Buying property for son while living abroad

cts_casemod

My dad is planning to help me out in the property ladder by purchasing a house for me to live. He currently resides overseas.

A couple of questions that arise: Can he place the house in a trust so that, if anything happens, I can legally stay there/claim ownership?

I would be paying rent to help with the mortgage until I can get my own. What are the implications to consider, tax wise? I understand there used to be a 10K/Yr exemption, but can't find anything on that matter now.

Thanks

Slithery

So he isn't purchasing a house for you, he's purchasing a house as a BTL with you as a tenant.

He will have to abide with all of the rules, regulations and taxes that come with being a landlord, as well as the extra responsibilities that an overseas landlord has.

Please instruct him to read the following in full and all of the links that it contains before even thinking about becoming a landlord.

Tenancies in Eng/Wales: Guides for landlords and tenants

agrinnall

It'll be much simpler if he just gives you the money and you buy the house yourself (ensuring that you have a good record of the source of the money for when AML checks are done), but of course he then reinquishes any prospect of ownership of the property.

steampowered

Your dad will need a BTL mortgage with a higher rate and deposit than a homeowner mortgage.

Your dad may also find that many lenders will not lend if the proposed tenant is a family member of the landlord.

I think the first thing to do is to speak to a mortgage broker.

You could indeed set-up a trust with your father as the trustee and you as the beneficiary. However again the mortgage lender is going to have a problem with that. It would be simpler for your dad to write a will leaving the property to you.

steampowered

What do you mean the 'current mortgage'?

I read your Op as suggesting that your dad was thinking of buying a property.

cts_casemod

agrinnall wrote: »

It'll be much simpler if he just gives you the money and you buy the house yourself (ensuring that you have a good record of the source of the money for when AML checks are done), but of course he then reinquishes any prospect of ownership of the property.

I'm a young professional and I want to protect the house against open risks such as claims from a future spouse or cohabitant. This also applies to the trust, essentially I want the house to remain on my fathers name - The mortgage situation is all sorted.

steampowered wrote: »

What do you mean the 'current mortgage'?

I read your Op as suggesting that your dad was thinking of buying a property.

Yes and the mortgage payments would come out to 96/wk so they are below the tax threshold. I suppose he still needs to contact HMRC and have a record of payments, but I can't see a worked out example on the notes, so just making sure.

davidmcn

steampowered wrote: »

What do you mean the 'current mortgage'?

Those words don't exist anywhere above...

cts_casemod

davidmcn wrote: »

Those words don't exist anywhere above...

I edited the post, sorry.

Thrugelmir

cts_casemod wrote: »

I'm a young professional and I want to protect the house against open risks such as claims from a future spouse or cohabitant.

Have you divorced your current wife formally yet?

cts_casemod

Thrugelmir wrote: »

Have you divorced your current wife formally yet?

Yes. And once bitten, twice shy.

steampowered

cts_casemod wrote: »

I'm a young professional and I want to protect the house against open risks such as claims from a future spouse or cohabitant. This also applies to the trust, essentially I want the house to remain on my fathers name - The mortgage situation is all sorted.

This arrangement would not protect you against claims from a future spouse. On divorce a court would see straight through this and would treat the house as your asset (or at least take the house into account when deciding how to divvy up the rest of your assets).

It would protect you from claims against a co-habitant, but it is very difficult for co-habitants who are not joint owners to make claims anyway.

Yes and the mortgage payments would come out to 96/wk so they are below the tax threshold. I suppose he still needs to contact HMRC and have a record of payments, but I can't see a worked out example on the notes, so just making sure.

Your Dad will need a BTL mortgage, which will require a 25% deposit and have a higher rate than the £96/week your paying at the moment.

Also note that many BTL lenders will not lend if the property is being let to family members.

If you try to do this on a conventional residential mortgage the risk of being prosecuted for mortgage fraud is a bigger risk than the tax risk.