Helping elderly parents moving back to the UK-advice needed

sturgeon

My parents have been out of of the country for a long time (15+ years) and wish to move back. They don't want to rent as they're concerned they could be kicked out after their rental is up and don't want the upheaval, plus are subject to endless increases at the whim of the landlord. They just don't want the insecurity of it. Based on their age and limited income from pensions, they don't think they'll be able to get a mortgage. They've therefore asked me to help buy a property, I think they're a little naive and think there's a way for me to buy a property in my name (via mortgage, I do not have the spare cash) and for them to just transfer me the amount for mortgage payments each month. It's clearly far more complicated than that. My initial research has determined the following, which may not be entirely correct:

• Buying a property for them under my name via a standard mortgage is an immediate no-go. Even if I could, I'm wanting to sell and upgrade myself soon and if I lose several £100k of affordability then I can't get the property I want. If I did pursue this, I'd be (illegally?) subletting and if found out, there would be consequences. Not sure what these are, however one I believe will be my lack of ability to get insurance or it being voided, so if the house burned down then I'd not be covered yet will still owe the full mortgage, correct? What other risks are there?

• Buy to let may be an option but a standard BTL is not allowed for family members as many BTL landlords would want to reduce the rent for relatives. I'm not sure how my lender would find out, I'm not familiar with BTL so I'm not sure (and doubt) that they ask for the names and details of tenants. However, they could easily see their surnames match from the council tax and electoral register once they move in.

• Therefore a 'family buy to let mortgage' will be the answer as these are designed for this purpose, very hard to find much detail on these online but supposedly the interest rates are higher and I'd like to know what these look like. The downside they didn't anticipate/think about was that this pretty much universally would need a 25% deposit as with all BTL I believe. Plus the stamp duty payable would be more as I already have a main residence. Lots more investigation needed on this, I've no idea how to set rent payments as I'd also need to pay tax on profits, and I believe the rent would need to be at least 25% more than my mortgage costs to be allowed to proceed. Is this correct? My parents would pay rent that covers the mortgage but how do I charge them to cover the tax I'm paying for this  rental amount that must be +25% over the payments? If they did have the 25% deposit and gave that to me, isn't a gifted deposit not allowed?

Any other issues I've not considered? Does a BTL definitely not impact my own mortgage affordability so I can continue buying my next property without being told I'd be lent far less than I currently can?

The family BTL mortgage seems unviable as I don't think they'd have the 25% deposit to begin with. Plus it's complicated and a financial burden on me. I'd need to figure out how to pay the mortgage off without assuming the property value would increase, whilst my main interest is my own home and covering that. Therefore, I'd like to be able to find another option which I think could be:

1. Are there longer term rental schemes where properties or developments are owned by rental companies and not private landlords, meaning they won't suddenly be sold or new tenants being found, giving them more assurance/security? How do I find these?
2. Are there any mortgage schemes for elderly people? One is mid 70's, the other late 60's. There's a little info here suggesting a part buy/part rent scheme for elderly people who can't get standard mortgages? https://www.ageuk.org.uk/information-advice/care/housing-options/specialist-housing-options/

Thanks in advance.

housebuyer143

sturgeon said:

My parents have been out of of the country for a long time (15+ years) and wish to move back. They don't want to rent as they're concerned they could be kicked out after their rental is up and don't want the upheaval, plus are subject to endless increases at the whim of the landlord. They just don't want the insecurity of it. Based on their age and limited income from pensions, they don't think they'll be able to get a mortgage. They've therefore asked me to help buy a property, I think they're a little naive and think there's a way for me to buy a property in my name (via mortgage, I do not have the spare cash) and for them to just transfer me the amount for mortgage payments each month. It's clearly far more complicated than that. My initial research has determined the following, which may not be entirely correct:

• Buying a property for them under my name via a standard mortgage is an immediate no-go. Even if I could, I'm wanting to sell and upgrade myself soon and if I lose several £100k of affordability then I can't get the property I want. If I did pursue this, I'd be (illegally?) subletting and if found out, there would be consequences. Not sure what these are, however one I believe will be my lack of ability to get insurance or it being voided, so if the house burned down then I'd not be covered yet will still owe the full mortgage, correct? What other risks are there?

