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  • FIRST POST
    • BM5118
    • By BM5118 10th Jan 19, 10:37 AM
    • 35Posts
    • 7Thanks
    BM5118
    Helping Family, Disaster or Triumph?
    • #1
    • 10th Jan 19, 10:37 AM
    Helping Family, Disaster or Triumph? 10th Jan 19 at 10:37 AM
    Dear All

    I want to rent a house to my aunt, I'm hoping to flesh out the idea on here.


    I'm trying to think of how this would work:
    Thought this is a sensible place to write down my thoughts and get feedback on the pitfalls of it:

    In short, my aunt is a close family member, she got divorced 2 years ago and has had to move house a few times due to landlords selling properties she lives in. She is fed up of moving and wants to be settled close to family. She has a stable job and commutes up to London from Ashford in Kent on the Highspeed line. She probably has 100k cash in the bank, and will inherit another 500k in the not too distant future I suspect. The tail end of her divorce got rather messy and destroyed both hers and her husband credit ratings. She has said she would want the option to buy the house from me when she can.

    Basic math seems to work out, she is paying 1200 per month at the moment. Based on online calculators alone I can comfortably get a mortgage around this level and she would just pay the mortgage. I'm not particularly looking to make a profit off of her. She has said she is happy to contribute to the deposit too if it helps. She would also obviously want to be very involved in the process, almost certainly picking the house herself. She said perhaps we would go halves on any renovations/extensions which in theory is completely fine by me!

    Personally, I work away a lot and my accommodation is provided by my employer. This would purely be a house for her, in my name giving her stability and I get someone paying the mortgage for me.


    I want to make clear that good will is very much the spirit of this. Neither one of us is trying to win anything over on the other. To that end I am here to flesh out the pitfalls of this idea!!


    Thanks in advance and please ask if any more info can help!
Page 2
    • fairy lights
    • By fairy lights 11th Jan 19, 2:49 PM
    • 8,644 Posts
    • 28,781 Thanks
    fairy lights
    I don't see how this is a win-win situation in any way at all.
    You say you want your own home to go to on your days off - but it wouldn't be your home would it, it would be your aunts home that you just stay in occasionally.
    Have you ever lived with her before? if you disagree about what to watch on tv or what colour to paint the living room it could strain your financial and family relationships.
    And if she wants the option to buy the property off you in the future, would this be at full market value or would she be expecting a generous discount?
    This could get incredibly messy.
    • BM5118
    • By BM5118 11th Jan 19, 2:59 PM
    • 35 Posts
    • 7 Thanks
    BM5118
    If your Aunt has a job and 100K in the bank she should go to a good mortgage broker and get her own house. It will almost certainly be possible.

    She really shouldn't be making her young niece/nephew responsible for her housing. Its not fair.
    Originally posted by Red-Squirrel

    I agree she should probably go to a mortgage broker, but as she isn't and wants to rent I feel like I could benefit from her. She certainly isn't putting a burden on me to get a house, although I must say this thread has made me realise if we do proceed on this route to keep it all in my name and as simple as possible.


    I'm seeing my parents and her on monday, Ill put it to her that she could probably just go and get her own place via a mortgage broker. Alternatively I would be happy look for a place together, putting everything in my name. She would simply contribute an amount towards the bills / mortgage. I ll talk to her about what she can realistically afford, and see if anything matches.


    I have a fairly large disposable income so if there is a shortfall I would still be completely fine with that. I think I need to approach this from a "I am getting a house, and she can stay in it" view point.



    If she isn't keen then I'll stop there and maybe look for my own place regardless.
    Thanks for your help everyone
    • BM5118
    • By BM5118 11th Jan 19, 3:01 PM
    • 35 Posts
    • 7 Thanks
    BM5118
    I don't see how this is a win-win situation in any way at all.
    You say you want your own home to go to on your days off - but it wouldn't be your home would it, it would be your aunts home that you just stay in occasionally.
    Have you ever lived with her before? if you disagree about what to watch on tv or what colour to paint the living room it could strain your financial and family relationships.
    And if she wants the option to buy the property off you in the future, would this be at full market value or would she be expecting a generous discount?
    This could get incredibly messy.
    Originally posted by fairy lights

    I agree it could get messy. I definitely earn a significant amount more than her and everyone else in the family. Thats why i think if we are clear from the beginning on all terms it could hope to avoid complications further down the line. I would insist on something like 3 valuations of the property and picking the average/middle one. Something like that if I were to sell it to her. If we agree this all beforehand then hopefully it should avoid drama. Ultimately we are a very close family, there is good will on all sides. So hopefully if we are open and honest from the start it shouldn't sour in the future!
    • need an answer
    • By need an answer 11th Jan 19, 4:02 PM
    • 1,080 Posts
    • 1,310 Thanks
    need an answer




    I have a fairly large disposable income so if there is a shortfall I would still be completely fine with that. I think I need to approach this from a "I am getting a house, and she can stay in it" view point.


