Buying a house for a relative but owning in another name - options?

16confused

Hi 
My younger brother has minimal savings and opportunities for him to get a permanent job by which he could get a mortgage to buy a property are very limited. 
He's 35 and has struggled for regular employment for many years which means that renting somewhere privately is also not really an option and is also prohibitively expensive if he could find a private landlord that would take him. 
This leaves him with two options 1) continue living with our mum indefinitely (she's in her 60s) or
2) get on the council list to see if he can get a property but he would be low priority and so the options offered would be quite limited if at all. 

An idea that my mum and I have considered is that we pool our money and buy a place for him. The idea being that he would then have a place to live for the rest of his life with no mortgage and so that he would only have his living expenses to consider.

He has a small amount of savings that he could put in but most of the money would come from us. My mum's contribution would be seen as giving some of his inheritance early i.e. he would never need to pay it back. I would give him the money on the basis that I could possibly get it back if the property were sold or my mum would give me more of an inheritance to offset what I gave towards the house purchase or I could recover the money if the house were ever sold. Either way we are both aware that there is a risk that the money will never be seen again. However, we do want to minimise the risks. We're also aware that if we owned there may be a situation where some day we had to evict him. 

Our concern is that if he has it in his name he can't be trusted not to do something reckless and end up losing the house (there are good reasons why he has ended in the situation he is in despite the support from others) and so he would then end up back where he started either moving back in my mum or relying on the state to house him. 

How would we go about buying a house for him but ensuring that it was in our names or jointly? 
We'd have to buy it cash as clearly we can't have  a mortgage and then rent to a relative?  
How could we have it documented so that it was not in our names so he couldn't borrow money against it etc? 

*****This is not a tax dodge or anything underhand. My mum is so tired of having him at home but she can't kick him out and things are particularly difficult at the moment. 
Suggestions/links etc would be much appreciated.
Thanks
 

AnotherJoe

16confused said:

How would we go about buying a house for him but ensuring that it was in our names or jointly? 
We'd have to buy it cash as clearly we can't have  a mortgage and then rent to a relative?  
How could we have it documented so that it was not in our names so he couldn't borrow money against it etc? 

Not sure i understand this paragraph 

First sentence its in your names third its not ????????????  Is the third a typo? If its not in his name he cant borrow money against it. You can also, as an extra guard, sign up to the land registry website which will alert you of any activity such as, for example, someone attempting to borrow against the house. Lets say he forged some documents and pretended to be you.

You would go about buying a house in your (you&mum) names by buying a house jointly. Same as anyone who bought  house.

You would have it documented as part of the normal process of buying same as anyone else who buys a house has it documented.

Your mum should alter her will to make sure that any property she owns goes to you and maybe everything else depending if she wants to leave anything to brother.

 

theoretica

Have you considered setting up a trust?  It would need to be drawn up by a solicitor experienced in that sort of thing, but might do what you want in a formal way.

16confused

theoretica said:

Have you considered setting up a trust?  It would need to be drawn up by a solicitor experienced in that sort of thing, but might do what you want in a formal way.

I did look into that but it seemed too broad for what we had in mind. 
Any ideas to what kind of trust to consider so that I can target my research? If anyone has any recommended parties that would be great too. 

Mgman1965

And dont forget you'll pay 3% SDLT if either you or mum are already homeowners.
There MAY be tax implications even by letting him have it rent free.
If either of you need residential care and your names are on the deeds, the council will see it as can asset for potential sale.

[Deleted User]

16confused said:

Hi 
My younger brother has minimal savings and opportunities for him to get a permanent job by which he could get a mortgage to buy a property are very limited. 
He's 35 and has struggled for regular employment for many years which means that renting somewhere privately is also not really an option and is also prohibitively expensive if he could find a private landlord that would take him. 
This leaves him with two options 1) continue living with our mum indefinitely (she's in her 60s) or
2) get on the council list to see if he can get a property but he would be low priority and so the options offered would be quite limited if at all. 

An idea that my mum and I have considered is that we pool our money and buy a place for him. The idea being that he would then have a place to live for the rest of his life with no mortgage and so that he would only have his living expenses to consider.

He has a small amount of savings that he could put in but most of the money would come from us. My mum's contribution would be seen as giving some of his inheritance early i.e. he would never need to pay it back. I would give him the money on the basis that I could possibly get it back if the property were sold or my mum would give me more of an inheritance to offset what I gave towards the house purchase or I could recover the money if the house were ever sold. Either way we are both aware that there is a risk that the money will never be seen again. However, we do want to minimise the risks. We're also aware that if we owned there may be a situation where some day we had to evict him. 

Our concern is that if he has it in his name he can't be trusted not to do something reckless and end up losing the house (there are good reasons why he has ended in the situation he is in despite the support from others) and so he would then end up back where he started either moving back in my mum or relying on the state to house him. 

How would we go about buying a house for him but ensuring that it was in our names or jointly? 
We'd have to buy it cash as clearly we can't have  a mortgage and then rent to a relative?  
How could we have it documented so that it was not in our names so he couldn't borrow money against it etc? 

*****This is not a tax dodge or anything underhand. My mum is so tired of having him at home but she can't kick him out and things are particularly difficult at the moment. 
Suggestions/links etc would be much appreciated.
Thanks
 

Yes you can have a mortgage and let to relatives, it's called a regulated BTL mortgage.  However, it doesn't appear that you will be charging your brother any rent.  It's also possible for people to get second home mortgage to buy a property for relatives to live in.

If you and your mum jointly purchase the property then the property will be in your names. It would be recorded with the Land Registry same as any other property you buy in England or Wales. Your brother couldn't use the property as security for loans because it wouldn't be in his name.  

If you go down this route who is going to pay for repairs and maintenance?

theoretica

16confused said:

theoretica said:

Have you considered setting up a trust?  It would need to be drawn up by a solicitor experienced in that sort of thing, but might do what you want in a formal way.

I did look into that but it seemed too broad for what we had in mind. 
Any ideas to what kind of trust to consider so that I can target my research? If anyone has any recommended parties that would be great too. 

Trust can have broad powers, but you don't need to use all the breadth.  But a discretionary trust can be set up to give the power to the trustees and not the person living in the house the trust could still work if it became appropriate to sell that property and buy another one and may counteract the second home stamp duty and CGT issues.

eg see

https://www.sheffieldmencap.org.uk/wp-content/uploads/discretionary_trusts_a_guide_for_families-2010.pdf

https://garner-hancock.co.uk/wealth-protection/faq-on-trusts-tip-traps-and-tax/

LadyDee

Why wouldn't you charge him at least a nominal rent.  Who will pay for the insurance, bills, maintenance, repairs?  Does he actually need to live rent free?  There'd be little or no motivation to find and keep a job if he's going to housed for nothing.  Does he have special needs (you mention Council), or is he just a nuisance.  You could offer to pay his rent for a set period in a rented flat, to help him get on his feet, then once he's proved himself but still needs assistance, set about purchasing a property for him.

AdrianC

A trust really does sound the right way to do this. Professional advice required.

Angela_D_3

I wanted to do a buy to let for my daughters to live in.  None of the high street lenders would touch it 

Angela_D_3

Having seen my brother go through this,  living almost rent free with my mum,  in and out of jobs and relationships for years sponging off everyone he could find.  The best thing she ever did was kick him out.  Once he was forced to stand on his own two feet he did.