• Buy to let may be an option but a standard BTL is not allowed for family members as many BTL landlords would want to reduce the rent for relatives. I'm not sure how my lender would find out, I'm not familiar with BTL so I'm not sure (and doubt) that they ask for the names and details of tenants. However, they could easily see their surnames match from the council tax and electoral register once they move in.

• Therefore a 'family buy to let mortgage' will be the answer as these are designed for this purpose, very hard to find much detail on these online but supposedly the interest rates are higher and I'd like to know what these look like. The downside they didn't anticipate/think about was that this pretty much universally would need a 25% deposit as with all BTL I believe. Plus the stamp duty payable would be more as I already have a main residence. Lots more investigation needed on this, I've no idea how to set rent payments as I'd also need to pay tax on profits, and I believe the rent would need to be at least 25% more than my mortgage costs to be allowed to proceed. Is this correct? My parents would pay rent that covers the mortgage but how do I charge them to cover the tax I'm paying for this  rental amount that must be +25% over the payments? If they did have the 25% deposit and gave that to me, isn't a gifted deposit not allowed?

Any other issues I've not considered? Does a BTL definitely not impact my own mortgage affordability so I can continue buying my next property without being told I'd be lent far less than I currently can?

The family BTL mortgage seems unviable as I don't think they'd have the 25% deposit to begin with. Plus it's complicated and a financial burden on me. I'd need to figure out how to pay the mortgage off without assuming the property value would increase, whilst my main interest is my own home and covering that. Therefore, I'd like to be able to find another option which I think could be:

1. Are there longer term rental schemes where properties or developments are owned by rental companies and not private landlords, meaning they won't suddenly be sold or new tenants being found, giving them more assurance/security? How do I find these?
2. Are there any mortgage schemes for elderly people? One is mid 70's, the other late 60's. There's a little info here suggesting a part buy/part rent scheme for elderly people who can't get standard mortgages? https://www.ageuk.org.uk/information-advice/care/housing-options/specialist-housing-options/

Thanks in advance.

You mentioned family BTL but unlike normal BTL these are regulated and I believe they assess affordability as they do a typical mortgage, taking into account your income etc and therefore this would directly affect you moving or borrowing more for your own residential property, which you do not want. 
It also assumes you have enough earnings to be able to afford this second property on top of your residential mortgage, which is probably unlikely. 

BTL - if you are defrauding the mortgage lender by lying is obviously fraud but also can cause the lender to call in the loan if found out. Do not do it.

You then need to factor in the 3% additional stamp duty for the purchase. 

There are no schemes you talk of for renting as far as I know unless you get a housing association house.

Some lenders do lend into retirement but without a large deposit and large pensions etc, they will not be able to borrow much if anything. 
Although they do not want to rent, they really have little choice as it seems they do not have the money or the income to buy a house. 

macman

I think both you and your parents need to understand that tenants in England have considerable rights. If the property were to be sold, the tenancy continues, but under the new owner. Sale of the property does not void the tenancy: they would need to be given notice (2 months minimum) beyond any fixed term, and actual eviction would be many months after that.
Further more, rents cannot be just increased  'at the whim of the landlord'.
Their rights to occupy as legal tenants will be much greater than those which they would have if they occupied a house bought and owned by you without a tenancy agreement-they would simply be excluded occupiers, with minimal rights.

bouicca21

Bit difficult to comment without more information.  Do they have a property to sell so that they would have some capital?  Presumably they want to be close to relatives so not a lot of choice about location.

