Son wants to buy our house as investment

Flakie

We are thinking of downsizing next year and our son has expressed an interest in buying our house so he can turn it into an investment property. No solid plans yet but his purchase would go through as if he were any other buyer on possibly a buy to let mortgage and we would get the full market value so we can buy something else. We would have our own solicitor to protect our interests but would just be able to cut out the estate agent. Our house is worth around £500,000 at present. Any pitfalls we need to be aware of? Any guidance would be appreciated. Thanks.

DE_612183

if he is using it as an investment - where is he living?

kingstreet

That sounds fine as you don't intend to continue to reside in the property.

dimbo61

Without knowing the property, condition, local rental market and plans that your Son has No one can say if this is a good idea or a terrible step for him to take.
With BTL interest rates climbing faster than normal residential rates and  development finance rates higher still if he can get the loan/mortgage ?
Watching Homes under the hammer right now and a young couple have converted a semi into a 5 bed HMO.
Maybe £100/120,000 development costs 
Now they need a HMO licence which Councils are blocking with Article 4 rules.
A normal BTL where you rent to a family might mean your Son makes a LOSS every month !

housebuyer143

dimbo61 said:

Without knowing the property, condition, local rental market and plans that your Son has No one can say if this is a good idea of a terrible step for him to take.
With BTL interest rates climbing faster than normal residential rates and  development finance rates higher still if he can get the loan/mortgage ?
Watching Homes under the hammer right now and a young couple have converted a semi into a 5 bed HMO.
Maybe £100/120,000 development costs 
Now they need a HMO licence which Councils are blocking with Article 4 rules.
A normal BTL where you rent to a family might mean your Son makes a LOSS every month !

I don't imagine he going to do it if he loses money....

Ath_Wat

DE_612183 said:

if he is using it as an investment - where is he living?

Somewhere else?

Ath_Wat

dimbo61 said:

Without knowing the property, condition, local rental market and plans that your Son has No one can say if this is a good idea of a terrible step for him to take.
With BTL interest rates climbing faster than normal residential rates and  development finance rates higher still if he can get the loan/mortgage ?
Watching Homes under the hammer right now and a young couple have converted a semi into a 5 bed HMO.
Maybe £100/120,000 development costs 
Now they need a HMO licence which Councils are blocking with Article 4 rules.
A normal BTL where you rent to a family might mean your Son makes a LOSS every month !

If the son is interested in buying a 500K house as an investment property it's reasonable to assume he is capable of working all this out for himself.  I think all the OP wants to know is whether there are any risks for them peculiar to selling to their son.

dimbo61

From bitter experience I can assure you that setting up a BTL property costs way more than people think.
Mortgage fees, surveys, Fit for habitation, decent home standards, EPC band C from 2025.
Selective licence, Room size, Hundreds of laws/rules and regs relating to being a Landlord
 Nightmare tenants who move in and Won't pay for 12/18 months.
Tax changes, tradesmen needed to improve the property for tenants ! and GSC, EICR, EPC, 
Joining NRLA  and tenancy paperwork. Registering the deposit within 30 days etc.

silvercar

If the son wants to invest £500k in the letting business he should buy the most appropriate property for that business, not buy his parents' home just because he knows the seller.

Bendy_House

silvercar said:

If the son wants to invest £500k in the letting business he should buy the most appropriate property for that business, not buy his parents' home just because he knows the seller.

I presume he also knows the house.

Ath_Wat

silvercar said:

If the son wants to invest £500k in the letting business he should buy the most appropriate property for that business, not buy his parents' home just because he knows the seller.

For all we know this is going to be the 75th property he is adding to his investment portfolio.  I really don't think advice for the son is what was being asked for here.