homepage
  roll on christmas  
click here to find out more about ship of fools click here to sign up for the ship of fools newsletter click here to support ship of fools
community the mystery worshipper gadgets for god caption competition foolishness features ship stuff
discussion boards live chat cafe avatars frequently-asked questions the ten commandments gallery private boards register for the boards
 
Ship of Fools


Post new thread  Post a reply
My profile login | | Directory | Search | FAQs | Board home
   - Printer-friendly view Next oldest thread   Next newest thread
» Ship of Fools   »   » Oblivion   » buy to let to kids

 - Email this page to a friend or enemy.    
Source: (consider it) Thread: buy to let to kids
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
Hi, does anyone have any experience of buying a flat/house for their (young adult) kids to live in?

Do I have to get a buy-to-let mortgage, or does it count as residential, since my family will live in it, at least for the foreseeable future?

Does anyone have a horror story of how it all went horribly wrong?

Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
Schroedinger's cat

Ship's cool cat
# 64

 - Posted      Profile for Schroedinger's cat   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
I do have a mortgage on a rented house. The question about the type of mortgage depends on the precise situation.

If you are not living in the property, which you are not, then you might struggle to get a standard mortgage. It depends on the lender, so you might have to shop around.

The advantage of a BtL mortgage is that the interest is tax deductable. The down side of it is that the amount you can borrow is based on the rental income ( not your personal income ). So if you are not charging rent, or charging a low rent, you might struggle to get a BtL on the property. In essence, as BtL, you are running a business, where the income is the rental, and the outgoings are the mortgage payments ( and other stuff ). You need to pay income tax on any profit.

You might find that the best option is to talk to a mortgage advisor, who should be able to advise you, and find the right mortgage for you, given your specific situation.

Other advice - make sure you have a contract. It doesn't matter if they are friends, relations, lovers or Malaysian sex slaves, you need to have a contract outlining the responsibilities and expectations of both sides.

--------------------
Blog
Music for your enjoyment
Lord may all my hard times be healing times
take out this broken heart and renew my mind.

Posts: 18859 | From: At the bottom of a deep dark well. | Registered: May 2001  |  IP: Logged
moonlitdoor
Shipmate
# 11707

 - Posted      Profile for moonlitdoor   Email moonlitdoor   Send new private message       Edit/delete post   Reply with quote 
If you own the property where you are living, with enough equity to cover the mortgage you would need on the other place, you'll be able to take the mortgage on the place you live if you prefer, so you would have the choice of buy to let or standard mortgage.

--------------------
We've evolved to being strange monkeys, but in the next life he'll help us be something more worthwhile - Gwai

Posts: 2210 | From: london | Registered: Aug 2006  |  IP: Logged
Ags

Knocked up
# 204

 - Posted      Profile for Ags     Send new private message       Edit/delete post   Reply with quote 
moonlitdoor - we did that and got a standard mortgage on our house. Our older daughter and her husband live in the second house and pay the mortgage on ours in lieu of rent. Works well for all, though we did struggle a bit persuading the bank we're a good risk as we're both in our 50s. We're unlikely to be able to do anything similar for our other daughter (too old now!)

--------------------
I think that we are most ourselves at our best, because that is what God intended us to be. The us we really like, the us that others love to be with. Moth

Posts: 2707 | From: London | Registered: May 2001  |  IP: Logged
busyknitter
Shipmate
# 2501

 - Posted      Profile for busyknitter     Send new private message       Edit/delete post   Reply with quote 
We have bought a house that my Mum lives in. As we had quite a bit of equity in our own home, we chose to extend the mortgage on that and buy the new one outright.
Posts: 903 | From: The Wool Basket | Registered: Mar 2002  |  IP: Logged
ken
Ship's Roundhead
# 2460

 - Posted      Profile for ken     Send new private message       Edit/delete post   Reply with quote 
And the real disadvantage of a buy-to-let scheme is the bad karma you get from the millions of people who will despise you from that moment on. Including me, what with the shite (*) I've had from the slum landlords who bought the flat above me [Frown] But their tenants escaped their clutches a few months ago, and they are trying to sell it now, unsuccessfully so far I think (there has certianly been no-one doing anything upstairs for weeks) and if the world was a just place they'd lose every ill-gotten penny of their "investment". Which is very likely looking at the condition of the place.


(*) That is not a metaphor

[ 23. May 2013, 17:11: Message edited by: ken ]

--------------------
Ken

L’amor che move il sole e l’altre stelle.

