Does buy to let make sense in under these circumstances, please?(15 Posts)
Will try to keep this as brief as possible ... the situation is that my DS lives in supported accommodation with carers going in - he rents his current flat with housing benefit but the area's becoming dangerous and I'd prefer him to move
A recent inheritance means I could buy a mortgage-free flat for him in a better area - I'd be stung for the new BTL stamp duty from April, but apart from this, the usual legal costs for purchase and tax on the rental income, it seems workable so far
The crucial thing is DS's future happiness and security, but I also have to consider that, unlike with a "normal" BTL, I couldn't easily sell the flat for any reason as he struggles with change - and anyway the place I've seen is gorgeous and he wouldn't want to lose it!!
I guess what's worrying me is the publicity about the government gunning for BTL landlords, general "landlords are all bastards who've got it coming to them" feeling and so on; I'm concerned that, in genuinely trying to help my son, I could get caught up in legislation really meant to penalize big investors. Obviously I don't expect anyone to make my decision for me, but does anyone else feel this is a sensible step to take in my situation?
Could you gift your son the money, and he buy the flat? That would mean it isn't a btl? Or do you need to charge rent? Would his HB continue if he was renting off a relative?
My understanding is the biggest change is happening on mortgage tax relief. If you don't have a mortgage, the won't matter.
Unfortunately I can't gift him the money, Dessert - Social Services would take it straight off him in reduced benefits as that would mean he had "capital"
The issue over HB is something I've got to look at ... it seems they're usually okay about it providing the property really is separate and there's a genuine tenancy agreement in place ...
I don't believe you can rent off family with HB.
It's a little bit cheeky to buy a property and pay your mortgage with your sons housing benefit. That's the way they see it.
the OP doesn't need a mortgage so the HB wouldn't be paying it.
the HB is an issue and he may lose that. So you need to consider how he would pay his bills even if you don't charge him rent.
you'll also need to protect his deposit (so don't charge one), do a yearly gas safe check (good idea anyway), and record that you have checked that he has the right to remain in the UK. There are many other things you must do with a normal new tenancy, but most relate to the ability to evict so you can take a view on that.
the main legislation changes only affect those with mortgages - BTL hasn't made much sense for a while in that situation unless it is the bottom right hand corner where prices are rocketing. ( Osbo hasn't worked out that many of the hated landlord are cash buyers, because savings are losing money at the moment despite his lies about inflation rates)
it is also just possible that there will be the really lunatic idea put through of discounted right to buy for tenants, especially if the serious landlord-hate lot get into power. (unlikely as the worst ones are the Greens, but there are others) Most landlords will evict if that happens; think what you would do.
as an aside; if you do buy the place make sure you tell the land registry your own address. This prevents the small risk of property fraud; owned outright properties can be susceptible to this.
Apologies for the delay - I had to nip out
Some excellent points raised by you all, and yes it's correct that I don't need a mortgage. The question of whether they'll still pay DS's housing benefit if he rents off me is something I've got to look into - online guidance suggests the real problem is when folk rent just a room to relatives and try to claim HB for that. It's said that a genuinely separate property (with a proper tenancy agreement to prove it) should be okay, but obviously I need to confirm whether that's really so
On the rest - no I wouldn't charge a deposit to DS - the flat I'm considering is all electric so no need for gas checks - no probs with right to live here given he's British, but yes it will be properly recorded - obviously I wouldn't want to evict my own DS, but the question about being forced to sell the place had more to do with potential major problems for BTL landlords caused by future legislation
Even if right to buy was brought in for private tenants there's no way DS would be able to action that for himself (significant learning difficulties) but that's just the sort of potential madness which worries me. Even a brief time on MN shows a real loathing for landlords - for some they can do absolutely nothing right - and I often wonder if government won't take advantage of that attitude to penalise still further
I should perhaps have mentioned that the rent isn't something I'd be looking to make a profit from. It would only need to cover the service charges, council tax and utilities, so the HB needed would actually cost the council much less than the current place DS is living in
You need to get proper advice from the solicitors at Mencap or Enable (depending on where you are). It may be better setting up a trust with the money, and paying a deposit on the flat while your son takes out a mortgage with his housing benefit to pay the rest. This is possible in certain circumstances. Please get legal advice from a learning disability organisation before you do anything. It's a minefield.
Now that's a good idea about Mencap - thanks for that and I'll certainly give them a call
There's a "housing/benefits advice" place in my city who I once approached, but despite their advertising claims they're really only for homeless issues. I realyl should have thought of Mencap ...
probably not an issue here, but for everyone's info landlords now have to check the right to remain status of all prospective tenants. Doesn't matter if you are British, you need to prove it with a passport or similar.
no passport? Might be difficult to rent.
don't blame the landlord. More regulation was requested, be careful what you wish for.
You need to speak to solicitor specialised in learning disabilities there may be a way for the house to be bought in trust for your ds. Presumably you intend for him to live there long term and when you die ?
If you buying it outright then may be different situation. That link lists specialist solicitors at the bottom . There should be no council tax to pay if severe mental impairment.
There are other specialist law firms for housing ld trusts property etc mencap will have a list.
Who else would have a claim on the property when you die? Eg his siblings ? You need to think ahead too. They could force a sale if in your name but you could make some kind of trust ? Consider also repairs etc how they paid for . Now and long term.. would his esa and pip cover it
Very many thanks for all the latest excellent advice
DS is an only child so no worries about sibling claims - the intention is that he'd stay in the same property during my lifetime and my solicitors will be his trustees when I go (no other family to do it). While their fees would make a hole in the money at least I know he'll be properly advised
The local homeless/housing/benefits advice charity who I mentioned before say they actually can advise about the big issue of any effect on DS's HB, so I've emailed the whole story to them this morning. Also tried the local HB office themselves but of course they don't answer the phone; this is probably just as well as I wouldn't necessarily trust the council to advise me correctly anyway
Have also called Mencap who said they no longer give housing advice and referred me to Shelter, who I've tried repeatedly over the years for various things and never even had a reply. So right now it looks as if I'll wait on the local advice place and also have a look for specialist "housing issue" solicitors while I'm at it ... and I'll include the ones who will one day be DS's trustees in that
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