Page 2 | Buy to let - daughter will be tenant

Twoshoesnewshoes · 2022-11-30T19:26:20+00:00

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

Dreamsoffreedomjoyandpeace · 30/11/2022 21:44

Its fraud if you deliberately get a buy to let with the intention of letting to family. However it isn’t illegal to do this if you have previously let to other people and never intended to let to family. It would be breaking the terms of the mortgage though so you could be forced to sell if they found out but most likely the family member would have to move elsewhere. I wouldn’t be worried about this but I’d be a bit worried about invalidating the buildings insurance.

I think interest only mortgages are really difficult to get.

Soontobe60 · 30/11/2022 21:48

Twoshoesnewshoes · 30/11/2022 20:59

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?

So how are you going to buy the property then? There will be an affordability check carried out - theyre pretty rigorous.

titchy · 30/11/2022 21:54

Twoshoesnewshoes · 30/11/2022 21:41

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

@openinggambit thanks, I’ll have a look

So she gives you her money, which you then use for a flat (wouldn't you be liable to capital gains on her 'gift' to you?). Plus CGT when you gift it to her. You'd also have to stamp duty at the second home rate.

She wouldn't have to pay stamp duty if she bought in her name and obvs no CGT liability.

Maybe she just has to buy somewhere she can afford!

PragmaticWench · 01/12/2022 06:59

"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."

I'm not sure what you mean here. If you bought it, how would your daughter then (at a later date) raise a mortgage on a property that you legally own? Would you gift it to her (tax implications) or sell it to her?

Alexandernevermind · 01/12/2022 07:11

Is there a way for you to buy it together, be joint names on the mortgage?

Twiglets1 · 01/12/2022 07:14

It seems a bit overly complicated (don't think you're doing anything wrong morally though).
Between your daughter and you, a deposit of 50k can be raised plus she can pay a mortgage as she is working full time. I think it would be easier for her just to find a cheaper property she can afford to repay along with the 50k deposit. She can always trade up when she earns more but at the moment a small property is all she can afford even with your generous support. That's the same for most young people these days unfortunately, they are lucky if they can affford to buy at all.

Twiglets1 · 01/12/2022 07:16

Alexandernevermind · 01/12/2022 07:11

Is there a way for you to buy it together, be joint names on the mortgage?

OP should be wary about doing this as there are second property rules and financial penalties for buying a second home.

Honeybee8409 · 01/12/2022 09:27

The jealousy and judgement on here.

caroleanboneparte · 01/12/2022 09:40

She needs to just buy the £110k property.

Another option is for her to have a lodger. She can earn £9500 in rent from a lodger without it being subject to tax. This could increase her mortgage affordability.

Look at one beds that can actually be used as 2 beds ie separate living room from kitchen so it can be used as a 2nd bedroom.

Lcb123 · 01/12/2022 09:44

This seems very complicated. Can she just buy something cheaper, even if not a long-term property? Or do shared ownership, at least she'd be on the ladder, and you don't need to borrow as much

determinedtomakethiswork · 01/12/2022 09:46

Can't you get a joint mortgage with her?

survivingmomland · 01/12/2022 09:47

Honeybee8409 · 01/12/2022 09:27

The jealousy and judgement on here.

It's awful isn't it!! So many irrelevant suggestions too that the poster is not asking for

Svalberg · 01/12/2022 09:51

ineedafairygodmother · 30/11/2022 20:19

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

Show quote history

They have to believe you'd evict them, so even if you have all the documentation in place, they'd say no unless the rent wasn't paid & you served them with a section 21 (or 8 - I forget which)

ineedafairygodmother · 01/12/2022 10:12

@Svalberg
Not generally the case..... I get UC top up (inclusive of the housing element) and rent from family and have never been asked any questions or had anything checked. Like I said, as long as there's an official contract, the rent is paid and everything is above board there shouldn't be a problem

Svalberg · 01/12/2022 13:37

ineedafairygodmother · 01/12/2022 10:12

@Svalberg
Not generally the case..... I get UC top up (inclusive of the housing element) and rent from family and have never been asked any questions or had anything checked. Like I said, as long as there's an official contract, the rent is paid and everything is above board there shouldn't be a problem

Not the case for my relative I'm afraid, and social services & citizens advice have all been involved.

Svalberg · 01/12/2022 13:41

It was even said that everything was in place (tenancy, rent, EPC, all utility certificates) but UC weren't convinced that they'd be evicted if the rent wasn't paid. The relative that owned the house had also been a landlord previously with a different house.

ineedafairygodmother · 01/12/2022 14:04

@Svalberg
Possibly every LA is different it makes it impossible to give the OP advice when different people have different outcomes

Svalberg · 01/12/2022 14:32

@ineedafairygodmother Very true

SollaSollew · 01/12/2022 15:57

No judgement here @Twoshoesnewshoes I've been looking at the same thing for my eldest children as neither of them earn enough to get a mortgage on their own or possibly even together as we're in the south east but their grandparents are downsizing into a retirement place and want to gift them a deposit each.

I don't fancy committing mortgage fraud either but had seriously considered having a rental agreement with ex-h's family but for the kids to live there. However we're now looking at shared ownership. I know people don't love them and there are definitely downsides but could that be an option for your daughter?

Original poster

Twoshoesnewshoes · 01/12/2022 19:20

Thank you everyone who has been supportive.
for those asking how we can buy a buy to let with £50k deposit- it would be a 25% deposit and the mortgage is not based on income, just rent income from that property.
I cannot find a guarantor mortgage that allows her to borrow more, can anyone recommend?
she is looking at shared ownership, though near her they are private builds (not housing authority) and the actual values seem very inflated.
there isn’t anywhere to buy for less than around £160k, there actually isn’t

OP posts:

Isyesterdaytomorrowtoday · 01/12/2022 19:29

Can’t you just buy it jointly?

NoSquirrels · 01/12/2022 19:30

Is the reason that the guarantor mortgages aren’t increasing the potential borrowing because your salary is not high, OP?

Original poster

Twoshoesnewshoes · 01/12/2022 19:34

i already have quite a large mortgage on mine and DPs property so that may why, but I just haven’t found one yet where me being guarantor actually adds more than about £5k, are there any others?
between DP and I we earn around £75k so doing alright

OP posts:

titchy · 01/12/2022 19:51

Twoshoesnewshoes · 01/12/2022 19:20

Thank you everyone who has been supportive.
for those asking how we can buy a buy to let with £50k deposit- it would be a 25% deposit and the mortgage is not based on income, just rent income from that property.
I cannot find a guarantor mortgage that allows her to borrow more, can anyone recommend?
she is looking at shared ownership, though near her they are private builds (not housing authority) and the actual values seem very inflated.
there isn’t anywhere to buy for less than around £160k, there actually isn’t

So if places cost a minimum of £160k and she can get a. £110k mortgage and has £50k deposit why can't she just buy somewhere for £160? She's young - she has to cut her cloth accordingly. Good lesson to learn.

DeeofDenmark · 01/12/2022 20:26

I know you mean well but given what you have said about your own situation I don’t think you can afford to help her. In a few years once her salary has increased she will be able to buy. It just doesn’t sound like you could afford the tax implications that this arrangement would result in.