Posts: 39579 | From: London | Registered: Mar 2002  |  IP: Logged
Og, King of Bashan

Ship's giant Amorite
# 9562

 - Posted      Profile for Og, King of Bashan     Send new private message       Edit/delete post   Reply with quote 
I have seen a number of cases where the parents bought a house for an adult child, and put the child on the title to get a better mortgage rate. The usual story is that the bank will not give you a residential mortgage unless someone who actually resides at the house is on the title, so the parents just added the child as a formality. (I am sure the policy varies from bank to bank.) The problem arises when a creditor of the adult child attempts to put a lien on or foreclose on the child's interest in the property. Convincing the creditor that the child doesn't really have an ownership interest in the house can be a hard slog. It might never come up, but it can create some trouble.

--------------------
"I like to eat crawfish and drink beer. That's despair?" ― Walker Percy

Posts: 3259 | From: Denver, Colorado, USA | Registered: May 2005  |  IP: Logged
Schroedinger's cat

Ship's cool cat
# 64

 - Posted      Profile for Schroedinger's cat   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
Despite what Ken says, being a landlord does not make you a pariah.

And yes, there are some bad landlords, and some utterly appalling landlords. There are also a whole lot of very good landlords. As a small landlord, you will be one of the good ones. People doing this have grown in number over the last decade or so.

One of the things you should do is make sure that you are going to be a good landlord. That involves looking after the property, caring for the neighbours, behaving as if you actually lived there. And this does make a difference.

--------------------
Blog
Music for your enjoyment
Lord may all my hard times be healing times
take out this broken heart and renew my mind.

Posts: 18859 | From: At the bottom of a deep dark well. | Registered: May 2001  |  IP: Logged
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
I don't actually get what ken is talking about - I want to buy a property for my kids to live in, because they can't afford to pay the current rents in this area, so it seems to make sense.

I wasn't asking for comments on landlords in general. Back in the day, we owned a house in one town, but wanted to live in another, so we rented a house to live in, and rented ours out. My husband wanted to help someone who needed help, so he rented our house to a family who couldn't afford to pay a deposit.

Within a few months, they complained about ants, and when OH suggested they put ant powder down, the tenant demanded we supply it, and actually said 'all landlords are the same, bastards.'

A few months later they stopped paying rent, and eventually left, months and months in arrears (nothing we could do as all laws protect the tenant) stealing all our stuff - white goods, curtains, lampshades - including breaking in to the shed and stealing a dishwasher and other machines.

After that we used an agency to let the house.

so try not to generalise.

Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
ken
Ship's Roundhead
# 2460

 - Posted      Profile for ken     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:
I don't actually get what ken is talking about -

Not about people buying a house for members of their family, nothign wrong in that, obviosuoly.

But about these "buy to let" schemes that are making the bad housing situation in this country even more of a disaster. Its the contemporarty version of old-fashioned slum landlordism. And it drives rents higher and higher for anyone who can't afford a mortgage.

Sets up a huge doble bind for all sorts of people. If you can;t afford a mortgage you have to rent, but rents are higher than mortgages, so you never become able to buy anywhere,and meanwhile are at the mercy of profiteering landlords.

--------------------
Ken

L’amor che move il sole e l’altre stelle.

Posts: 39579 | From: London | Registered: Mar 2002  |  IP: Logged
ken
Ship's Roundhead
# 2460

 - Posted      Profile for ken     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:
Back in the day, we owned a house in one town, but wanted to live in another, so we rented a house to live in, and rented ours out.

Yes, but that is nothing like these "Buy to Let" schemes.

OK, maybe the OP misleadingly used the words "Buy to Let" when the thread was intended to be about something quite different.

quote:

After that we used an agency to let the house.

As for lletting agents, I suppose their might be some decent and honest ones somewhere. But I can't remember ever coming across them.

When we were renting in London, back in the 1980s, we had an agent walk off with two months rent that we'd paid them, never giving it to the landlord.

Before that in Brighton there were people I know forced to deal with the likes of Rachman and Hoogstraten.

Right now the flat above me is in one of these Buy-to-Let schemes and being run by some letting agents in Lewisham Hight Street who I suppose I opught not to name because the people who run this website are so scared of libel, and there is nothing nice to say about the cheating weasels.

quote:

so try not to generalise.

I'm not generalising, I'm ranting. I'm also right.

--------------------
Ken

L’amor che move il sole e l’altre stelle.

