buy home for parents

MatMar · 6 December 2019 at 11:56PM

Hello

I am a first time user on this service and was looking for some help with a problem that i have been having. I was hoping that the people on this site with far more knowledge and or experience than i have would be able to help?

I am hoping to buy a home for my mother to live in and rent back from me with her housing benefit.

I am concerned that the place she is living in is not suitable and have been down many paths with the local council and private landlords but this seems to be the best option.

Firstly can i do this? I have looked into this through google and asking friends in the industry but there does not seem to be definitive answer. I have asked the local council and they believe that it is ok to do so.

Secondly, can it be done through a second home mortgage or does it need to be a regulated buy to let mortgage. and what essentially are the differences? I know that the forums states states it heavily regulated, bt doesn't say how?

thirdly what is the tax burden? I am a basic rate tax payer and would look to charge market rates for this approx £550 PCM? what are the differences that I can claim for. I am not looking for a profit, just not looking to make too much of a loss per year?

fourthly is there anything that I have missed, I do not wish to done for Mortgage or tax fraud

thank you in advance fr your help

shortcrust · 7 December 2019 at 12:29AM

I’m not sure why you’re struggling to find an answer. This seems pretty clear (first result on google for “can you claim housing benefit if renting from family”):

https://england.shelter.org.uk/housing_advice/benefits/housing_benefit_renting_from_family

You can’t get housing benefit if you’re renting from a close family member, including your children. I’ve found the same info in lots of other places.

Perhaps I’m missing something?

[Deleted User] · 7 December 2019 at 3:03AM

shortcrust wrote: »

I’m not sure why you’re struggling to find an answer. This seems pretty clear (first result on google for “can you claim housing benefit if renting from family”):

https://england.shelter.org.uk/housing_advice/benefits/housing_benefit_renting_from_family

You can’t get housing benefit if you’re renting from a close family member, including your children. I’ve found the same info in lots of other places.

Perhaps I’m missing something?

Yes you are missing something. The Shelter like you provided says, "You can't get housing benefit or universal credit housing costs for rent you pay to a close family member you live with." The OP isn't planning to live with the mother and charge her rent like a lodger.

Further down the page it says, "You can get housing benefit or help with rent from universal credit if you rent a property from a member of your family who lives elsewhere." The tenancy has to be a proper commercial one where the OP would be willing to evict if mother blew all her housing benefit at the bingo instead of paying rent and the rent should be the market rate for the property but it can be done.

dimbo61 · 7 December 2019 at 2:27PM

Do you own your own home ?
Can you get a BTL mortgage with the 20/25% deposit required ?
Do you earn enough and have enough savings to cover the BTL mortgage and your own mortgage each month while waiting months for Housing benefit and universal credit to pay your mum,s rent
You also need a lender that is happy with housing benefit tenants

ska_lover · 7 December 2019 at 3:02PM

Yes you can I know someone who does this - as long is it is a proper tenancy agreement and docs can be shown as proof - no prob

luvchocolate · 7 December 2019 at 8:21PM

Lenders do not like you renting to family members and would need a regulated buy to let mortgage, there are many threads on this subject and regular posters think its not a good idea.
someone with more knowledge will be along soon.

elsien · 7 December 2019 at 8:32PM

Check what the local housing allowance is and how much rent your mother could actually claim.
Read up on all the obligations of being a landlord and what that will entail.
Consider very carefully the reasons why people say family and money don't always mix. You both need to be very clear about the consequences if either of you don't meet your obligations.

MatMar · 8 December 2019 at 2:11AM

Hello everyone,

thank you very much for your responses, yes I will do this correctly, I believe I can trust her, as I say it is more of a last resort, as the housing stock in the area is poor.

I understand that there have been a number of posts however there have been a number of recent changes to the law especially tax law. What is allowed to be claimed for?

Further can you do this with a Second home mortgage with a AST or does it have to be a regulated BTL?

Thank you again

[Deleted User] · 8 December 2019 at 2:36AM

MatMar wrote: »

Hello everyone,

thank you very much for your responses, yes I will do this correctly, I believe I can trust her, as I say it is more of a last resort, as the housing stock in the area is poor.

I understand that there have been a number of posts however there have been a number of recent changes to the law especially tax law. What is allowed to be claimed for?

Further can you do this with a Second home mortgage with a AST or does it have to be a regulated BTL?

Thank you again

Don't quote me on this but my understanding is that a second home mortgage can be used to purchase a home for a relative to live in but you can't charge rent because it will be against the T&C of the mortgage, similar to the residential mortgage you have for your home. If you want to let a property to a family member then it's a regulated BTL you will need.

buy home for parents

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