buying house with / for mum

Linuxgeek

Long story short my mum is splitting from her partner at 80 years old but her half share from where she's leaving, isn't quite enough for the bungalow she's seen

I could in theory buy a 25% share from savings it would hurt my buffer but can do it enabling her to buy. and consider it an investment for me.

What are the pit falls with this ? 
Would she need to pay rent on my share?
Could I loose the share if she needed long term care 

Another option is me buy it outright with a BTL mortgage and she pays rent as I own my house outright 

Sam_666

You could buy 25% and she could add 75%, BUT its important how this is recorded in title deeds.
You wont loose your share if ownership is recorded properly in title records.
Also, you will pay extra tax as this will be your 2nd property.

NO. You cant buy btl and rent to family member. Every btl morgage prohibits that bad idea.

Alderbank

Sam_666 said:

NO. You cant buy btl and rent to family member. Every btl morgage prohibits that bad idea.

YES. Of course you can.

BTL mortgages are not all the same; there are several subcategories. The standard BTL is designed for renting out to strangers but the regulated BTL is designed specifically for renting out to family members. For that reason they are also known as Family BTL mortgages. Many lenders offer them.

Here is an explanation of how they work:
https://www.mfbrokers.co.uk/resources/blogs/can-you-rent-to-a-family-member-under-a-buy-to-let-mortgage

I do agree with @Sam_666 though that in this particular case buying a 25% share would be a simpler and much better way forward.

Olinda99

dont forget any growth in your 25% would be subject to cgt

may be better she buys it all.in her name and you lend her the 25% as a mortgage with a charge on the house - either interest free, at some interest rate, or interest linked to how much the bungalow increases in value

Keep_pedalling

If you purchased this jointly the whole purchase would be subject to the additional 5% second home SDLT. The same would apply if you purchased it yourself.

To avoid this, you could loan her the money and protect the loan through a charge against the property. 

Bookworm105

will your 25% cost more than £40,000?
if yes, then as others point out, the higher rate of SDLT would apply to the entire purchase price.

if not, then the higher rate will not apply as the first condition is the chargeable consideration must be above that threshold

as a part owner of the property it is entirely your choice whether you charge rent or not. As a home for your mother I hope you would not.
As a part owner your share is excluded from any care home means test 

the alternative of making it a loan, rather than you becoming a legal owner, would achieve the same shelter from car home means test provided that the terms of the loan make it repayable on demand if the property needs to be sold.

whether you own or loan, your money will not form part of mother's estate, so inheritance tax on her (I doubt she is above its threshold anyway) would be irrelevant.

• if you loan, but do not charge interest, your money is losing value due to normal inflation.
• if you loan and do charge interest that income would be subject to income tax payable by you.
• if you own then obviously your share will be exposed to house price inflation and any gain would be subject to CGT when you sell up & cease to be a co-owner.

Markmywords

Keep_pedalling said:

If you purchased this jointly the whole purchase would be subject to the additional 5% second home SDLT. The same would apply if you purchased it yourself.

To avoid this, you could loan her the money and protect the loan through a charge against the property. 

good idea, sounds sensible

Linuxgeek

Thank for the input guys 

SDLT was something I was missing at very easy stage planning atm