Renting to my father

gash

My daughter (8 years old) was recently left some money and I was in several minds about what to do with it. So, as bank rates are so poor, I have decided to buy a small house as an investment for her. My father, who currently rents, has agreed to live in it at a low rent which is beneficial to both of us. I'll have a regular rent coming in to do repairs, upgrade the property etc, and my father was considering moving into town because he's out in the sticks so this works for everybody.


I am aware I'll need to do self assessment tax returns and declare the rent etc, and have landlords insurance, which is fine, but I was also wondering do I actually need a tenancy agreement in this situation? Also, are there any other things I need to be aware of? I did rent a property out approx 20 years ago, but it all seems a lot more complicated now.


I'm not taking a bond from my dad by the way, and if ever he did want to leave the property I'd probably just put it up for sale, so I can't see there being any real issues with this? Thanks in advance.

andrewjb3

Who owns the house? Your daughter? The rent won't be your income, will it.. it'll be hers?

They'll be a tenancy agreement whether it's written down or not..

gash

No, because she's so young the money is in my possession until she's 21 to invest as I think is best. So the rent above costs is going to be put into improving the house over the years.

gash

ruhe wrote: »

I think it's a lovely idea! The only potential problem is that there are "lack of boundaries" which would come into play if he stopped paying the rent for example and then what would you do? Would you call up the"Can't pay we'll take it away" team?

Overall I think it's a great idea because one of the often overlooked situations about houses are that they can't be stolen, they can't be spent, they can't be unwisely invested in risky ventures, they can't be lent to uncles, brothers, children who all have the next greatest business idea etc

There is an inherent lack of risk in mortgage free property so overall I think it is a win/win for both you, your dad and your daughter. With that amount of money involved just consult a really good solicitor. My only bit of advice would be to invest some time researching a really good solicitor who can help you make sure everything is legally done properly

Thank you!


If my dad decided to stop paying, which I really couldn't see happening, I'd just have to deal with it. But he's well aware it's ultimately his granddaughters house, so I really couldn't see him doing that. He's been in his current rented house 14 years and his landlady will be very upset to lose him. He even fixes that house up himself and never bothers the owners.


I take your point about legal advice, and I'll have a good conversation with the solicitor next week when I go to discuss my grandfathers Will that the money is coming from. Thank you!

Marvel1

gash wrote: »

My daughter (8 years old) was recently left some money and I was in several minds about what to do with it. So, as bank rates are so poor, I have decided to buy a small house as an investment for her. My father, who currently rents, has agreed to live in it at a low rent which is beneficial to both of us. I'll have a regular rent coming in to do repairs, upgrade the property etc, and my father was considering moving into town because he's out in the sticks so this works for everybody.


I am aware I'll need to do self assessment tax returns and declare the rent etc, and have landlords insurance, which is fine, but I was also wondering do I actually need a tenancy agreement in this situation? Also, are there any other things I need to be aware of? I did rent a property out approx 20 years ago, but it all seems a lot more complicated now.


I'm not taking a bond from my dad by the way, and if ever he did want to leave the property I'd probably just put it up for sale, so I can't see there being any real issues with this? Thanks in advance.

When Daughter comes of age to have access to the money, she may want to evict tenenet to have the house to herself, very messy.

gash

cjdavies wrote: »

When Daughter comes of age to have access to the money, she may want to evict tenenet to have the house to herself, very messy.

Thanks. Already thought of this. Dad will be 84 when my daughter is entitled to the money, so I've explained to dad that when she reaches 21 the house will most likely be sold, and dad feels he'll be ready for sheltered accommodation at that point.

marliepanda

If he ever needs housing benefit to pay the rent this will not be seen as a commercial agreement and he may be refused help.

Does he have his own funding for the rent?

Red-Squirrel_2

gash wrote: »

Thanks. Already thought of this. Dad will be 84 when my daughter is entitled to the money, so I've explained to dad that when she reaches 21 the house will most likely be sold, and dad feels he'll be ready for sheltered accommodation at that point.

He might be surprised, people are living longer in good health, plenty of 84 years olds would be horrified at the thought of going into sheltered! He also might not find it easy to actually find somewhere.

This seems a bit risky considering its not your money. If your dad is happy where he is why not stay there, and get some proper professional advice about the best/safest way to invest your daughter's inheritance.

gash

Red-Squirrel wrote: »

He might be surprised, people are living longer in good health, plenty of 84 years olds would be horrified at the thought of going into sheltered! He also might not find it easy to actually find somewhere.

This seems a bit risky considering its not your money. If your dad is happy where he is why not stay there, and get some proper professional advice about the best/safest way to invest your daughter's inheritance.

Haha, I posted in the savings/investments section a few months back and everybody said banks and building societies were a waste of time because there's no return. So, several suggested putting the money in property, as I've decided to do. I can't win!! Just kidding really, but you can't get much safer than property surely.


EDIT: also, just remembered, as I said in initial post, dad isn't particularly happy where he is anymore because he is way out in the sticks (One bus a day), and he no longer has a car.

gash

marliepanda wrote: »

If he ever needs housing benefit to pay the rent this will not be seen as a commercial agreement and he may be refused help.

Does he have his own funding for the rent?

Just wondering why it would be seen as anything other than a normal rental? When I say I'm charging him a low rent, I mean £350pm so he's not paying more than he is at his current home. It's only low because the average rental on the property I'm buying would be around £450. He doesn't actually get housing benefit anyway because his pensions are too high, so yes, he pays his rent himself, but I'm still unsure why him renting a house for slightly cheaper than average rental costs would be frowned upon? Thank you for your comment though. I hadn't thought of that.


Edit: I had offered him even lower rent but he and I agreed that he didn't want to pay less, as long as the rental profit went into improving the home and value.

marliepanda

gash wrote: »

Just wondering why it would be seen as anything other than a normal rental? When I say I'm charging him a low rent, I mean £350pm so he's not paying more than he is at his current home. It's only low because the average rental on the property I'm buying would be around £450. He doesn't actually get housing benefit anyway because his pensions are too high, so yes, he pays his rent himself, but I'm still unsure why him renting a house for slightly cheaper than average rental costs would be frowned upon? Thank you for your comment though. I hadn't thought of that.


Edit: I had offered him even lower rent but he and I agreed that he didn't want to pay less, as long as the rental profit went into improving the home and value.

Clearly from what you’ve written the agreement isn’t commercial.

But if his pensions exclude him from HB you don’t need to be concerned.