I’m not sure about the eligibility criteria for shared ownership but that might be worth exploring, even if only to cross it off the list of possibles.  What about a flat in one of those over 60s developments?

sturgeon

housebuyer143 said:

sturgeon said:

My parents have been out of of the country for a long time (15+ years) and wish to move back. They don't want to rent as they're concerned they could be kicked out after their rental is up and don't want the upheaval, plus are subject to endless increases at the whim of the landlord. They just don't want the insecurity of it. Based on their age and limited income from pensions, they don't think they'll be able to get a mortgage. They've therefore asked me to help buy a property, I think they're a little naive and think there's a way for me to buy a property in my name (via mortgage, I do not have the spare cash) and for them to just transfer me the amount for mortgage payments each month. It's clearly far more complicated than that. My initial research has determined the following, which may not be entirely correct:

• Buying a property for them under my name via a standard mortgage is an immediate no-go. Even if I could, I'm wanting to sell and upgrade myself soon and if I lose several £100k of affordability then I can't get the property I want. If I did pursue this, I'd be (illegally?) subletting and if found out, there would be consequences. Not sure what these are, however one I believe will be my lack of ability to get insurance or it being voided, so if the house burned down then I'd not be covered yet will still owe the full mortgage, correct? What other risks are there?

• Buy to let may be an option but a standard BTL is not allowed for family members as many BTL landlords would want to reduce the rent for relatives. I'm not sure how my lender would find out, I'm not familiar with BTL so I'm not sure (and doubt) that they ask for the names and details of tenants. However, they could easily see their surnames match from the council tax and electoral register once they move in.

• Therefore a 'family buy to let mortgage' will be the answer as these are designed for this purpose, very hard to find much detail on these online but supposedly the interest rates are higher and I'd like to know what these look like. The downside they didn't anticipate/think about was that this pretty much universally would need a 25% deposit as with all BTL I believe. Plus the stamp duty payable would be more as I already have a main residence. Lots more investigation needed on this, I've no idea how to set rent payments as I'd also need to pay tax on profits, and I believe the rent would need to be at least 25% more than my mortgage costs to be allowed to proceed. Is this correct? My parents would pay rent that covers the mortgage but how do I charge them to cover the tax I'm paying for this  rental amount that must be +25% over the payments? If they did have the 25% deposit and gave that to me, isn't a gifted deposit not allowed?

Any other issues I've not considered? Does a BTL definitely not impact my own mortgage affordability so I can continue buying my next property without being told I'd be lent far less than I currently can?

The family BTL mortgage seems unviable as I don't think they'd have the 25% deposit to begin with. Plus it's complicated and a financial burden on me. I'd need to figure out how to pay the mortgage off without assuming the property value would increase, whilst my main interest is my own home and covering that. Therefore, I'd like to be able to find another option which I think could be:

1. Are there longer term rental schemes where properties or developments are owned by rental companies and not private landlords, meaning they won't suddenly be sold or new tenants being found, giving them more assurance/security? How do I find these?
2. Are there any mortgage schemes for elderly people? One is mid 70's, the other late 60's. There's a little info here suggesting a part buy/part rent scheme for elderly people who can't get standard mortgages? https://www.ageuk.org.uk/information-advice/care/housing-options/specialist-housing-options/

Thanks in advance.

You mentioned family BTL but unlike normal BTL these are regulated and I believe they assess affordability as they do a typical mortgage, taking into account your income etc and therefore this would directly affect you moving or borrowing more for your own residential property, which you do not want. 
It also assumes you have enough earnings to be able to afford this second property on top of your residential mortgage, which is probably unlikely. 

BTL - if you are defrauding the mortgage lender by lying is obviously fraud but also can cause the lender to call in the loan if found out. Do not do it.

You then need to factor in the 3% additional stamp duty for the purchase. 

There are no schemes you talk of for renting as far as I know unless you get a housing association house.

Some lenders do lend into retirement but without a large deposit and large pensions etc, they will not be able to borrow much if anything. 
Although they do not want to rent, they really have little choice as it seems they do not have the money or the income to buy a house. 

Thank you. I could cover the mortgage payments for the 2nd home if I had to (not that I’m planning to but if it’s worst case scenario in their affordability calculations). However if that mortgage amount is deducted from the amount I’d usually be allowed (4.5x salary or so) for my own house move I can’t accommodate that loss. 

