Active discussions

Meet the Other Phone. Only the apps you allow.

Meet the Other Phone.
Only the apps you allow.

Buy now

Please or to access all these features

Talk
Legal matters

Mumsnet has not checked the qualifications of anyone posting here. If you have any legal concerns we suggest you consult a solicitor.

Original poster

I'm paying the mortgage is it renting

32 replies

penguinparty00 · 18/07/2021 08:24

I'm just about to move my elderly parents into a house I own but do not live in prior to this I was renting this property out but as my parents Heath has deteriorated and where they live is not a suitable option for them it was either this or the go into care which I did not want. The issue I'm having is I want them to feel secure there I will never need the house and I will continue to pay the mortgage however I do not want any payment from them, the deal we made was I will pay the mortgage they can pay bills ( electric & gas/ water/ council tax / broadband) but do I need to do anything to make this all happen officially / legally? Is it still classed as renting even tho I'm paying the mortgage? Do I need to declare it anywhere? Any advise would be appreciated :)

OP posts:
FFSFFSFFS · 18/07/2021 08:26

It will probably be in breach of your mortgage terms - either buy to let or residential. You will need specialist advice.

Original poster
penguinparty00 · 18/07/2021 08:28

Thank you I'll have a look into that is there anything else I might need to check out?

OP posts:
Chasingsquirrels · 18/07/2021 08:34

Make sure the house insurance is appropriate.

Chasingsquirrels · 18/07/2021 08:35

Realised you were previously renting it out, so you are probably already on top of insurance.

HyggeTygge · 18/07/2021 08:38

Surely when you were renting it to others you were paying the mortgage then too? So that hasn't changed?
Presumably you had a BTL mortgage then as well?
So the only thing that's changing is the tenants and the amount of money you receive from them.

Original poster
penguinparty00 · 18/07/2021 08:42

@HyggeTygge

Surely when you were renting it to others you were paying the mortgage then too? So that hasn't changed? Presumably you had a BTL mortgage then as well? So the only thing that's changing is the tenants and the amount of money you receive from them.
Yes this is true so I guess it would still fall under renting I think because I'm emotionally invested in it whereas before it was just renting I'm seeing it differently when it really isn't
OP posts:
GOODCAT · 18/07/2021 08:45

Have your parents ever made large(ish) gifts to you? If so, consider pre-owned assets tax and gifts with reservation of benefit as then you may want to charge them full market rent rather than have one of those taxes apply.

Do they own their own home currently? If so, what will happen to that property?

slipofthekeyboard · 18/07/2021 08:46

If you’re not taking money from your parents my understanding is they won’t be tenants (even if they are paying other bills), and therefore it would be a different sort of occupation @penguinparty00. I’d suggest you speak with the mortgage provider and insurer to check they consider it to be classified appropriately/you’ve got the right product for this setup.

Ducksurprise · 18/07/2021 08:46

I think I would charge them rent, to keep it clear that the house is still a rental, and to keep their status clear, it only needs to be a nominal amount.

Original poster
penguinparty00 · 18/07/2021 08:51

@GOODCAT

Have your parents ever made large(ish) gifts to you? If so, consider pre-owned assets tax and gifts with reservation of benefit as then you may want to charge them full market rent rather than have one of those taxes apply.

Do they own their own home currently? If so, what will happen to that property?

The put a rather sizeable amount into the house some years ago which is why I feel rent free is the best option?
OP posts:
Original poster
penguinparty00 · 18/07/2021 08:51

@Ducksurprise

I think I would charge them rent, to keep it clear that the house is still a rental, and to keep their status clear, it only needs to be a nominal amount.
So I could for example have them set up a direct debit for rent for £5 for example?
OP posts:
Nowthisisme · 18/07/2021 09:00

@FFSFFSFFS

It will probably be in breach of your mortgage terms - either buy to let or residential. You will need specialist advice.
As long as it’s insured properly does this really matter?
sleepingdragon · 18/07/2021 09:10

What are the conditions of your mortgage? My buy to let mortgage terms does not allow me to rent to family. I believe you need a Regulated Mortgage to rent to family- I think its because of the risks that you might live there too.

sleepingdragon · 18/07/2021 09:13

The mortgage lender could demand their money back, and if they can't find another lender willing to allow them to rent to a close family member the house could be repossessed.

sleepingdragon · 18/07/2021 09:14

@sleepingdragon

The mortgage lender could demand their money back, and if they can't find another lender willing to allow them to rent to a close family member the house could be repossessed.
Sorry! I was trying to put this as a reply to a quote, from the PP asking if it mattered if it was in breach of the mortgage terms
Soontobe60 · 18/07/2021 09:17

Do they own their own property?
Why do you think they will be able to manage better in your house than in their own?

Gardenwalldilema · 18/07/2021 09:24

Can you not just charge them a peppercorn and give them q tenancy agreement, £1 a year or suchlike?

RandomMess · 18/07/2021 09:35

Far better to charge them minimal like £5 per month.
If they lose mental capacity or something you may need to do something like "evict" them to get appropriate care.

Best not to muddy the waters because you just don't know what the future holds.

Thanks
FFSFFSFFS · 18/07/2021 14:39

charging them £5 won't work!

If its a requirement of your mortgage that its rented it would have to be at market rent. It's likely that there is a clause in the mortgage terms that it not be rented to relatives.

Breaching your loan terms is a kinda big deal....it could invalidate your insurance, the mortgage company could call in the loan, it could be considered fraud...

Mosaic123 · 18/07/2021 20:23

Just ask the mortgage company what would happen if I...... Best to be honest.

HalzTangz · 18/07/2021 21:10

Is it a buy to let mortgage? If so you will need to charge rent, but you could total that rent up to whatever the bills are, they pay you and you pay the bills

kerosene20 · 18/07/2021 21:14

Most buy to let mortgages don’t allow you to rent to family even if they are paying full market rent. If your lender finds out they put any money into this property they really won’t like it as it risks their security if someone else has a possible claim on the property. You need to clear everything with your lender before going any further and be prepared to remortgage.

Clem4579 · 19/07/2021 12:26

Do they currently own a house themselves?

Original poster
penguinparty00 · 19/07/2021 12:43

@Clem4579

Do they currently own a house themselves?
They do but they are going to sell their house.
OP posts:
Original poster
penguinparty00 · 19/07/2021 12:45

I spoke to the mortgage company today for clarity and as I have a residential mortgage with a "consent to let" due to circumstances what I would need to do is cancel the consent to let and their policy for residential is any family member 1 up/ down can live in the property indefinitely with me still paying the mortgage so long as it's not financially adding value to the property.

OP posts: