Joint buying with a regulated tenant

Wakey0698

Smodlet said:

I admit I am not sure I understand but would your "mate" not be giving up the security of his tenancy to make you money or do I have that wrong?

Yes but he would also have a % of the house/business. 

oldbikebloke

Wakey0698 said:
Yes but he would also have a % of the house/business. 

so what you are saying is: 

a) property has been valued on the basis it is occupied by a regulated tenant and therefore its true market value is correctly flagged as low 

b) you see a way to make money for yourself by conning your mate out of a regulated tenancy in exchange for "a" % ownership of a company that will buy the property he will then live in.

Excellent idea. As part owner of the company he will immediately be liable for (benefit in kind) income tax on the difference between what he in pays in rent and what would be its now much inflated market rent because it is no longer occupied by a regulated tenant.

does he call you a mate or a con artist chancer?

Smodlet

oldbikebloke said:

Wakey0698 said:
Yes but he would also have a % of the house/business. 

so what you are saying is: 

a) property has been valued on the basis it is occupied by a regulated tenant and therefore its true market value is corrected flagged as low 

b) you see a way to make money for yourself by conning your mate out of a regulated tenancy in exchange for "a" % ownership of a company that will buy the property he will then live in.

Excellent idea. As part owner of the company he will immediately be liable for (benefit in kind) income tax on the difference between what he in pays in rent and what would be its now much inflated market rent because it is no longer occupied by a regulated tenant.

does he call you a mate or a con artist chancer?

Nice to know my instincts are not completely dormant.  With "mates" like you...

Wakey0698

You lot are charming ain't you. Was only asking to see if it was possible. If you didnt like what i asked why bother replying

AdrianC

Wakey0698 said:

The house in question is going for a lot less than It's worth.

If that was true, it'd have sold immediately.
It's going for what it's worth... with a regulated tenant in situ.
That's a lot less than what it would be going for with vacant possession, because the market is severely restricted.

So if we was to buy it cash with a small refurb, then remortgage. His rent into the company would pay the mortgage? Freeing up money to reinvest? Does this work legally?

I think you're unnecessarily complicating the whole picture.
Your friend is the regulated tenant. He can't afford to raise the money to buy, but you can.
There are several options...
1. You lend him the money, he buys. He may then be able to mortgage commercially and repay your loan, based on the vacant possession value.
2. You buy as joint owners. He pays you whatever you agree for rent for your portion. In effect, a private equivalent to conventional shared-ownership.
So why is the company needed, and why does he pay himself rent? What money does this "free up"? What does the layer of complexity and cost introduced by a limited company actually add?

[Deleted User]

The property being sold doesn't end your friend's tenancy.  Whoever buys it will become your friend's landlord and his regulated tenancy will continue as it always has so he has more to lose than to gain with this arrangement.  If you want to be the one to buy the property and becoming your friend's landlord then fill your boots although one of the golden rules of being a landlord is never rent to friends or family.