    Originally posted by BM5118
    so you don't intend to put this on the firm setting of LL and Tenant?
    in S 0 T 0 F 6
    out S 0 T 2 F 4
    2017 -32 2018 -33
    • BM5118
    • By BM5118 11th Jan 19, 4:55 PM
    • 35 Posts
    • 7 Thanks
    BM5118
    so you don't intend to put this on the firm setting of LL and Tenant?
    Originally posted by need an answer

    Again probably a grey area, In my mind I think more of a lodger scenario.


    I checked the money advice service website and I can have a lodger paying 7500 per year without having to declare it or pay any tax. I will suggest she gifts me 625 per month. I will have all bills in my name, I think i will suggest she gives me 1/2 the amount of the bills each month including council tax.


    Maybe she can buy me dinner once or month or something too to balance it out but in all honesty she is a close family member, our intentions are good, neither party is out to get anything passed the other. I will be slightly out of pocket each month depending on the property I go for, however I just need to make sure this is an amount I am comfortable spending each month.
    I doubt we will even have a contract drawn up, im aware she will automatically get rights, but the chances of this falling apart are super low.



    I don't think this approach would upset a mortgage lender, HMRC or my employer.
    I'll let you know how the conversation goes. She may not like the idea in which case its back to the drawing board to work out a plan!
    • Slithery
    • By Slithery 11th Jan 19, 5:37 PM
    • 1,133 Posts
    • 1,820 Thanks
    Slithery
    In my mind I think more of a lodger scenario.
    Originally posted by BM5118
    It doesn't matter what you think, there are legal definitions for this sort of thing.

    What part of 'it won't be your main residence therefore she cannot legally be a lodger' do you not understand?
    Last edited by Slithery; 11-01-2019 at 6:02 PM.
    • Hasbeen
    • By Hasbeen 11th Jan 19, 5:50 PM
    • 1,035 Posts
    • 776 Thanks
    Hasbeen
    Hope all landlords are looking at this. Buy house put someone in as lodger get 7500 per year tax free? Really? skim read most of posts but will this work?
    • BM5118
    • By BM5118 11th Jan 19, 10:29 PM
    • 35 Posts
    • 7 Thanks
    BM5118
    It doesn't matter what you think, there are legal definitions for this sort of thing.

    What part of 'it won't be your main residence therefore she cannot legally be a lodger' do you not understand?
    Originally posted by Slithery

    Just reading up on main residence criteria with regards to CGT and I believe you are incorrect in your advice.


    My main residence has more criteria than just which property I spend more time in. It also seems



    This is taken from: https://www.property-tax-portal.co.uk/taxarticle84.shtml
    Here are questions HMRC ask when relating to CGT for main residence status.



    (a) At which residence is the individual registered with a doctor or dentist? New home

    (b) Where are the majority of his or her possessions kept?
    New home, the only thing I keep in my work house is work uniforms, a toothbrush and a laptop. It is fully furnished and not single thing in it is mine.

    (c) Where is the individual registered to vote?
    New home
    (d) Consider the membership of clubs and other social activities.
    New home, gym membership would be there.

    (e) Which address is used as normal postal address?
    New home, I have no post/record of living at the work address.

    (f) Which property does he or she regard as the main residence and how is time split between the residences?
    I see my work accommodation as a hotel, although I spent marginally more time here than in my new home.

    (g) Where do spouse and dependants live?
    Currently not applicable, however if I had a wife she certainly wouldn't be allowed on my work property.

    (h) From which residence do children attend school?
    Would be new home. Again wouldnt be allowed children at work.

