Purchasing property for 10 year old

Mr_Jones

Looking for advice please.

We own our own house with a small mortgage left to pay. It is in both my name and my wife’s name.

We are looking to purchase another property for our 10 year old daughter. And then rent the house out until she is older – rental money hopefully will cover the mortgage payment. Any surplus will be hers.

My daughter has enough money in her Building Society account to pay the deposit however if I take the money out of her account then I need to prove it is for her use.

I want to put the property in her name but I cannot get a mortgage in her name as she is not 18. Also trying to avoid the stamp duty land tax.

Can I put the house in my daughter’s name ? And how is it best to proceed?

Any other considerations ?

davidmcn

Mr_Jones wrote: »

Can I put the house in my daughter’s name ?

No (assuming the property is in England or Wales anyway). I suggest you find some other form of investment for her.

3card

https://www.property-tax-portal.co.uk/taxquestion61.shtml

SunnyCat

Have you considered the pros and cons of taking on the job of a landlord for this property? And what you might do in the opposite situation from what you describe - if the rent doesn't cover the mortgage, repairs are needed, you cannot find a tenant or they don't pay etc?

It's frequently easier and a better return to invest in socks and shares, especially for someone so young.

Mr_Jones

SunnyCat wrote: »

Have you considered the pros and cons of taking on the job of a landlord for this property? And what you might do in the opposite situation from what you describe - if the rent doesn't cover the mortgage, repairs are needed, you cannot find a tenant or they don't pay etc?

It's frequently easier and a better return to invest in socks and shares, especially for someone so young.

Thank you
We have a Junior stocks and shares ISA already - recently transferred from a CTF. But she has money in the Building Society too earning very little. In the area we live in we expect property prices will give a good return - it is very much a rental area in our village with a lot of demand for rental properties. We just don't want to put all her money into Stocks and Shares so just hedging our bets really. Met with the local mortgage advisor who confirms generally speaking rent should cover the mortgage

foxy-stoat

People under 18 cannot own property, even if they could do you think a 10 year old can be a landlord, cover the rent if the tenants do not pay or have voids?

If you think that rent will cover the mortgage and the difference is hers to spend/save you need to read up on becoming a landlord.

Good luck

SDLT_Geek

The 3% extra SDLT would be due anyway if the property is held beneficially for a minor, see for example https://www.gov.uk/hmrc-internal-manuals/stamp-duty-land-tax-manual/sdltm09815

alex_163163

Also, even if it was possible to put a property in her name, you are then taking away her status as a FTB for SDLT purposes when she is older and wants to buy a property of her own to live in. She might want to move away from the village and not live in the house when she is older.
I know, the FTB relief might not still be in effect by the time she is 18/ wants to buy her own property, but conversely it also could be.
So will you be giving her the money for her future stamp duty costs, as you took away her FTB status when she wasn’t old enough to understand the decision being made?
I think you should meet with a financial advisor and find out what other forms of investment there are for your daughter before committing to property right now.

sal_III

Invest/save the money in your own name. Then when she turns 18 and can legally own a property, gift her the money for deposit so she can chose the home herself.

Pretty sure a 10 y.o. doesn't care if the funds are in her name or not...

If you are looking for tax avoidance you can look at putting the money in a trust.

eddddy

Mr_Jones wrote: »

Met with the local mortgage advisor who confirms generally speaking rent should cover the mortgage

If you need a mortgage, obviously a bank won't lend to a 10 year old, but they're unlikely to lend where a trust is involved either.

(Also, saying that 'rent should cover the mortgage' is a little simplistic. Renting a house is a business, you need to look at all the costs and all the business risks and their potential impact.)

AnotherJoe

Mr_Jones wrote: »

Met with the local mortgage advisor who confirms generally speaking rent should cover the mortgage

That is hardly a ringing endorsement of your plan ! "generally", "should"??? What about "will, with ample over for maintenance, tax, additional SDLT, voids, damages, insurance and eventual CGT"?

Essentially you are taking a gamble that over the next 8 years that house price inflation minus capital gains tax will exceed stock market growth by a margin that accounts for risk and hassle of a single investment. A ballsy bet on behalf of someone else without the capacity to understand the risks.

Why not simply invest in either general property investments or UK housebuilding & land sector as a proxy for a single risky load-of-hassle investment? Within her JISA, or one of your ISA's earmarked for her that you trickle feed into the JISA over time.. Spreads the risk, no additional one-off taxes.