Advice please! How can my partner buy into a property that only I will live in?

MrsOystercatcher

New here and hoping for some collective MSE wisdom - I currently rent a property for myself and my 20 year old daughter, in London.  We've been there for 12 years and have a very good landlord, who has never increased the rent, but who is now planning to sell in the next year or so.  He has offered to sell to us but I can't afford to buy the flat. Rents have skyrocketed in my area and put renting locally out of reach, so I am looking at taking out a mortgage and hoping to buy a flat within the same borough we are living in now. 
I'm 55 and don't want a mortgage lasting longer than 12/13 years, as don't want to be paying it off past retirement age.   I have researched shared ownership but it doesn't seem like the best option. My daughter has some health issues and can't work at the moment, so any mortgage would be based just on my salary.
My partner has a large house in another part of London but for various reasons, we can't go and live with him. He is however willing to help me out financially with buying a property, but I'd like to understand how this might work and my questions are:
Would he be able to take out a mortgage for 20% of the property price only?
Or would we have to apply for a joint mortgage, even if he won't be living in the property? 
Would he be deemed a landlord, if not living there, even if he is only buying a small share of the property? and what implications would that have? 
I am a first time buyer, he isn't - would that complicate matters? 

We would obviously need to have some form of legal agreement about what happens to his share of the property if (a) we split up - although very unlikely to be acrimonious and he has said he would treat this as a business arrangement  (b) I sell in the future  - so he would get his % share back or (c) something happens to him, as his two sons would be the beneficiaries of his will, but I wouldn't want to lose my home. 

Is this all a really bad idea? It seems to be the only way we can stay in London, where I have my job, my only remaining parent, my partner, my friends (plus daughter is really adamant she doesn't want to leave London and as she has MH issues, I don't think it would be a good move for her). 

Really grateful for anyone's advice/thoughts/experiences!

sheramber

Is your partner intending to put money into the purchase or just  help with the mortgage?

propertyrental

He can't get a mortgage for 20% of the property. You and he would need a joint mortgage for the full mortgage. However you could own as 'Tenants in Common' and create a Deed specifying that he owns 20% (and could leave it to whoever he chose in his will) and you own 80%. The alternative is to own a Joint Tenants' whereby you each own 100%. If one of you dies, the other owns the property outright (irrespective of what their will might say).

You (both) would lose any FTB benefits as he is not a FTB.

If he did not live there, he'd be liable to potential Capital Gains Tax on his share if the property was sold.

An alternative would be for him to loan you the money, though banks/lenders don't tend to approve/like this.

Or he could gift it to you, but then he's ;ost that money - it's yours.

theartfullodger

Any number of people can put money into a share of property.  There will be CGT, & other tax  implications. They should ALL talk to accountant/solicitor (ie not just person produce "the cunning plan" )

Understand you want to pay off mortgage by age 68 but it's possible to go much longer: I've a mortgage ending 2031 my age 83 (I'm 76.)  Dunno which will expire 1st, me or mortgage.. (ditto my car..)

Bit tough on my 3 sons....

sheramber

Would  he be able to go on the mortgage if he is not going to be living there?

silvercar

No harm in you taking a mortgage over a longer term and overpaying it as and when you can afford. You may be able to get a single proprietor, joint borrower mortgage, where your partner goes on the mortgage but not on the deeds. Or he could gift you a deposit.

just some options to consider.

MrsOystercatcher

sheramber said:

Is your partner intending to put money into the purchase or just  help with the mortgage?

Basically, he's happy to help with the mortgage (or might potentially consider lending me a lump sum to give me a bigger deposit) but will want the money back at some point in the future

MrsOystercatcher

propertyrental said:

He can't get a mortgage for 20% of the property. You and he would need a joint mortgage for the full mortgage. However you could own as 'Tenants in Common' and create a Deed specifying that he owns 20% (and could leave it to whoever he chose in his will) and you own 80%. The alternative is to own a Joint Tenants' whereby you each own 100%. If one of you dies, the other owns the property outright (irrespective of what their will might say).

You (both) would lose any FTB benefits as he is not a FTB.

If he did not live there, he'd be liable to potential Capital Gains Tax on his share if the property was sold.

An alternative would be for him to loan you the money, though banks/lenders don't tend to approve/like this.

Or he could gift it to you, but then he's ;ost that money - it's yours.

This so helpful, thank you!  I had no idea about Tenants in Common etc, will look into this further. I had feared that it would affect my FTB status although I'm not clear how so will also look into this.   I don't think he has thought about Capital Gains Tax at all (neither had I) so further discussions needed there.  He's VERY risk-averse so this may not go ahead anyway and sadly I can't see him gifting me the money (financially he could but it's clear he doesn't want to and that has to be his decision)

MrsOystercatcher

theartfullodger said:

Any number of people can put money into a share of property.  There will be CGT, & other tax  implications. They should ALL talk to accountant/solicitor (ie not just person produce "the cunning plan" )

Understand you want to pay off mortgage by age 68 but it's possible to go much longer: I've a mortgage ending 2031 my age 83 (I'm 76.)  Dunno which will expire 1st, me or mortgage.. (ditto my car..)

Bit tough on my 3 sons....

Thanks so much for your reply - I hadn't really considered taking out a mortgage for a longer period but have been looking into this since last night when I saw your comment.  It would certainly give me more flexibility in terms of properties I could afford, and if I went for a 20 year mortgage, I'm very likely to have received some money as an inheritance by then (although obviously hoping my parents are around for as long as possible!), which would clear a big chunk of it. 

I'm sure you'll outlast your mortgage! Thanks so much, you've given me a whole new angle to research

MrsOystercatcher

silvercar said:

No harm in you taking a mortgage over a longer term and overpaying it as and when you can afford. You may be able to get a single proprietor, joint borrower mortgage, where your partner goes on the mortgage but not on the deeds. Or he could gift you a deposit.

just some options to consider.

Thank you for your reply - you're the second person who has suggested a longer term for a mortgage and I have started looking into this.   I also had no idea about a single proprietor, joint borrower mortgage, so will have a look at that too.   He potentially could gift me a deposit but I don't think he's willing to; he wants some return on the investment.

kingstreet

Talk to a broker about Gen H products. This sounds like a perfect case for them.