Posts: 39579 | From: London | Registered: Mar 2002  |  IP: Logged
Boogie

Boogie on down!
# 13538

 - Posted      Profile for Boogie     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:

After that we used an agency to let the house.

We are landlords and use an agency. Our tenants left recently (they loved the house, but it became too small for their growing family) We were glad of the agency to do all the hassle of re-letting.

When I get my pension lump sum we are thinking of buying another to do up and let. There is no interest to be had in investing it, after all.

Posts: 13030 | From: Boogie Wonderland | Registered: Mar 2008  |  IP: Logged
Leorning Cniht
Shipmate
# 17564

 - Posted      Profile for Leorning Cniht   Email Leorning Cniht   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by ken:
If you can;t afford a mortgage you have to rent, but rents are higher than mortgages, so you never become able to buy anywhere.

Of course rents are bigger than (interest only) mortgages! On top of his mortgage, a homeowner has to pay for repairs and maintenance, and has to carry the risk of having his capital tied up in bricks and mortar. If he lets the house out, he also has to carry the risk of having voids between tenancies, and of the tenants deciding not to pay (several months of no rent while eviction proceedings take place, plus the tenant will probably trash the place).

The tenant pays an all-in price, and has no risk. He's not liable for repairs and maintenance - his only liability is to pay rent for whatever the notice period in his tenancy is.

Posts: 5026 | From: USA | Registered: Feb 2013  |  IP: Logged
Tubbs

Miss Congeniality
# 440

 - Posted      Profile for Tubbs   Author's homepage   Email Tubbs   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by ken:
quote:
Originally posted by Taliesin:
Back in the day, we owned a house in one town, but wanted to live in another, so we rented a house to live in, and rented ours out.

Yes, but that is nothing like these "Buy to Let" schemes.

OK, maybe the OP misleadingly used the words "Buy to Let" when the thread was intended to be about something quite different.

quote:

After that we used an agency to let the house.

As for lletting agents, I suppose their might be some decent and honest ones somewhere. But I can't remember ever coming across them.

When we were renting in London, back in the 1980s, we had an agent walk off with two months rent that we'd paid them, never giving it to the landlord.

Before that in Brighton there were people I know forced to deal with the likes of Rachman and Hoogstraten.

Right now the flat above me is in one of these Buy-to-Let schemes and being run by some letting agents in Lewisham Hight Street who I suppose I opught not to name because the people who run this website are so scared of libel, and there is nothing nice to say about the cheating weasels.

quote:

so try not to generalise.

I'm not generalising, I'm ranting. I'm also right.

The Ship is scared of libel because it does not have the funds to defend itself if someone decides to sue IT for something YOU post.

Tubbs
Admin

--------------------
"It's better to keep your mouth shut and be thought a fool than open it up and remove all doubt" - Dennis Thatcher. My blog. Decide for yourself which I am

Posts: 12701 | From: Someplace strange | Registered: Jun 2001  |  IP: Logged
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
quote:
Yes, but that is nothing like these "Buy to Let" schemes.

OK, maybe the OP misleadingly used the words "Buy to Let" when the thread was intended to be about something quite different.

The OP asked a straightforward question - do I have to apply for a 'buy-to-let' mortgage in order to buy a house for my kids? They will need to pay rent - if they just cover the mortgage repayments who is going to pay for repairs?
Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
Tubbs

Miss Congeniality
# 440

 - Posted      Profile for Tubbs   Author's homepage   Email Tubbs   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:
quote:
Yes, but that is nothing like these "Buy to Let" schemes.

OK, maybe the OP misleadingly used the words "Buy to Let" when the thread was intended to be about something quite different.

The OP asked a straightforward question - do I have to apply for a 'buy-to-let' mortgage in order to buy a house for my kids? They will need to pay rent - if they just cover the mortgage repayments who is going to pay for repairs?
Speak to a mortgage advisor who will be able advise on the best mortgage for your circumstances and your budget etc. You may also want to speak to a tax advisor - rental income is taxable.

Once you've got an idea from the mortgage advisor of how much you can borrow, how much the payments will be and see what it'll get you, then, speak to your kids about the idea to see if they're up for it. Agree up-front what the rent will be, who is responsible for what, what happens once the mortgage is paid etc. Draw up a contract with the help of a solicitor and treat it like a business arrangement.

