Son wants to buy our house as investment

housebuyer143

dimbo61 said:

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.

If you do you research or have knowledge of the industry none of this comes as a surprise.
I have BTLs and do it all myself and I plan and expect everything you mentioned. I have never been surprised or out of pocket 

lookstraightahead

I think Just normal procedure as a landlord / investor. He's going to pay market price and you won't be tenants (although that's ok if there's no mortgage I believe)

AlexMac

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.

What silvercar said! 

Acknowledging the points made by others, above...

- that if the boy's able to access half a mil, he ought to be able to (learn how to?) cost, plan and run his own lettings business, and
- that the OP might be asking about the impact on themselves; financially, or from the familial stresses or tests of the relationship by dear offspring mixing business and family and blaming them if it goes t1ts up ...

.. my only added thought (as a small landlord with over 20 years trouble free and profitable experience of letting two flats- one latterly to the Grand daughter - thus immediately discrediting any credibility of my advice about mixing business) is

- why this one?  Depending on location, a family home worth half a mil might not necessarily be the best renatl prospect, depending on condition, demand, the local market, etc?

Assuming he'd want at least 4% gross return, will it generate north of £1,700 per month (£20k-odd pa) in rent?  Or if he really wants to appear on "Homes under the Hammer", should he maybe just buy a couple of little two-bed flats;

- in a conventionally-built block (low-rise, pitched roof, no cladding and ideally no expensive lifts or service charges)
- in an area with good public transport, near shops and in high rental demand to minimise voids, turnover and re-letting costs,

or whatever is popular locally, for £200-300k a pop (like my little two)?

And is now the time with higher mortgage interest rates?  (Although admittedly they're lower than the 10-15% I was paying in the 1970's and 1980s!)

Family conference... or let him sink or swim?

Ath_Wat

AlexMac said:

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.

What silvercar said! 

Acknowledging the points made by others, above...

- that if the boy's able to access half a mil, he ought to be able to (learn how to?) cost, plan and run his own lettings business, and
- that the OP might be asking about the impact on themselves; financially, or from the familial stresses or tests of the relationship by dear offspring mixing business and family and blaming them if it goes t1ts up ...

.. my only added thought (as a small landlord with over 20 years trouble free and profitable experience of letting two flats- one latterly to the Grand daughter - thus immediately discrediting any credibility of my advice about mixing business) is

- why this one?  Depending on location, a family home worth half a mil might not necessarily be the best renatl prospect, depending on condition, demand, the local market, etc?

Assuming he'd want at least 4% gross return, will it generate north of £1,700 per month (£20k-odd pa) in rent?  Or if he really wants to appear on "Homes under the Hammer", should he maybe just buy a couple of little two-bed flats;

- in a conventionally-built block (low-rise, pitched roof, no cladding and ideally no expensive lifts or service charges)
- in an area with good public transport, near shops and in high rental demand to minimise voids, turnover and re-letting costs,

or whatever is popular locally, for £200-300k a pop (like my little two)?

And is now the time with higher mortgage interest rates?  (Although admittedly they're lower than the 10-15% I was paying in the 1970's and 1980s!)

Family conference... or let him sink or swim?

Your biggest assumption is the same as everyone else's - you are assuming he is new to this and doesn't already understand everything about it, and that anyone has asked for advice from landlords or about being a landlord.  Why are people consistently doing this?  It's absolutely clear the question is from the OP about the effect on themselves.  And the answer is, there is none, they are fine to do it.

alt80

On the assumption son is happy with the investment and the property will meet lending criteria, private sale is fine. Think about where you are getting the figure of £500k from and is it definitely a fair reflection of market value? You need to be aware that if you sell a house to your son bmv, the difference between market value and the agreed price is considered a 'gift' in the eyes of HMRC.

Flakie

Thank you for your replies, even the negative ones. It was a simple question as he only brought the idea up yesterday. It would be his only investment and basically just for his and his families future. I share the concern about tenants and all the hoops he would have to go through but like most parents I want to support him if he has an idea, but would be the first to discuss the dangers of it. He has a good job as does his wife and they have an valuable home already. It’s way down the line and this was the first step in that process to see if it could affect us in any way. But you have given me some nuggets of information to bear in mind for further in the future and for that I thank you. 

Flakie

alt80 said:

On the assumption son is happy with the investment and the property will meet lending criteria, private sale is fine. Think about where you are getting the figure of £500k from and is it definitely a fair reflection of market value? You need to be aware that if you sell a house to your son bmv, the difference between market value and the agreed price is considered a 'gift' in the eyes of HMRC.

That’s a very good point but believe me he would be paying what it’s worth! My retirement might depend on it! 

Mojisola

Flakie said:

It was a simple question as he only brought the idea up yesterday.

It would be his only investment and basically just for his and his families future.

Does he have an emotional attachment to the house because it's been the 'family home'?

If so, I suggest it would be better for him to buy another property - it can be difficult enough to deal with if a tenant trashes your property but, if you have an emotional connection to it, it's even harder to cope with.

AlexMac

Ath_Wat said: re what  AlexMac said...

AlexMac said:

..." you are assuming he is new to this and doesn't already understand everything about it, and that anyone has asked for advice from landlords or about being a landlord..."

oops- sorry Ath_Wat.  I didn't mean to offend or be assumptive (is that even a word?) so forgive me for replying as a landlord, family member and old f4rt who's glad he bought a slum in inner city London in the 1970's for £10k or he'd never be able to afford anywhere round here now...   

But as regards your second critique;

Ath_Wat said:  

..."Your biggest assumption is the same as everyone else's .  Why are people consistently doing this?"  

Maybe you're making the assumption that we, "everyone else", come on here as contributors to forensically examine questioners' motive and needs, meet these, help them and generously share our knowledge? 

No we don't; we come on to show off, to pass the time, revel in the problems of others (why isn't there an English word for schadenfreude?) and because we haven't got anything better to do?  Sort of "outdoor relief" for the socially and emotionally impoverished? 

Anyway, keep up the good work!