Buying BTL for daughter to live in

[PurplePrickley]

DH and I have been discussing doing this and on our end it seems like a great idea. We’d obviously charge her below market rate (just enough to cover mortgage payments). It would be an investment once DD moved out.
Am I missing some really obvious reasons why this would be a bad idea?

You can claim housing benefit to pay a family member, so long as everything is above board - tenancy agreement and tax etc. I rent from a family member. They bought outright though, so I can't help with the mortgage advice

If it’s in DDs name and she’s a first time buyer I think you can avoid the stamp duty if it’s cheap enough. Some of this advice really depends on the sums of money you are talking about. If no one has any savings I don’t see how any of this is possible unless someone is willing to give you a 100% mortgage. That’s probably not going to happen. You haven’t said what your deposit might be.

Is your dd in council housing? She could exercise her right to buy if she has been a tenant over 5 years. Otherwise looking for an ex council house would mean that you could get more house for your/her money.

Be careful if your DD is on Universal Credit, it can be very difficult to get a payout for rent if it isn't market value and is owned by a family member. The family member needs to be treated in exactly the same way as a tennent would be.

One of the terms of b2l mortgage is that you cannot rent it out to a family member. If you did you would be breaking mortgage agreement with your lender.

B2l LL have to pay stamp duty at higher rate.

Mortgage providers usually ask for 30 per cent deposits on b2l mortgages.

You also have to charge 1.5 times over mortgage in order to satisfy stress test for b2l.

You are not allowed to rent to relative.

If your DH is higher earner he will pay 40 percent tax on rental income - 25 pet cent of rent.

I am s b2l LL and my dh is accountant.

People think b2l LL make lots of money but they don't. Their property will go up in value over time. That is the benefit of b2l.

We did this for my brother. He lives for 'mates rates' in a house that we bought but in return he does the odd bit of DIY. He's very happy with the arrangement.

She needs to buy it in her name and you take a charge over it for the money you give her as a large deposit.

Then the money she pays you is paying back a loan, it’s not income.

She takes out a mortgage small enough for her to afford.

She won’t pay CGT when she sells as it’s her main home.

Not tax advice but you can only offset mortgage interest against rent so you’d need to consider whether you were doing a repayment or interest only

Not anymore.

Have you considered a joint mortgage with your daughter? You could remortgage to provide the deposit then apply for a repayment mortgage with your daughter for a property she can comfortably afford the payments for. Take legal advice re safeguarding your deposit, if you feel you need to.