Buying house for CASH from Son-Letting it out to His ex-Subsidized rent.

blue_max_3

I wonder if this is more complicated than it needs to be. The ex may decide to move in time, especially when the kids are older or she meets someone new. 
And do you actually want to own another property? 
Perhaps helping your son financially is going to keep his investment in the property. It will be tax free and have no further implications (I believe). I would have an agreement that the house will be sold on or before his eldest child reaches 18 or some other variation mutually agreeable. He could then either repay you, or you could write it off. The ex may be eligible for benefits this way too.
Without this financial burden, your son should be able to move out.

[Deleted User]

blindman said:

MovingForwards said:

Why not just do a private mortgage with the ex-gf for the outstanding mortgage balance and 50% of the equity due to your son.
You still get an income each month because of the mortgage payment.
A solicitor draws the terms of the mortgage up and it's secured on the property like a normal mortgage is.

Intersting
Would any solicitor do this?

I like this idea too ! I think its the best way forward. 

[Deleted User]

blindman said:

MovingForwards said:

Why not just do a private mortgage with the ex-gf for the outstanding mortgage balance and 50% of the equity due to your son.
You still get an income each month because of the mortgage payment.
A solicitor draws the terms of the mortgage up and it's secured on the property like a normal mortgage is.

Intersting
Would any solicitor do this?

Any conveyancing solicitor should be able to help and it's more tax efficient than buying the whole property and letting to your son's ex.  Plus it would avoid any potential sale-and-rent-back issues.

letsbetfair

Agree that a private mortgage sounds like a better idea. Do consider what would happen if the ex couldn't or wouldn't pay for a prolonged period of time, but this does avoid a number of the disadvantages of renting to them. Be clear on the timescale within which you want/expect to be repaid.

blindman

letsbetfair said:

Agree that a private mortgage sounds like a better idea. Do consider what would happen if the ex couldn't or wouldn't pay for a prolonged period of time, but this does avoid a number of the disadvantages of renting to them. Be clear on the timescale within which you want/expect to be repaid.

Sounds good, I'll look into that.

getmore4less

Does the private mortgage really solve the problem? 

With the buy and rent back you have the rental income and the potential for the value of the house to grow.

You effectively lend the ex £147k and come to some arrangement on a payment plan.
You are going to have to charge interest for it to be viable and may never see your money back in your lifetime.

Interest will be taxable as income and less than you could get in rent.

What can they afford a month?

blindman

getmore4less said:

Does the private mortgage really solve the problem? 

With the buy and rent back you have the rental income and the potential for the value of the house to grow.

You effectively lend the ex £147k and come to some arrangement on a payment plan.
You are going to have to charge interest for it to be viable and may never see your money back in your lifetime.

Interest will be taxable as income and less than you could get in rent.

What can they afford a month?

Actually  it does not solve the problem.
Apart from the pitfalls as outlined above:
The Ex cannot afford the mortgage and and she will get no benefits towards it.
At the minute she pays £300 ish per month for her half of the mortgage.
If she rents she will get benefits for the rent.

letsbetfair

The ex may struggle to get benefits for rent if you buy and rent to her on a subsidised basis https://england.shelter.org.uk/legal/benefits/housing_benefit/eligibility_for_housing_benefit/treated_as_not_liable_for_rent They may be able to get benefits for rent, but there's a risk they won't (or will have a right in order to do so).
Either way, if you buy the house off them, won't they have a big enough lump sum to be ineligible for means-tested benefits anyway?

blindman

Good points.

She may get her job back in Oct post Covid, but I am assuming the worst, that she will not.

And yes, She will have £30k .

MovingForwards

Having £30k from the sale would rule her out for most benefits and she would be expected to use that to pay her rent, bills and everything else.

Why don't you wait and see what happens in a few months before making any decision.

With the private mortgage any conveyancing solicitors can do it.