    (i) At which residence does the individual spend time with the family?
    Family wouldn't be allowed to visit, so new home by default




    Out of interest, is the owner allowed to take out a BTL mortgage with the intention of living in it themselves?
    Thanks for you help everyone

    • The Earl of Streatham
    • By The Earl of Streatham 12th Jan 19, 9:50 AM
    • 135 Posts
    • 265 Thanks
    The Earl of Streatham
    Out of interest, is the owner allowed to take out a BTL mortgage with the intention of living in it themselves?
    Thanks for you help everyone
    Originally posted by BM5118
    You seem quite capable of doing detailed research to find stuff that refutes what people are taking the trouble to tell you here. This is not the place you need to be winning the argument.

    If you want to find out about the limits placed on BTL mortgages, there's no need to wait until you feel the need to refute what people here will tell you.
    • Pixie5740
    • By Pixie5740 12th Jan 19, 11:40 AM
    • 13,624 Posts
    • 19,620 Thanks
    Pixie5740
    Oh well OP, now that you've quoted an 8 year old article off the internet and that's not even by HMRC, we stand corrected. If only Hezi Yechiel had you on his side telling HMRC what you feel makes a main residence.

    Instead of the BTL mortgage question you should be asking if a lender will give you a residential mortgage for a property that won't be where you reside and the deposit is coming from someone not on the mortgage but who will be residing in the property.

    Has you aunt even suggested this "solution" or is this all you?
    • BM5118
    • By BM5118 12th Jan 19, 6:23 PM
    • 35 Posts
    • 7 Thanks
    BM5118
    Oh well OP, now that you've quoted an 8 year old article off the internet and that's not even by HMRC, we stand corrected. If only Hezi Yechiel had you on his side telling HMRC what you feel makes a main residence.

    Instead of the BTL mortgage question you should be asking if a lender will give you a residential mortgage for a property that won't be where you reside and the deposit is coming from someone not on the mortgage but who will be residing in the property.

    Has you aunt even suggested this "solution" or is this all you?
    Originally posted by Pixie5740
    I'll let you know what the outcome is in a few days, some of you seem rather flustered over a few words so I'll keep you updated

    I just spent a whopping 5 minutes reading the outline of the Hezi Yechiel case, based on the criteria outlined for "sufficient quality of occupation" I think I would meet all of those criteria and which just adds another string to my bow of ideas.

    Perhaps it is leaning somewhat towards a grey area, but I will pursue this idea as it seems fairly sensible to me. Presumably so long as I pay the mortgage on time every month my mortgage lender won't care about the quality of my occupation. Even if they did I'd be happy to argue my point and worst case scenario my aunt wouldn't be able to give me 7500 towards the property. Which isn't part of the plan but wouldn't be an issue.

    Depending on the deposit requirement I'd be confident my aunt would lend it, although I'd happy save for a couple more months if necessary to avoid a loan. If she were to gift me 15k for example that would cover 2 years of her living there based on this very informal arrangement between family.

    Thanks for you help, sorry if its caused some flustering!
    • Red-Squirrel
    • By Red-Squirrel 12th Jan 19, 6:46 PM
    • 4,021 Posts
    • 10,789 Thanks
    Red-Squirrel

    Thanks for you help, sorry if its caused some flustering!
    Originally posted by BM5118
    Don't flatter yourself.

    People on here who know what they're talking about take time out of their day to offer help and advice for free. I'm sure its no skin off their nose if somebody decides they know better and goes ahead with a bad idea regardless. They've still given lots of help to usually polite and grateful people.
    • paddy's mum
    • By paddy's mum 13th Jan 19, 9:38 AM
    • 3,625 Posts
    • 13,048 Thanks
    paddy's mum
    OP - your repeated use of words such as 'presumably', 'seems', and the biggest small word in the English language - IF - ought to be the loudest warning.

    None so deaf ....
    Last edited by paddy's mum; 13-01-2019 at 9:38 AM. Reason: typo
    • BM5118
    • By BM5118 13th Jan 19, 11:35 AM
    • 35 Posts
    • 7 Thanks
    BM5118
    None so deaf ....
    Originally posted by paddy's mum

    I appreciate how this post comes across, apologies for that!
    Perhaps it is a case of that because I do feel this is a win win scenario despite the advice here. Ill pursue the idea and see where it gets me.


    Thanks for all your help though, it has helped me come to a pathway which is exactly what this forum is for! (Even if it isn't exactly the pathway advised haha!)


    All the best
    *insert my name here*
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