Buy to let - daughter will be tenant

[Twoshoesnewshoes]

Has anyone done this? Officially it seems to not be allowed to rent your buy to let property to family, how do they know/check?
trying to find a way to help my daughter on the housing ladder!
TIA x

It sounds like you’re asking for advice on how to commit mortgage fraud?

Also bear in mind that if she wants to claim benefits she can't claim the housing element if she is renting from family.

You can get Buy To Let mortgages that allow you to rent the property to family. They're called Regulated Buy To Let mortgages. You need a bigger deposit and when the lender assesses affordability it tends to look at your income and not at the rent you could get on the property.

Another way of helping is to remortgage your own house to raise funds to buy outright or reduce the amount of mortgage she needs. You could also investigate the possibility of standing as a guarantor to a mortgage for your daughter.

Consult a mortgage broker about funding options. Consult a solicitor about protecting the money you put in and the potential pitfalls of liability if you are a guarantor or hold a mortgage in your name.

Are you really asking for advice on how to commit fraud?

Could a guarantor mortgage be an option instead?

How does that help her get on the housing ladder? She'll be a tenant not an owner (putting aside any potential fraud issues)?

I don’t see why it’s fraud as long as you are honest with the mortgage company. I knew lots of parents who bought student houses to rent to their children and their friends whilst at university.
I also don’t see how it would help her get on the property ladder, it sounds quite controlling as presumably you wouldn’t want her to then buy her own house when she could afford it.
If you want to help her get on the property ladder help her out with a deposit or go guarantor on her own mortgage. Or let her stay at home while she saves enough for her own deposit.

Yes you can, as long as there's a tenancy contract and everything is official (and that rent is actually paid)

Thanks everyone, that’s helpful
to clarify, she works full time and doesn’t get any benefits.
she can pay (monthly) towards a mortgage much more than she can borrow if that makes sense, like most young people she is paying £750 a month rent which is equivalent of around £150,000 mortgage, but can only borrow around £110,000.
so if I bought the property it would actually be hers and she would pay the rent / mortgage, then remortgage to her name when she can borrow more in her own name.

Also, we are giving her a 15% deposit and she has lived at home rent free for two years to save, all of my dc are always welcome here rent free.
not controlling at all I think, maybe ask before making assumptions?

It's not fraud! You can legally get by to let mortgages specifically for this! My family are in the process of doing this for me. It's all above board and legal!

Why not just lend/give her the difference between what she can borrow plus her savings and the price of the property? Then it truly is her property, there’s no issue with complicated mortgages and you won’t have the hassle of being a landlord.

So you would gift the property to her when she could afford it?

Make sure you check the stamp duty implications of doing that

I don’t know the legal/tax implications of doing this (capital gains, inheritance) but if you needed care her house could be taken to pay for it.
I think it would be better to be a guarantor on her own mortgage so that the property is actually hers.

I can’t afford to lend her more than £30k I just don’t have it, it’s a stretch as it is.
the guarantor mortgages don’t seem to add more borrowing -just a lower deposit needed.
it’s very tricky! What has anyone else done in this situation?

Oh and you would have to declare the rent on your tax return and may need to pay tax on it. Plus remember there are lots of regulations a landlord needs to comply with.

Products exist that allow you to buy a property to rent to family, but they're unusual - and given the OP specifically mentioned letting to family not being permitted, I think we can infer that these specialist mortgages aren't the ones they've been exploring so far.

Can she do SO my son is doing this as despite having a big deposit he can only get a mortgage of around 130k
we live in an expensive city.
So SO it is

@Persipan they are not unusual at all! And the OP came on to find out information 🤷🏻‍♀️ and has discovered there are ways of doing it legally!

I was looking into this for my daughter. The guarantor mortgage allowed her to borrow more as based on our combined salaries. As they will be the sole proprietor they get all the first time buyer benefits and you won’t get hit on capital gains tax (if this new property is your 2nd property if you were buying the buy to let)

Then what will you use as a deposit? A BTL would need 20% which would be £30k. Which you don't have....

Have you looked at family mortgages/Barclays springboard mortgages? I haven't looked at them in detail but they enable parents to help their offspring buy property.

@titchy i have £30k for her, she has saved £20k, so a combined deposit of £50k

@openinggambit thanks, I’ll have a look

Yes being her guarantor means she can borrow against the value of your house or your salaries. She should be able to borrow more unless you don’t have a house or job.