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Ask granny to do buy-to-let for her adult grandson?

70 replies

Chatice · 10/06/2023 09:09

My mother is pretty well-off. (I’m not)

My adult son (early 20s) has had a succession of rubbish landlords and letting agents who charge a fortune in my part of the world in the South for places little better than hovels. Also letting agents not returning significant £££ deposits. I also strongly suspect ADHD, so all this moving is extra chaos for him. He works full-time and could pay his granny rent every month no problem and she could keep her capital.

Do people think this could work? Any experience of it? Possible downsides? Of course granny could easily say “no” anyway but I am thinking of asking.

OP posts:
Chatice · 10/06/2023 09:56

I’m not totally sure it’s a good idea which is why I’m asking for peoples thoughts, by people who maybe have bothered to read my actual original post!

OP posts:
Chatice · 10/06/2023 09:57

Thank you @sassyduck

OP posts:
Chatice · 10/06/2023 10:03

So many rude and angry posters!

OP posts:
Sittingonabench · 10/06/2023 10:04

I think it depends on your relationship with her but not a bad idea. Maybe speak to a financial planner to check it is viable and make sure contracts are clear. I have considered this as a possibility we may need to do at some point in the future for one of ours if the housing situation doesn’t sort itself out and if we can.

Toooldtoworry · 10/06/2023 10:06

Positives:

Likely to be a longer term option for your son than renting from anyone else affords.

Would be a steady return for mum

If she is old enough for it to be a long term investment she may well make a decent profit upon sale

Negatives:

Property may need selling for care, which still makes it uncertain for your son.

CGT liability upon sale

Increased costs, including possibly SDLT

She may have tax implications

Toooldtoworry · 10/06/2023 10:07

I would also add in that there would need be be a legally binding AST in place as though the LL/Tenant family relationship didn't exist.

LIZS · 10/06/2023 10:07

What if his circumstances change - loses job, wants to move, can't afford the bills? Or she suddenly needs access to the funds? She would need to pay tax on the income and is likely to get a better financial return in the bank.

Toooldtoworry · 10/06/2023 10:08

HettySunshine · 10/06/2023 09:22

If she uses a buy to let mortgage, she cannot let the property to family. If she's a cash buyer then obviously, this wouldn't be an issue.

Unless they've pulled them consumer buy to let mortgages are for this exact purpose.

EyelessArseFace · 10/06/2023 10:10

Have you any idea what she might put in her will in years to come? If she is going to leave anything to your ds and depending on her age, then it could be worth consulting a solicitor about the most efficient way of planning for the future, and how best to avoid having to sell the property to pay for care fees. They might suggest that she signs part of the flat over now so they are tenants in common. There's also the inheritance tax issue. It is a really complicated topic and I would strongly suggest taking professional legal advice.

BonnieGlasses · 10/06/2023 10:10

Chatice · 10/06/2023 10:03

So many rude and angry posters!

Nobody has been rude or angry. Confused

thecatsthecats · 10/06/2023 10:15

Chatice · 10/06/2023 09:53

I’m not sure why so many people are jumping to such negative conclusions (that aren’t even true!).

Because they are neutral, and therefore picking holes in the plan because they assumed that would be useful to you.

When I have an idea like this, I WANT people to make worst case assumptions, discuss pitfalls. Not just baa along that of course my idea is great.

Does your mum want to do this? I agree with PP that this sort of thing really should be offered, not asked.

Lovingitallnow · 10/06/2023 10:15

You seem to be thinking the rent is somehow extra money for her, like she's getting a good deal on this. It's only upside for her is once the rent has paid back the value of the property, or until she sells it. Until then she's just tying up her cash to benefit her grandson. Why did he lose deposits?

Mummyoflittledragon · 10/06/2023 10:15

I am a landlord. It really depends on the relationship she has with you and your ds. Property isn’t likely to go up much in value atm so capital gains is moot. As for income tax, I imagine rent on a 120k place will be low so any tax will be pretty minimal if at all, depending on her other assets, pension(s) etc.

I mean it’s a risk. What if he doesn’t pay the rent or moves? Will she get landlord insurance to cover this and damage? Ie What if he damages the property or allows others to do it? But if she can afford it and you are prepared to deal with the admin for her, why not ask? Returns are pretty crap these days however, the money definitely won’t do better in a bank.

Mummyoflittledragon · 10/06/2023 10:16

I also don’t understand why he lost the deposits. These must be held in a deposit scheme and any disputes handled by them. Most go in favour of the tenant.

Whatthediddlyfeck · 10/06/2023 10:18

I’ve heard of worse ideas. I know my dad would have done it in a heartbeat for his grandchildren, should the need have arisen

Savoury · 10/06/2023 10:19

Are you sure she has as much as you think? A low digit millionaire (counting investments other than own house and pension) wouldn’t have £120K that is readily accessible without liquidating investments. It’s not hanging around the bank on low interest rates.

