Buying flat for parent

[Ilkleymoor]

I'm about to buy my first home, with partner. We're doing it together but can afford on either single salary alone.

One of my parents is in their 70s and lives in an unsuitable rented flat. Once we're sorted, I'm going to help them find a better rental - but I go to thinking that maybe I could buy a flat for security.

They live in an affordable area so I could have a 10% deposit ready fairly quickly. I could then get the mortgage and they have an ok pension so could pay it rather than pay private rent.

If need be I could cover the mortgage before selling it again. I would need to borrow 90k.

Would I be treated as a buy to let landlord? Or second home? What else do I need to consider?

Basically this would mean they were in a ground floor flat near amenities whereas currently they have stairs and no lift. Or am I just creating issues for myself and should get them another private rental instead?

There are specialist mortgages for people who want to buy to let to family OP.

Thank you, will look it up!

Really helpful, thanks - would need a bigger deposit so might need to rethink.

We got a mortgage with my mum - a specialist lender who took into account the fact her retirement income. We own it together as tenants in common so that when one of us dies it automatically becomes 100% owned by the other person.

Ooops I mean as joint tenants! Always get that the wrong way round.

@panicpidgeon that's interesting, who was the lender?

It’s the family building society.

Any second property will be liable for CGT when it’s sold though I think. Only if it’s made enough money of course. I would also look into how the “rent” your parent pays might be classed as income on your tax return. As a parent in their 70s wont get a mortgage, I cannot see how “rent” is anything other than income. I would look into this.

I would speak to a financial advisor about your situation. It would seem to make sense for you to do this.. in the long term you will be left with owning a flat. You will need to take into account how you want to share the flat with your partner and what the short and long term impacts are on tax and other property related costs. Good luck finding the best way forward.

Thanks @ChateauMargaux definitely need to speak to someone about this as it's much more complex than I realised.

Other thing I hadn't thought about is that although I would hold the mortgage, it would be my parent's money that paid for it. So when they eventually die, is the best thing to do to sell it, cover all my costs including any maintenance, and then split anything remaining with my siblings? This money would normally be lost on rent but as long as I don't end up paying for anything, I wouldn't want to end up benefiting unfairly either.

You really need to see a funancial adviser. Who will own the flat? If it’s you, then it’s yours. If parents are paying the mortgage, they just “own” what they pay off. Do they have a will? What assets do they have? They cannot leave what they don’t own. What they pay for a mortgage is paying for that loan. You should pay for maintenance etc. it’s YOUR property!

Yeah... your siblings wont get a share in the property owned by their landlord if they pay rent... if you think this will create problems with your siblings.. you need to think carefully.

However.. if as a couple, you could afford this and a second property.. it would be a nice way of ensuring your parent's security in old age.

Do want out for any pitfalls regarding cost of residential care in the future if you put this property into your parent's name or create a will declaring that it does actually belong to them... but don't let all of that get in the way of a decision that makes sense. Find a way.