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Can I buy a property with a mortgage to rent to my brother on benefits
buytoletquery
Posts: 1 Newbie
My brother has been priced out of the rental market by the LHA and the benefit cap. Is it possible to buy a property and rent it to him. He is an ESA claimant migrating to UC. Is this a viable option and what sort of capital would be needed? Social housing maybe available when he is 55 in some years time
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Comments
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you will struggle to get a mortgage when letting to family, leaving aside the UC question2
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You can but you’d needed a regulated BTL mortgage to let to a family member. There also needs to be a commercial tenancy in place because if the council suspects it’s a contrived tenancy that could impact your brother’s LHA part of his UC.buytoletquery said:My brother has been priced out of the rental market by the LHA and the benefit cap. Is it possible to buy a property and rent it to him. He is an ESA claimant migrating to UC. Is this a viable option and what sort of capital would be needed? Social housing maybe available when he is 55 in some years time3 -
There is a significant risk that this will be viewed as a contrived tenancy. Besides, renting to family can strain relationships. All round a situation best avoided.2
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It would have to have the approval of the mortgage company. It would also have to be a proper contract and rented at the market rate so probably not different to what he would pay elsewhere. You cant just get a mortgage then let a family member claim benefits to pay your mortgage. That's a contrived tenancy.
What would you do if his benefits were stopped? would you still be able to pay the mortgage without his money coming in.1 -
Gifting your brother some money each month would be less risky for you, and won't pose any risk his benefits.The comments I post are my personal opinion. While I try to check everything is correct before posting, I can and do make mistakes, so always try to check official information sources before relying on my posts.0
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I would expect affordability for a regulated BTL to follow residential affordability rules and be based on applicant income and outgoings and not on the rental income potential of the property. In that regard it follows the usual route of a purchase for a dependent relative.I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.0
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