ESA (Contribution Based) Benefit & PIP Benefit - Residential Mortgage & New BTL Mortgage

NightLight1

Hi there,

I'm just looking for a bit of information on how benefits can affect setting up a New Buy To Let Property.

I'm currently in receipt of Employment & Support Allowance (Contribution Based - Support Group), PIP and Income Protection Insurance Policy due to ill health.

I already have a residential mortgage which is my my own property that I reside in .

My question is: If I apply for just one Buy To Let Mortgage (as I'm wanting to help a friend of the family), I'm not interested in any other properties moving forward outside of this new BTL, will this affect the Income I'm in receipt of above? For example: will it reduce these incomes?

The idea is to let it out to the new tenant (friend of family),to be managed solely by me and not a letting agency (as there wouldn't be much to monitor) and simply charge whatever the mortgage is each month as the rental amount. 

Or is it better for it to be managed by a letting agency for the purposes of this?

I'm not looking for this to be a business. Just helping a friend out! If this is possible?

Also regarding tax, does this new BTL Property need to be declared to the HMRC via self assessment tax return? Will I be taxed on the property in anyway for setting it up as a BTL?

I know there are a few questions there but looking forward to hearing some feedback regardless of the outcome.

Many thanks!

silvercar

generally, you need at least a 25% deposit for a BTL. Assuming you have that much in savings, the income from the BTL would need to be declared. As a basic rate tax payer or less, the mortgage interest would be accepted as a finance cost of the BTL business but the repayment part won’t. You would be taxed on any profit you make.

as for benefits, any means tested benefits would consider your deposit amount as savings. 

motorman99

Letting to a friend of family……….

Run Forrrest, run…….

oh dear. 

theartfullodger

Issues with savings and any future income from  B2L for some benefits.  Gov.uk usually explains eligibility etc .  Different benefits different issues with savings, income (eg none of my benefits bothered about)

Doubt any lender will consider benefits income in their assessments. 

Myself, in receipt of 6 benefits (old) never been asked about them when applying for mortgage/remortgage (no job).

gazfocus

As nice as it is to try and help friends/family, my advice is DON'T! We rented to family we thought we could trust...won't go in to detail but needless to say, we were mistaken and would never rent to friends or family again.

NightLight1

Thank you for your comments everyone. It's really good to hear honest feedback about your own experiences etc. I really do appreciate it. Especially when your speaking from experience too. Thanks again!

Northern_Wanderer

PIP and Contributory ESA are not means-tested and therefore not affected by income, capital  or savings. If you were to move to means-tested benefits in future, like Universal Credit, you may not qualify for them.

NightLight1

Thank you Northern_Wanderer!