You’re correct I don’t think they have the means to buy. There does seem to be a help to buy scheme for elderly people lending as little as 25% of the property value I’ve found online which needs more research. 

sturgeon

macman said:

I think both you and your parents need to understand that tenants in England have considerable rights. If the property were to be sold, the tenancy continues, but under the new owner. Sale of the property does not void the tenancy: they would need to be given notice (2 months minimum) beyond any fixed term, and actual eviction would be many months after that.
Further more, rents cannot be just increased  'at the whim of the landlord'.
Their rights to occupy as legal tenants will be much greater than those which they would have if they occupied a house bought and owned by you without a tenancy agreement-they would simply be excluded occupiers, with minimal rights.

Very helpful, thank you. I understand your point regarding their concern about a sale forcing them out so I’d push them to agree a longer term tenancy agreement if they’re worried about security. However, regarding the point on the landlord increasing the price-whilst unreasonable surely they can up the price to whatever they deem fit once the current tenancy period ends? There’s no right to cap the amount for the tenant. 

sturgeon

bouicca21 said:

Bit difficult to comment without more information.  Do they have a property to sell so that they would have some capital?  Presumably they want to be close to relatives so not a lot of choice about location.

I’m not sure about the eligibility criteria for shared ownership but that might be worth exploring, even if only to cross it off the list of possibles.  What about a flat in one of those over 60s developments?

They sold their U.K. property many years ago and their capital isn’t significant. I don’t know all the figures yet but we are talking less than £100k to hand I believe. They don’t mind location so are happy to go somewhere lower cost as long as it’s commutable via train to family and not halfway across the country. 

They’d ideally like a little bungalow with garden important to them. 

deannagone

Have they/you looked into over 60's rentals run by Housing Associations?  It would be a flat rather than a house but can have good community facilities and can offer more in the way of support if needed (a little, we are not talking day to day care if that is needed, you'd have to rely on the NHS for that).  As long as the rent is paid, there is no chance they'd be evicted in their life time. RightMove quite often have HO over 60's rental accommodation in their listings.

pinkteapot

I've rented a few times and never been forced out, or had my rent put up unreasonably. The same will apply to many, many other people. Of course there are plenty of tenants who do go through these things, but it's not necessarily the norm (your parents' view of how common it is may be skewed by news/online stories).

Question the landlord/lettings agent on why the property is rented out. If it's owned by a landlord with multiple BTL properties, it may be more stable than, say, a family renting out their house while they try a relocation to somewhere else (they're likely to sell it later or move back). Yes, there's always a risk a landlord will want to reduce their portfolio by selling some properties, but you'd be unlucky to have it happen quickly. I'm not saying rule out other circumstances - some people go abroad to work for years on end and leave a property rented out. Others are able to trade up to a bigger house while keeping their old one as a long-term rental for the income. Obviously prospective landlords can lie to you about their circumstances, but it's worth asking. 

The vast majority of rentals now want an initial 12-month (rather than 6-month) contract, so they've got at least that long to get settled. Every time I've rented carrying on past the 12 months hasn't been an issue.

pinkteapot

sturgeon said:

bouicca21 said:

Bit difficult to comment without more information.  Do they have a property to sell so that they would have some capital?  Presumably they want to be close to relatives so not a lot of choice about location.

I’m not sure about the eligibility criteria for shared ownership but that might be worth exploring, even if only to cross it off the list of possibles.  What about a flat in one of those over 60s developments?

They sold their U.K. property many years ago and their capital isn’t significant. I don’t know all the figures yet but we are talking less than £100k to hand I believe. They don’t mind location so are happy to go somewhere lower cost as long as it’s commutable via train to family and not halfway across the country. 

They’d ideally like a little bungalow with garden important to them. 

Halfway across the country from where? £100k will buy you something in various parts of the country (though a bungalow with garden will be pushing it). 

Tiglet2

There is/was a scheme called Homewise that meant if you were over 60 you could buy a property at a reduced price.  It was an equity release scheme whereby a percentage of the property is owned by Homewise and would be repayable when the house is sold - perhaps after your parents have sadly passed.  Here is a link, if it's something you might want to consider:  https://www.homewise.co.uk/home-for-life-plan/