Tubbs

[ 25. May 2013, 10:23: Message edited by: Tubbs ]

--------------------
"It's better to keep your mouth shut and be thought a fool than open it up and remove all doubt" - Dennis Thatcher. My blog. Decide for yourself which I am

Posts: 12701 | From: Someplace strange | Registered: Jun 2001  |  IP: Logged
Leorning Cniht
Shipmate
# 17564

 - Posted      Profile for Leorning Cniht   Email Leorning Cniht   Send new private message       Edit/delete post   Reply with quote 
An alternative might be to act as a guarantor for your children's mortgage. That does expose you to quite a lot of risk if your children don'tkeep their finances in check, though.
Posts: 5026 | From: USA | Registered: Feb 2013  |  IP: Logged
Evangeline
Shipmate
# 7002

 - Posted      Profile for Evangeline   Email Evangeline   Send new private message       Edit/delete post   Reply with quote 
As with everything, don't rely on advice offered via the internet, check the situation out with a good accountant or solicitor and financial institutions. In Australia there are a number of tax implications that could cost 1000s of $s that you'd need to consider before deciding to put the property in yours or your kids names. No doubt the tax situation in your country is different so I won't go into details.

One thing to consider if putting it in your child's name is how financially responsible they are. The problem with a family friend of ours was that they bought their younger, musician wannabe son a flat to live in, he sold it and went overseas to live for a year or 2, he came back they bought him another one (like seriously)and he did the exact same thing. Finally, when he came back they bought a flat but in their names to stop him selling it and pocketing the proceeds.

Posts: 2871 | From: "A capsule of modernity afloat in a wild sea" | Registered: May 2004  |  IP: Logged
Vulpior

Foxier than Thou
# 12744

 - Posted      Profile for Vulpior   Author's homepage   Email Vulpior   Send new private message       Edit/delete post   Reply with quote 
No experience in buying-to-let, whether to kids or to commercial tenants, but we do live in the granny flat at the end of Mum's house. It's very "Everybody Loves Raymond". From a kid/tenant point of view, there can be privacy issues when you're that close.

I do echo the recommendation to establish a written agreement. Whether it's family or friends, it make for clear boundaries, even if you choose to be lenient at times.

--------------------
I've started blogging. I don't promise you'll find anything to interest you at uncleconrad

Posts: 946 | From: Mount Fairy, NSW | Registered: Jun 2007  |  IP: Logged
Firenze

Ordinary decent pagan
# 619

 - Posted      Profile for Firenze     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by ken:

OK, maybe the OP misleadingly used the words "Buy to Let" when the thread was intended to be about something quite different.



I don't think you can call it 'misleading' because it happened to push a particular button in your personal experience. The scope of the topic was there in the OP as well.
quote:


I'm not generalising, I'm ranting.

And you know where rants are supposed to go.

Firenze
All Saints Host

Posts: 17302 | From: Edinburgh | Registered: Jun 2001  |  IP: Logged
Tubbs

Miss Congeniality
# 440

 - Posted      Profile for Tubbs   Author's homepage   Email Tubbs   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Schroedinger's cat:
I do have a mortgage on a rented house. The question about the type of mortgage depends on the precise situation.

If you are not living in the property, which you are not, then you might struggle to get a standard mortgage. It depends on the lender, so you might have to shop around.

The advantage of a BtL mortgage is that the interest is tax deductable. The down side of it is that the amount you can borrow is based on the rental income ( not your personal income ). So if you are not charging rent, or charging a low rent, you might struggle to get a BtL on the property. In essence, as BtL, you are running a business, where the income is the rental, and the outgoings are the mortgage payments ( and other stuff ). You need to pay income tax on any profit.

You might find that the best option is to talk to a mortgage advisor, who should be able to advise you, and find the right mortgage for you, given your specific situation.

Other advice - make sure you have a contract. It doesn't matter if they are friends, relations, lovers or Malaysian sex slaves, you need to have a contract outlining the responsibilities and expectations of both sides.

The other issue with BtL mortgages is that they tend to be interest only as they assume you'll pay the rest off when the property is sold.

There are products aimed at parents wanting to get their kids on the property ladder. Speak to an advisor about those.

Tubbs

--------------------
"It's better to keep your mouth shut and be thought a fool than open it up and remove all doubt" - Dennis Thatcher. My blog. Decide for yourself which I am

Posts: 12701 | From: Someplace strange | Registered: Jun 2001  |  IP: Logged
Zacchaeus
Shipmate
# 14454

 - Posted      Profile for Zacchaeus   Email Zacchaeus   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Tubbs:
quote:
Originally posted by Schroedinger's cat:
I do have a mortgage on a rented house. The question about the type of mortgage depends on the precise situation.

