Advice on being Named Landlord/Mortgagor

konn1ch1ha

Hi all,

I have been offered the position by my unofficial stepdad whom is into his 70s and has Parkinson's Disease. He has offered to put down a deposit on a property in England in my name and for him to move in to alleviate him from his current residence that he owns - a top floor flat with stairs - and wants to live in a ground floor flat. He also wishes to keep his current flat that he lives in and rent that out for income.

The complicated bit - he has an ex-tenant that is his good friend and carer that would also move in and have a room and would pay his rent via DSS or something of the like.
Now, as I would technically be the landlord, I would be in receipt of that DSS and that would go towards the mortgage, or perhaps would pay all of the mortgage monthly(?). 

As someone like me that is quite dubious on the matter, I've come to seek advice and opinions on it. Is it legal and above board?

TIA

HampshireH

Why in his 70s does he want to own / maintain 2 properties?

Is he gifting you the deposit? Do you want to be a landlord and can you get a mortgage?

AdrianC

Of course it's legal and above board.

He would be buying a property, then gifting it to you.
You would have two tenants... One would be your "unofficial stepdad". The other would be his friend.
You would have all of the legal responsibilities and costs of being a landlord, and - of course - the obligation to do self-assessment tax.

Now, the question is whether it's wise.
Ultimately, you get a free property.
What happens with this friend, if/when your "unofficial stepdad" kicks the bucket?
What happens if he doesn't pay his rent? The benefits system (probably Universal Credit) pays him, then he should pay you.


Except... Where does this mortgage come into it? I thought he was buying the place and giving it to you? Oh, wait. He's only gifting you some equity, then expecting you to buy the place...? Some gift, this.
Do you even want to run a residential lettings business? Do you want him and his mate as tenants? Is your "unofficial stepdad" actually planning on paying any rent himself?
As gift-horses go, this one seems to need a dentist. Urgently.

Why can't he just sell his first-floor flat and buy his own ground-floor flat?

AskAsk

so your stepdad will give you money to pay your deposit.  he will then move into it along with his mate.  his mate will pay you rent, what about your stepdad, is he also going to pay you rent?

i assume you won't be living there yourself.

konn1ch1ha

HampshireH said:

Why in his 70s does he want to own / maintain 2 properties?

Is he gifting you the deposit? Do you want to be a landlord and can you get a mortgage?

He doesn't want to own two properties, only his current flat, which is proving difficult to live in due to his age. He would then let this out himself.

I guess he would be gifting the deposit, yes. The question lies that I would be getting a free property out of it, but having the responsibility, I've yet to think about it (I already have my own flat I let out). I'm not sure if I can get a mortgage yet. 

theartfullodger

HampshireH said:

Why in his 70s does he want to own / maintain 2 properties?

I'm 72 and have more than 2 properties.  Do you advise against this please?

konn1ch1ha

AdrianC said:

Of course it's legal and above board.

He would be buying a property, then gifting it to you.
You would have two tenants... One would be your "unofficial stepdad". The other would be his friend.
You would have all of the legal responsibilities and costs of being a landlord, and - of course - the obligation to do self-assessment tax.

Now, the question is whether it's wise.
Ultimately, you get a free property.
What happens with this friend, if/when your "unofficial stepdad" kicks the bucket?
What happens if he doesn't pay his rent? The benefits system (probably Universal Credit) pays him, then he should pay you.


Except... Where does this mortgage come into it? I thought he was buying the place and giving it to you? Oh, wait. He's only gifting you some equity, then expecting you to buy the place...? Some gift, this.
Do you even want to run a residential lettings business? Do you want him and his mate as tenants? Is your "unofficial stepdad" actually planning on paying any rent himself?
As gift-horses go, this one seems to need a dentist. Urgently.

Why can't he just sell his first-floor flat and buy his own ground-floor flat?

Yes, but my "unofficial stepdad" (let's call him Fred), would be living there rent free as he is putting the deposit down, though I'm sure he would chip in for maintenance and upkeep until he dies.

The plan is that I would get the property at the end of it and his friend can continue to stay there or move on, that's yet to be determined. I can rely on his friend to pay rent as he always has with Fred, hence their strong and lengthy friendship. He would also be there to look after Fred until he dies.

The details of the equity and mortgage are yet to be discussed too. I've been told I wouldn't need to pay a penny, or closest to  not paying a penny at least.

I understand being a landlord is a big deal (I am one myself already with a singly property) and responsibility. It would be worth going for it in the long run and I think it could go smoothly. The benefit of it all is for Fred to have someone to live at ease without selling his current flat until he dies, for his friend to have somewhere to live and look after Fred, and I would pocket a property from it. 

konn1ch1ha

AskAsk said:

so your stepdad will give you money to pay your deposit.  he will then move into it along with his mate.  his mate will pay you rent, what about your stepdad, is he also going to pay you rent?

i assume you won't be living there yourself.

1. Yes
2. Yes
3. Yes
4. He won't be paying rent
5. I won't be living there

Slithery

You won't be able to get a BtL mortgage if the deposit is going to be gifted by someone who then lives in the property rent-free.

konn1ch1ha

Slithery said:

You won't be able to get a BtL mortgage if the deposit is going to be gifted by someone who then lives in the property rent-free.

Even if the only person paying the rent goes to the mortgage? What type of mortgage would it need to be?

greatcrested

konn1ch1ha said:

Hi all,
 He has offered to put down a deposit on a property in England in my name

* So he gifts you the deposit (10%?).

* What is the purchase price?

* What mortgage would you need and do you qualify/can you afford it?

* so you then own this property

* if he dies within 7 years, the gift (deposit) would remain within his Estate for Inheritance Tax

* if he needed o go into care, the gift (deposit) would be included in any assessment of his eligibility for council funding (Deprivation of Assets).

and for him to move in to alleviate him from his current residence that he owns - a top floor flat with stairs - and wants to live in a ground floor flat.

* why not sell the top floor flat and buy a ground floor flat?

He also wishes to keep his current flat that he lives in and rent that out for income.

* so he will be a landlord with all that that involves: tax on the income, impact on any benefits entitlement, tenancy laws etc
The complicated bit - he has an ex-tenant that is his good friend and carer that would also move in and have a room and would pay his rent via DSS or something of the like.

* move in where? with him, into your property on the ground floor, as your tenant?

* what if the rent did not come? Could you still pay the mortgage?

* or the current top floor flat, as your step-dad's tenant?

Now, as I would technically be the landlord, I would be in receipt of that DSS and that would go towards the mortgage, or perhaps would pay all of the mortgage monthly(?).

* ah! so friend moves in with stepdad and pays you rent yes? What if he has rent arrears- can you pay the mortgage? What if DSS don't pay for some reason?
As someone like me that is quite dubious on the matter, I've come to seek advice and opinions on it. Is it legal and above board?

Yes, legal (if done properly) and 'above board'. But is it wise.... that's a different question!