Rent out family home to live in sheltered housing

TeaAndToast_2

Hello,

Mum (78) has been assessed by the housing people as needing a new home due to her struggles with stairs, eyesight etc.  She seems to have a fair number of points so I'm hoping it can be swift. Anyhow I've been tasked with trying to find a way to proceed.  

Mum owes 53k on a 170k house.  The mortgage has only ever been interest only for past 20 years as she moved close to pension age.

When she gets a property with a housing association she will have to pay rent there due to her capital.

She doesn't want to use what she sees as the kid inheritance.  The sums I've done suggest that renting out her current house would cover her new housing association accomodation and the mortgage repayments.  

Due to her age I doubt any lender would consider her for a buy-to-let.  I've only paid 25k off my 150k house so have no capital to cover.  Ive also just remortgaged so I couldn't even make the repayments for 50k over 20 years myself.   

Any advice on renting or is it a case of selling and using it to fund the housing associations rent?

kingstreet

Age is less of an issue for a BTL but many lenders won't like her moving to rented rather than having an onward purchase. Speak to recommended brokers for suggestions.

TeaAndToast_2

kingstreet said:

Age is less of an issue for a BTL but many lenders won't like her moving to rented rather than having an onward purchase. Speak to recommended brokers for suggestions.

It's specific housing for those assessed as vulnerable.  I think it was worded as being made involuntarily homeless. 

Thanks for the advice. 

Keep_pedalling

I think it is a terrible idea. Does she or you have any experience of being a landlord? How much would need to be spent on getting her home to rentable standard? The priority here is her comfort and security, so better to sell up and clear the debt. 

If you still think it is a good idea have a read of this thread.

https://forums.moneysavingexpert.com/discussion/6424417/bailiffs-are-our-last-resort/p1

TeaAndToast_2

Keep_pedalling said:

I think it is a terrible idea. Does she or you have any experience of being a landlord? How much would need to be spent on getting her home to rentable standard? The priority here is her comfort and security, so better to sell up and clear the debt. 

If you still think it is a good idea have a read of this thread.

https://forums.moneysavingexpert.com/discussion/6424417/bailiffs-are-our-last-resort/p1

No money needs spent on the property, new boiler and carpet last year.  New carpet every year it seemed.   We have family that are currently renting close by who I would offer it too. It would be under the area price, but would cover what's needed.

silvercar

A friend's mother does this. She needed to be in sheltered housing/ supported living yet couldn't afford it. Her kids do all the landlord type work and her former home is rented out to cover the costs of the sheltered housing. They thought this better than selling up and using the money to pay for the new home as the money won't run out. I think the issue was that the new place costs more than the LA would pay, so this meant that she could self fund.

TeaAndToast_2

I think the issue was that the new place costs more than the LA would pay, so this meant that she could self fund.

LA ? Local authority?  I know she isn't entitled to anything due to the capital.  So as you said to know that the money won't run out, or to have it as backup for anything further.

Keep_pedalling

One other factor is the mortgage, she would need permission to do this from the mortgage company snd that is not going to be given for an IO mortgage and it is highly unlikely that she will be able to get any other type of remortgage unless it is a private one from family.

If there is nothing in place to pay off the IO mortgage then better to bite the bullet now.

MWT

TeaAndToast_2 said:

Mum owes 53k on a 170k house.  The mortgage has only ever been interest only for past 20 years as she moved close to pension age.

Do you know exactly what sort of mortgage she has?

If this is a product designed to run for her lifetime and be settled eventually from the sale of the property, then leaving the home to move to sheltered housing would usually trigger the need repay the mortgage..?

 

Annisele

TeaAndToast_2 said:

No money needs spent on the property, new boiler and carpet last year.  New carpet every year it seemed.   We have family that are currently renting close by who I would offer it too. It would be under the area price, but would cover what's needed.

Renting to family introduces a whole new set of issues. Some of those are to do with relationships, and you might be able to predict those - but some are to do with mortgages. Standard BTL mortgages prohibit letting to close family members. Regulated BTL mortgages do allow lets to family members, but they come along with a bunch of income related criteria that it sounds like your mum won't meet.

There might also be an issue with letting to family "under the area price". Standard BTL lenders are unlikely to be happy with a let that isn't on commercial terms. Plus, once your mum has paid any appropriate tax, are you sure she'd do better as a landlord than just selling and sticking her money elsewhere?