Can you part own a house with someone and charge rent for the bit you own?

GoldenOldy

Good morning.

I already own a home, but a family member has purchased a bungalow recently.
Money is a bit tight for them and I wondered if it would be possible for me to buy half the property from them so they have some capital, and maybe charge them a little rent for the half i have purchased (bit like shared ownership schemes i think?)

They have looked at equity release but would prefer to keep finances within the family as it were.

Would any lender alllow me to do so?
I appreciate the stamp duty will be heavy, 
or is this a bad idea?

thankyou

Emmia

GoldenOldy said:

Good morning.

I already own a home, but a family member has purchased a bungalow recently.
Money is a bit tight for them and I wondered if it would be possible for me to buy half the property from them so they have some capital, and maybe charge them a little rent for the half i have purchased (bit like shared ownership schemes i think?)

They have looked at equity release but would prefer to keep finances within the family as it were.

Would any lender alllow me to do so?
I appreciate the stamp duty will be heavy, 
or is this a bad idea?

thankyou

What if they stop paying the rent?

Are you going to force a sale or take legal action - hopefully you'd get part ownership associated with the property - also it might make them getting a mortgage more difficult.

GoldenOldy

Yes , i had thought of doing a joint tenancy. TBH it doesnt really matter if they stop paying rent, i will take the hit. Just want them to be a bit more comfortable.

TrickyDicky101

Do they have an existing mortgage?  If not then they could sell you a share of the property (as you stated, you become tenants in common and can define % share each hold).  You may have SDLT to pay depending on what you pay.  They could pay you rent for your portion.  This would be taxable income in your hands.

kingstreet

You can't mortgage part of a property.

The whole property would have to be security for the mortgage and the other joint owner would have to be a mortgage borrower as well.

GoldenOldy

Thanks Tricky. Kingstreet They dont have a mortgage, so i would have to buy into the property via a mortgage. So are you saying they would have to be on the mortgage too?Thanks

elsien

Can they not take a less drastic measure such as getting a lodger? 

user1977

Generally lenders want their borrowers to be either owner-occupiers or landlords, not a mixture of both which is what you seem to be proposing.

If it's a recent purchase why are they already rethinking their finances?

kingstreet

GoldenOldy said:

Thanks Tricky. Kingstreet They dont have a mortgage, so i would have to buy into the property via a mortgage. So are you saying they would have to be on the mortgage too?Thanks

Yes. There are no current "more owners than borrowers" options.

saajan_12

Can you lend them the money by placing a charge on their property? Or can they just get a small mortgage on their property? 

GoldenOldy

Thanks all. I think a charge may be the answer then. They had intended buying the best they could afford then taking out an equity release.They were exploring whether they could achieve a similar thing and keep it in the family . It seems like a loan and a charge then (or the er).