Buy To Let to Relatives

KathrynPenguin

Anyone know which providers allow you to get a BTL mortgage if you are renting to relatives? I've heard that its often not allowed but that some lenders are OK with it.

My grandparents want to move to a retirement flat. The have a property now but this is worth a lot less than the new property. The idea is that we could invest in the new property putting down 50% and then getting a BTL for the remaining 50% and the grandparents could then use their capital to pay the rent. This would allow them to live in the home of their choice whilst still having some money to spend as it would take them 20 years to use all their capital to cover the rent. Obviously they couldn't get any sort of mortgage - their pensions are not huge and their age and medical conditions would rule them right out.

Gorgeous_George

Lenders don't usually ask. That said, it is not something to enter lightly. Fall on hard times and you might need to evict them.

So long as you know the risks, it's not a bad idea.

GG

subjecttocontract

Most lenders include renting to relatives as a restriction in their T & C's for the mortgage precisely because it can lead to a difficult situation.

Generali

You should look into this properly with a solicitor as there are all sorts of implications, not least of which being that if one of them needs nursing home care they'll be assesed on their assets and have this big pot of cash to pay for their needs. This stuff isn't straightforward at all.

margaretclare

KathrynPenguin wrote: »

Anyone know which providers allow you to get a BTL mortgage if you are renting to relatives? I've heard that its often not allowed but that some lenders are OK with it.

My grandparents want to move to a retirement flat. The have a property now but this is worth a lot less than the new property. The idea is that we could invest in the new property putting down 50% and then getting a BTL for the remaining 50% and the grandparents could then use their capital to pay the rent. This would allow them to live in the home of their choice whilst still having some money to spend as it would take them 20 years to use all their capital to cover the rent. Obviously they couldn't get any sort of mortgage - their pensions are not huge and their age and medical conditions would rule them right out.

It may be possible for them to part-buy, part-rent a retirement flat without involving you.

Around here it used to be possible to sell your home and move into a rented sheltered-housing flat, thereby having the equity of the original property in the bank or to live on. I'm told that this isn't possible any more, but what IS possible is, if there is a shortfall as in your grandparents' case, they can do a part-buy part-rent.

Financial transactions within a family are fraught with all sorts of problems - I speak from some experience.

Margaret

Trollfever

Financial transactions within a family are fraught with all sorts of problems - I speak from some experience.

Agreed.

jambosaver

It is possible to get a Dependant Relatives mortgage but it does count against your overall borrowing limit (i.e. you are responsible for the mortgage even if the relative is going to be paying it). To reduce the tax burden you can then get the relatives to have a Deed of Trust which means that the property is classed as their main residence and so would be free of capital gains tax on sale.

Spirit_2

Hi

Last year we took out a mortgage on a flat in a town that my 78 year old mother wanted to relocate to. Mum paid the deposit, but was not a party to the mortgage. nor could she be a tenant. As she would be living in the flat she was required to agree that the first charge on the property was to the mortgage lender.

My mum's own property (a retirement apartment) is now up for sale. The intention being that when it is sold we will 'sell' the new flat to her and pay off the mortgage. We did this to ensure my mum makes the best of whatever time is left to her.

Mum is not paying any rent to us in the mean time.

If you want any more info please pm me.

Spirit

clutton_2

if you are putting down 50% deposit, the risk is so much l ower and a lender may well be persuaded to allow this.

lush_walrus

Not sure about the mortgage side of things, but I would definately check with the retirement flats if they actually allow BTL situations in there. All in the areas I deal with do not allow it, simple reason all new residents have to be interviewed by the freeholders or wardens and must be purchased and not rented. Thought it would be worth a mention.

CrimeWave

I got a BTL with Coventry BS, they allow relatives to rent.