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Original poster

Anyone know about BTL properties with a relative in them?

25 replies

Stylingwax · 14/09/2015 17:41

We have a small property (£50k) bought for cash, which my DPs mother lives in. She doesn't pay rent as we don't have a mortgage and she is on a very low income. We see it as a long term investment for our children and security for her.
However we need to do some roof repairs and would ideally like to release £15k of equity to do so.
I am currently going through the mortgage process of buying a family home, so wanted to transfer MIL house to my partner to keep that application separate and simpler. However, as my DP doesn't own a property, he can't get a buy to let. Getting a residential mortgage would obviously be fraudulent. Also, apparently you can't get a BTL mortgage anyway if a relative is living in the property.
He is a lower earner than me (£24k) but could easily cover a £15k mortgage on paper.
Seems a bit weird that there's no way I can get any cash out of the house for repairs. We don't even mind about paying a higher rate. I am wondering if maybe his bank might approve a loan for HI once he owns the house.
We could just wait a year and save, but then MIL continues to have to put buckets to catch drips in her bedroom. (nb we did a buildings survey on purchase but this was not flagged).
Any ideas?

OP posts:

HereIAm20 · 14/09/2015 17:50

Can you not just put the extra £15k on the mortgage on the hiuse you are buying? I know its daft that you can't rent a BTL to family. They are more likely to look after it and hopefully pay.

mandy214 · 14/09/2015 17:55

Can you rejig finances so you put a smaller deposit down on purchase and use that cash for repairs, supported by a normal unsecured bank loan if necessary?

You may need to go through an IFA since the ownership (and repairs / insurance) may factor into the affordability questions of your house purchase especially if you're not receiving any rent.

Original poster

Stylingwax · 14/09/2015 18:03

Well yeah, what I'm worried about is my mortgage application for our main property.
I wanted to put down 25% deposit, leaving me the repairs money on second property. But broker said I needed 30%. Which wipes out repairs. Am looking to borrow about 3.2 times income anyway. I borrowed 4 times income about 4 years ago with no problem but things are much tighter now and I'm worried about not getting it as it is.

OP posts:

HereIAm20 · 14/09/2015 22:03

You refer to DP rather than DH or DW. Are you married because if not then his/her mother is not an actual relative?

Original poster

Stylingwax · 14/09/2015 22:59

He is DP. So not technically a relative no. And house is just in my name.

OP posts:

hereandtherex · 15/09/2015 10:01

Some stuff mangled here. You seem to be chasing a lot of property without much of an income to service it.

There's no mortgage on the house so you can do what you like with it - your money, your choice.

You should be charging her rent. Houses cost a lot of money to maintain. If she's earning it should not be a problem. If she's in receipt of housing benefit then there might be a problem.

What's your DP not having a house to prevent him for getting a BTL? I would guess your DP does not have enough money or assets to secure any form of mortgage.

Why not take a mortgage secured against the house?

OK, do the following in order:
Start charging rent. At least 300/month.
Get the mortgage on the family home sorted
Get a re-mortgage on the rented house.

If the banks refuse the remortgage on the rented house then sell it, you have no choice. A leaking roof will destroy the house in a few years time, making it worthless.

hereandtherex · 15/09/2015 10:02

Why would you DP take out a 15k mortgage to cover the costs of repiars for a house he does not own or benefit from?

Your financial thinking is wierd.

specialsubject · 15/09/2015 11:56

as well as the damage currently being done, your house insurers will laugh in your face if things get worse (ceilings come down) because you are knowingly neglecting the property.

at least get it patched, which won't cost £15k.

Original poster

Stylingwax · 15/09/2015 13:29

Hm ok. DP doesn't have a house because he moved into my first purchase 5 years ago. It was bought with my money as deposit and so he didn't want to benefit from it, though contributed to bills. When we sold, a purchase fell through (vendors side). So we've been in rented. In the meantime this small property came up for sale. I bought with cash from equity, put in my name (should have put in both with hindsight). Knowing I would have enough for deposit on family home. now I want to shift to DPs name so he can borrow against it to repair roof. could charge rent (would do if had a mortgage) but won't help because apparently still can't get a BTL for a family member, with or without rent. So rent a bit irrelevant.
So DP would own house and benefit from it to take out the mortgage.
Yes. We will patch the roof and we can probably just sort that area, but it's an old property and I'd like to do it properly. I suspect boiler (ten years old) will go shortly also.

OP posts:

BertieBotts · 15/09/2015 13:32

You can't get housing benefit when your landlord is a relative, either. So that doesn't help.

Original poster

Stylingwax · 15/09/2015 13:32

Agree with hereandrhere though. Rents a bit 'mah', she does work but earns very little and has been left with no savings after having to refurbish, having left all her stuff in the home she owned with her partner after years of hidden violence culminated in a dreadful physical assault.
But I think we need to patch, sort out our mortgage then look to her house.

OP posts:

Original poster

Stylingwax · 15/09/2015 13:36

To be honest as well on the rent front? I'd be taxed at 40% so for £300 a month she'd struggle to find, and then I'd have to declare, plus all that paperwork, it's not worth it. I'm a landlord by merit of needing to look after her, not because I want to make money.

OP posts:

Sunnyshores · 15/09/2015 13:54

before you put DPs name on anything check carefully where it leaves your children (as you are unmarried). For example as it is now, you leave it all to your children. If however you put houses in you and DPs names and then split up, he will take his half and may not leave that to children.

Sunnyshores · 15/09/2015 13:56

also.... while it is only in your name, then DPs mother is NOT a relative. They cant have it all ways, treat you as if you're not married for some reasons and as if you are for others when it suits.

specialsubject · 15/09/2015 14:01

patch then look at finances; as you say. First things first, keep the weather out!

Roseformeplease · 15/09/2015 14:04

But, if you are not married, she is not a family member, technically.

Original poster

Stylingwax · 15/09/2015 14:11

Thanks ladies. Interesting about the family member thing. I will patch, mortgage family home then think about options.

OP posts:

hereandtherex · 15/09/2015 14:26

Worried about tax???Not worth the hassle?????

Are you are a higher rate tax player now? Even if you were, using 300/month as a rent figure, you'd get an post tax income of almost 2k. 2k is a lot of money.

You seem to be scratting around for 15k for the roof, which is insane.

thanksamillion · 15/09/2015 14:52

Can't you get a joint mortgage on the family home so that you're working from a higher income? Then you could use the smaller deposit and do the work. Or are you already doing that?

keely79 · 15/09/2015 15:18

You can get something called a dependent mortgage - we did this when we bought a place for my mother. Can't charge rent - point is that they are dependent on you. We got ours through Nationwide.

treesntrees · 15/09/2015 23:16

Not true bertiebotts

amarmai · 16/09/2015 01:37

you bought the property. His mother is living in it. You want to put it in his name altho you are not married to him . This is a huge risk to you and any family you may have if you and your partner split after you put your property in his name. Please be more cautious as there is no way to know what the future may bring.

BertieBotts · 17/09/2015 11:22

Eh? Well I couldn't a few years ago. Maybe they have changed the rules

YouMakeMyDreams · 17/09/2015 11:32

I worked for the jobcentre about 15-16 years ago and you could get hb renting from a relative back then so it's not a new thing. You have to have a proper, legal rental agreement but yep you can.

GingerFoxInAT0phat · 17/09/2015 11:33

We live in dps mothers btl, not sure if she knows you shouldn't have relatives in?

We also get housing benefit, which they are fully aware of, we just had to show we had a proper tenancy agreement and proof we pay rent.

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