The other challenge here is that BtL is barely worth it these days. Management costs have jumped - most people are paying £3K as fire and electrical standards have rising post Grenfell and the local authorities are raising the bar (rightly).

But if you help your mum to calculate it all to check she will make some money (more than she would if it was invested), then it seems a reasonable question to ask.

mewkins · 10/06/2023 10:19

Hi OP, others have suggested asking for a loan for a deposit so that your son himself can get on the housing ladder. Is this an option at all? Has your mum ever mentioned anything like this before?

ShoshanaShapiro · 10/06/2023 10:20

This reply has been withdrawn

This message has been withdrawn at the poster's request

Chewbecca · 10/06/2023 10:21

Is she cash rich?

Does your son look after his rented properties well?

MeMyCatsAndMyBooks · 10/06/2023 10:23

She'd need landlord insurance etc. it's not a case of buy a house and rent it out.
There's a lot of added hidden costs, you'd also need to factor in who would pay if something goes wrong like a leak, or the oven packs in or the shower etc.

Appleofmyeye2023 · 10/06/2023 10:25

Chatice · 10/06/2023 09:50

Re. care costs, obviously it’s still her asset so she could sell it to pay for care.

Once the law changes to prevent no fault evictions that is easier said than done.
this house will become your dc home. He could, after living there for a few years, be reluctant to give it up to pay for grannies care home fees if faced with having to pay a market value rent or buy his own place

Hell would burn over before I bought a buy to let property for anyone with my retirement savings , especially not a family member. Rental properties (my ex had one so I speak form experience) come with a lot of constant anxieties and issues. Your ds is young, with adhd , has limited experience of living on his own and clearly struggled with money - sounds like a perfect tenant 🤦‍♀️🤷🏼‍♀️.

I have seen my otherwise fit and healthy father, suddenly need to go into care due to mental decline. He doesn’t have dementia, we don’t know what it is , but it is unlikely he’ll ever return home. Right now he’s getting nursing care in hospital but once they stabilise him it’ll be costing £1500 a week for him to home in a suitable residence to get the care he needs. He could live another 20 years. He simply doesn’t have mental resilience to deal with sorting out an eviction or rental property if he’d gone the route you’re suggesting. Right now he barely has mental competence for anything.

im also retired, I have a good bollus of savings. But my pension income is modest. I need my savings for future liabilities. I’ve earmarked £80k for care, but also earmarked savings for my dc wedding, grandkids (well I’m hopeful!), buying at least 2 new cars over remainder of my life, similarly refitting 1 kitchen and up to 2 bathrooms over course of my life, replacing roof tiles (on their last legs), complete retiring that needs to be done, a new boiler. In other words all the things that when you are working you have cash to save for, or to take out and repay loans on. I don’t have income for that. I will have to use my savings for that. This is why so many pensioners end up having to release equity in their homes in later life- they’d not accounted for these big liabilities that they couldn’t afford out of their pension income. Add to that, as you get older you may need more help around the home like a Gardener or cleaner. All this has to be payed for. Worrying about if I have enough savings to see me through till I die is a source of low level anxiety - even I’m in a situation that if I live a long life I’m likely to have to take equity form my home.

you do what you want with your money. Do not put pressure on your family to decide what to do with theirs. Your mother has acquired her wealth through her own circumstance which have nowt to do with you. Your mother is responsible for deciding how best to earmark her money for the purposes she wants or needs - if that means she seems to be sitting on it and counting beans, that is not unreasonable, selfish etc.

your son is just in his early 20s. Even when I was young I had a succession of twatty landlords who tried everything, including sexual harassment, from the age of 18 to 29 when I married and moved into my first home with my husband
My own ds are 28 and 30 and in rental accommodation with no sign of getting onto housing market- eldest is in London so about as expensive and stupid as you can get. If your son was in mid thirties, maybe you’d have a point. But he’s early 20s fgs . He has to learn to live on his own 2 feet otherwise he’ll be a n entitled what’s it all his life. Stop helicoptering him and back off- you’re doing him no favours in the long run.

propertypitfalls · 10/06/2023 10:27

This reply has been deleted

This message has been withdrawn at the poster's request

@ShoshanaShapiro I think you meant to start a new thread :)

Willmafrockfit · 10/06/2023 10:28

seems a big ask tbh

HerbsandSpices · 10/06/2023 10:30

Has she mentioned considering buying a buy to let? What makes you sure she can afford this?

ShoshanaShapiro · 10/06/2023 10:30

Yes, I did. Sorry. I have asked MN to delete my post.

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