House swap advice needed

MsWils

Yes we could not allow them to stay rent free or give them a discount on behalf of the company. We personally would have to foot the bill or subsidise their rent. They will have a lump sum but I think their plan is to give a chunk to their son. Im not sure why they are asking to have an arrangement like this. I'm wondering if they just want rent free and full asking price. Which is obviously not good for us. I think they are probably just very nervous of having rent to pay. Them having our house to move into is a really big incentive for them selling us their house off market. Thank you for your info. 

Annisele

So you plan to end up with you owning the old couple's current house, and your company owning the one you're renovating. Will all these transactions be cash, or will somebody need a mortgage?

If you're going to need a mortgage personally in order to buy the old couple's house, then I think you might have a problem. I say "I think" rather than "you will" because I haven't come across this before - but I can imagine mortgage lenders getting spooked by a sale at a (slight) undervalue in exchange for [I'm not quite sure what, but some sort of discounted rent on a property owned by somebody connected to the borrower but not actually the borrower].

If your company is going to need a mortgage, then again I think it's likely most lenders will be spooked by the arrangement. If you've come to some agreement such that you can only rent to that couple, then any lender might have trouble repossessing - so they're not going to want to be involved with the deal.

In general I think that if you need a mortgage and there's something unusual about either you or the property that you're wanting to buy, you'll likely have an easier time of it if you engage a good mortgage broker early on. Here it doesn't sound as though there's anything particularly unusual about either prospective borrower or prospective property, but the deal itself is (while not yet fully fleshed out) non standard. So if you are going to want a mortgage, I'd suggest getting a broker.

Of course ignore me if all of this is cash!

MEM62

MsWils said:

MEM62 said:

MsWils said:

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later.

Property is no substitute for a pension as you primary retirement planning.  It is high risk and nowhere near tax-efficient.  (And you can expect future governments to hit small time landlords in the pocket even more)     

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

You need a lot.  You are running a business that has a lot of regulation - not all of it landlord friendly.  You can do it properly and above-board and still take a financial kicking.  For example do you know that, as a landlord, you cannot terminate a tenancy?      

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok.

And thinking that may just be your downfall.   

@MsWils Just to give you some perspective.    

Yes I didn't ask advice about being a landlord. I asked the question I asked. We have an accountant and are aware of the tax implications. Im not sure why you think we haven't thought through being a landlord. My father owns 8 properties and Im well aware of possible problems and pitfalls. Again, it wasn't my question. However, given that you don't know the property, you don't know our personal circumstances or its kinda annoying when people just come on forums to get a kick out of being negative nancies. 

An interesting response.  In many cases (perhaps even most) individuals looking to property as an investment have not done their research.  Therefore such a response would be useful to many if it encourages them to explore the subject in more detail and avoid mistakes.  My comments were not offered because I got "a kick out of being negative".  Perhaps you do have a good perspective on the subject but we are not to know that.  Apologies for trying to offer something that you may have found useful.   

TBagpuss

MEM62 said:

MsWils said:

MEM62 said:

MsWils said:

What makes you think renting a property out will give you an income to compensate for not having a pension?  

Because, we would pay off the mortgage and then sell the house when we need to later.

Property is no substitute for a pension as you primary retirement planning.  It is high risk and nowhere near tax-efficient.  (And you can expect future governments to hit small time landlords in the pocket even more)     

What training or experience do you have of being a landlord, please?

What training or experience does anyone have with their first rental? Id imagine you need to start somewhere. 

You need a lot.  You are running a business that has a lot of regulation - not all of it landlord friendly.  You can do it properly and above-board and still take a financial kicking.  For example do you know that, as a landlord, you cannot terminate a tenancy?      

Which country are you in please?? (eg Wales, NI).  The laws can be different.

England

What assets does the company have that it would use to buy a property please?  What is the company currently used for?
It has profit which can be reinvested. 

Do you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent-from-hell)? 

It's an excellent property near a university. Once the old couple have found their permanent home we would look to do a furnished rental or possibly holiday rental. We set up and run a company from scratch, starting out working life as a cleaner and fast food worker. I think we'll be ok.

And thinking that may just be your downfall.   

@MsWils Just to give you some perspective.    

Yes I didn't ask advice about being a landlord. I asked the question I asked. We have an accountant and are aware of the tax implications. Im not sure why you think we haven't thought through being a landlord. My father owns 8 properties and Im well aware of possible problems and pitfalls. Again, it wasn't my question. However, given that you don't know the property, you don't know our personal circumstances or its kinda annoying when people just come on forums to get a kick out of being negative nancies. 

An interesting response.  In many cases (perhaps even most) individuals looking to property as an investment have not done their research.  Therefore such a response would be useful to many if it encourages them to explore the subject in more detail and avoid mistakes.  My comments were not offered because I got "a kick out of being negative".  Perhaps you do have a good perspective on the subject but we are not to know that.  Apologies for trying to offer something that you may have found useful.   

Yes, and of course part of the point of a forum is that not only do you get answers to specific question but it relates a resource which may be useful to others in a similar situation.  I don't think that most people posting here are being 'negative nancies' of getting a kick out o that, i think most people are genuinely trying (for free!) to help out and that includes flagging up things which might be issues in the situation as described. If you look at other posts it's pretty common to see posters responding to that kind of additional information to say it's something they hadn't thought of or didn't know. It's quite strange to jump to the conclusion it's people being negative for the sake of being negative.