FTB Tenants in Common rules for residence/ renting

greenowl87

This is long so bear with me.

I live in London (renting for eye watering amount).

My intention is to move back to Scotland but there are fewer jobs there in my industry so I’m essentially waiting until I get a job.

A very good friend of mine who I’ve discussed buying with for years currently has the opportunity to buy a nice place privately from the owners and we’d like to buy together as tenants in common with a 75/25 or thereabouts split (on deposit and equity).  I’m happy to do this and not looking for people to tell me what a horror story buying with friends is. It’s ideal for me because it means if and when I get a job moving is simple. I can also start moving my stuff up gradually. We’ll draw up a DoT to outline our shares, and potential scenarios regarding sale, death etc.

Another friend would be living there as a lodger, essentially paying off part of the mortgage. I’d still put in some contribution as I’d want the third room free for my stuff/ me when I visit. This would go into the account to cover maintenance, repairs, insurance etc. in addition to our mortgage repayments.

My intention would be to live there eventually but not until I get a job offer. This could happen in the next six months to five years so very open ended but this house can house all three of us so there’s no conflict there.

I’m aware if I don’t move in and for some reason we sell I’d be liable for CGT on my share but where I get hazy is:

Does this preclude me using my LISA by making our joint mortgage partly btl?

If lodger’s rent goes into a shared account am I liable for tax on that. The other owner can use the rent a room scheme as the rent will not be more than 6k per year but, again, me not technically living there makes it a bit fuzzy.

I’m not ‘profiting’ from this, except in terms of potential equity.

Is there anything else I’m missing in terms of financial liability? FTB and there’s a lot of moving parts and variables which I can’t find covered anywhere.

silvercar

Does this preclude me using my LISA by making our joint mortgage partly btl?

It isn’t a BTL, it’s a residential mortgage where you and the other owner are renting out the spare room. It has to be residential for you to use your LISA, so you at least need to move in for a couple of months I would think. 

You and the other owner can then rent out the spare room to a lodger. lodgers have no tenancy rights, so that shouldn’t be a problem with your lender. How you and the other owner split the lodger rent is down to you, given you own a minority share it wouldn’t be unreasonable for you to agree that the other owner keeps all the rent in return for you not paying towards the upkeep. That would mean only the other owner has to worry about tax and the rent a room scheme.