an option. I do need to put a lot of thought into it - i tend to come to MSE for all sorts of things and was testing the water as to people's opinions. So far it's a resounding no!

ska_lover

melb wrote: »

We have just seen the money our son is having to pay out for what is essentially a large room in a victorian terrace house which has been sub-divided into a living/sleeping area, separate kitchen and shower-room and he is paying nearly £400 a month. .

I have got to ask - why have you not already done this for your son?

melb

you don't need to ask Ska Lover - you can just look at where I gave the answer

lovehols

I left home at 17 and moved in with boyfriend and rented a dive. Even though I'd got savings and considered myself fairly responsible so much changed. My career and chosen pathway changed, as did what qualifications I wanted to do and study which impacted on the area and the first year everything changed so quickly from what I was initially planning. Relationships, friends etc all a big influence on my choices etc, going travelling. My parents supported me (later told me they hated the though of me moving out but knew I would with or without their support) but they needed me to make my own mistakes (good choice as I wouldn't have listened anyway)! That said I had a mortgage at 18.

I'd say let her make some choices, even if it's a short term rental in a dive. Let her have the responsibility of bills, budgeting etc. You can support her without buying a house. See exactly how responsible she can be before jumping in. It's easy when renting from your parents to not pay the bills, to say you haven't got money for electric etc etc. See how she gets on first and let her spread her wings a bit first. The other side of me is saying she is 18, tell her to wait a bit and save make the most of living at the parents. She can't have it all. I soon discovered living at my parents was far easier than living away, aside from the midnight curfew at weekends (they gave up with that one)!

ska_lover

melb wrote: »

you don't need to ask Ska Lover - you can just look at where I gave the answer

My apologies I didn't see that - , it is not like you would be buying her it outright, she would in essence be paying the mortgage via rental payments

Vegas2010

As per my first post I'm pro helping out where possible but I agree 18 is to young. Not necessarily on majority levels but more the pace life changes at that stage - new partner, new job location, travelling etc.


If you do the maths around stamp duty, legal costs etc plus monthly interest and compare it to rent being paid, then I think you'll find she'd need to commit to at least 12 months potentially longer for any benefit to be received at all. Given the hassle I'd help out when settled and she potentially has a greater knowledge of what the future is likely to bring.

AnotherJoe

melb wrote: »

thanks for all replies and comments - all taken on board. It would be seen as an investment, with the knowledge that our daughter was getting a nice flat for her rental payment for whatever period of time she was living along, rather than paying the same for a dive which was paying someone else's mortgage.

The flat would be in our names - I know the LISA or whatever it's called would probably be better financially, but realistically she would not be able to save up enough money for her own deposit.

So what do the numbers look like?
Initial costs.
Purchase price, legal,stamp duty plus extra 3%? Redecorating?
Ongoing costs.
Maintenance ? Management fees? Mortgage? Void periods ?
Risk.
Damage through tenant? Non payment of rent ?

Upside.
Rental income minus all the above.
House price appreciation (or depreciation)

What do they look like? How about you take estimated legal costs ,stamp duty inc extra 3%, redecorating, ongoing costs, maintenance , management fees & mortgage for the first two years which is how long it would likely take you to break even, and give that to her in 2 years time. Would save you a lot of hassle, give her much more money than she could save which you say is the point of this apart from "investment" and is cost neutral to you.

wendyak

I have a similar predicament but my daughter is 31 and married with a school aged child.
Their rental house is for sale and we have been given first refusal at a bargain price.
She can only raise about half the required amount as they are both on low wages due to working in the family business.
I want to gift them the other half from equity in my house which is over 400k but dont want to sell for another five years.
I am struggling to find an independant advisor as the only ones I have seen thus far have an agenda or not interested as they wont get the right amount of commission.