Buy to let mortgage for house for parents

[toogoodforthisworld]

Hi, I'm considering getting a buy to let mortgage to buy a house for my parents when they return to the UK next year. They will pay me rent to cover the mortgage costs and are helping with the deposit on the quiet.
Anyone have any experience with this?
I have fantastic parents and my brother is seriously ill so everything is being left to me anyway. And I'm not concerned about them not paying the rent. They are the most honest people I know.
To me it's more a worry about if they are not allowed to claim/ receive benefits because I am their child and own the house they live in for example.
Any tips and hints are most welcome! Thank you.

We do this for my DM. She doesn’t pay us any rent, but we still have to have a formal rental agreement under the terms of the mortgage and all the other requirements of being a landlord still apply e.g. annual gas safety inspection, landlord insurance to cover the building rather than standard buildings and contents, etc. If we did receive any rent from DM to cover the mortgage then we’d also be required to declare this by registering for Self Assessment with HMRC.

Why would your parents need to claim benefits?

I think their claiming housing benefit to pay rent to you on a house youve vought for this purpose would be called a "created tenancy" (not sure that's the correct terminology) and would not be allowed by the local authority.

You might need to check with your mortgage provider as I think some need to know if you’re letting it to a family member:

www.mansfieldbs.co.uk/mortgage/buy-to-let/

They wouldn't need to claim benefits- they have a sufficient pension.
I said benefits but I meant is there anything in general they would lose out on because I owned the house?

As a side note - My brother is actually worried to death (which isn't helping him) as he has a mortgage at the moment and is still managing to work some hours because if he can't pay his mortgage he will basically lose his house. I looked into doing the buy to rent for him on his present house until he got back on his feet and so therefore his rent would be paid to give him a chance to recover- without the added stress of losing his house - but it seems he needed to be renting for a certain amount of years before he could claim housing benefit.

@FriNightBlues thanks for the link. Good point- I'll look into it.

Your parents helping you with the deposit? Might not work. Best seeking advice

@GiltEdges
Very useful! Thanks !
Any pros and cons you've experienced doing this? X

Most BTL mortgages don't allow you to rent to a relative.

When i had my btl mortgage it specifically said I couldn't rent it to family members.

What a lovely thing to do for your parents, I’d do the same if they needed it.
I think you need to check whether you can get a BTL mortgage that involves renting to your parents. Can you possibly just get them a smaller place and you a normal mortgage for it?

Thank you all.
Im going to speak to a mortgage broker who specializes in BTL for non UK Citizens (which I am- so that makes it even more complicated lol) hopefully early next week.
So I'll be very specific about the fact it's for my parents.
Maybe buying them a small house might be a better plan.. they happily contribute what they could.
X

If that's the best I plan then I wouldn't be specific that it's for your parents in the application.

I would also mortgage it for as long as possible (probably 5 years) as when it comes to re-mortgage the fact it has been let to your parents may become an issue at that point. However lots can happen in that time, you may be in a position to pay the debt off.

If a BTL mortgage doesn't come through, could you remortgage your own home for the max in order to release money to buy your second house with cash?
(although a BTL mortgage is usually interest only so is much cheaper than a standard repayment mortgage).
5 year fix BTL sounds like a plan though.