If you are not living in the property, which you are not, then you might struggle to get a standard mortgage. It depends on the lender, so you might have to shop around.

The advantage of a BtL mortgage is that the interest is tax deductable. The down side of it is that the amount you can borrow is based on the rental income ( not your personal income ). So if you are not charging rent, or charging a low rent, you might struggle to get a BtL on the property. In essence, as BtL, you are running a business, where the income is the rental, and the outgoings are the mortgage payments ( and other stuff ). You need to pay income tax on any profit.

You might find that the best option is to talk to a mortgage advisor, who should be able to advise you, and find the right mortgage for you, given your specific situation.

Other advice - make sure you have a contract. It doesn't matter if they are friends, relations, lovers or Malaysian sex slaves, you need to have a contract outlining the responsibilities and expectations of both sides.

The other issue with BtL mortgages is that they tend to be interest only as they assume you'll pay the rest off when the property is sold.

There are products aimed at parents wanting to get their kids on the property ladder. Speak to an advisor about those.

Tubbs

we have a buy to let mortgage and it is strightforward repayment and not interest only..
Posts: 1905 | From: the back of beyond | Registered: Jan 2009  |  IP: Logged
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
really appreciated, everyone, thank you. I have an appointment with advisor booked - but really appreciating advice like, 'write a contract' because it's a good idea that would never have occured to me.
Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
important piece of info - you cannot get a buy to let mortgage if you intend to rent to family members.
Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
Schroedinger's cat

Ship's cool cat
# 64

 - Posted      Profile for Schroedinger's cat   Author's homepage     Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:
important piece of info - you cannot get a buy to let mortgage if you intend to rent to family members.

Interesting. I suspect because it is not considered an independent source of income.

--------------------
Blog
Music for your enjoyment
Lord may all my hard times be healing times
take out this broken heart and renew my mind.

Posts: 18859 | From: At the bottom of a deep dark well. | Registered: May 2001  |  IP: Logged
Garasu
Shipmate
# 17152

 - Posted      Profile for Garasu   Email Garasu   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Taliesin:
you cannot get a buy to let mortgage if you intend to rent to family members.

How do they know?

--------------------
"Could I believe in the doctrine without believing in the deity?". - Modesitt, L. E., Jr., 1943- Imager.

Posts: 889 | From: Surrey Heath (England) | Registered: Jun 2012  |  IP: Logged
Taliesin
Shipmate
# 14017

 - Posted      Profile for Taliesin   Email Taliesin   Send new private message       Edit/delete post   Reply with quote 
if you tell them!

Apparently the problem is that people let family live in a place, then if they default on the mortgage the tenants becomes squatters, and very hard to remove. Bigger risk for mortgage lenders.

Posts: 2138 | From: South, UK | Registered: Aug 2008  |  IP: Logged
Tukai
Shipmate
# 12960

 - Posted      Profile for Tukai   Email Tukai   Send new private message       Edit/delete post   Reply with quote 
quote:
Originally posted by Leorning Cniht:
An alternative might be to act as a guarantor for your children's mortgage. That does expose you to quite a lot of risk if your children don'tkeep their finances in check, though.

My advice is to never do that. You have nothing to fall back on if trouble arises , e.g. if child's marriage breaks down, because you have all downside and no upside. Too many sad tales I could tell of friends who lost a lot as guarantors.

When my daughter was still a student [in Australia] , we bought bought together a house for her to live in and intended as hers to keep. I had a steady income and a paid off mortgage of my own, so the bank were happy to give us a mortgage. In normal times her co-residents ( it ran as a student share-house, with her in charge) paid rent to me, which covered the mortgage; in between tenants, I paid it. But at least I had a stake, which as the upside proved a positive investment over the years.

--------------------
A government that panders to the worst instincts of its people degrades the whole country for years to come.

Posts: 594 | From: Oz | Registered: Sep 2007  |  IP: Logged


 
Post new thread  Post a reply Close thread   Feature thread   Move thread   Delete thread Next oldest thread   Next newest thread
 - Printer-friendly view
Go to:

Contact us | Ship of Fools | Privacy statement

© Ship of Fools 2016

Powered by Infopop Corporation
UBB.classicTM 6.5.0

 
follow ship of fools on twitter
buy your ship of fools postcards
sip of fools mugs from your favourite nautical website
 
 
  ship of fools