Advice on family member living in BTL property

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    Advice on family member living in BTL property

    Hi,

    Bought a btl property some years ago. Recently let it to a daughter of a family friend.

    Even more recently, one of our lads hooked up with the daughter and moved in to the property with her.

    The only name on the Tenancy agreement is the woman's.

    So, wondering if that situation is in breach of the terms of the mortgage.?

    Also, if I wanted a further advance on the property would I have to inform the lender that a family member lives there, even though they aren't on the TA?

    Thanks in advance

    #2
    Only you will know the answer if it breaches your mortgage terms as each lender will have it's own conditions. But the wider implications are your insurance may become invalid, you may no longer be compliant for example right to rent.

    Is there a reason why he is not being put on the tenancy?

    Comment


      #3
      Is named tenant claiming HB or UC/HE,
      I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

      Comment


        #4
        My understanding is that the liability rests between landlord and the current nominated tenant and if the son is co-habiting that does not breach the Non Regulatory classification, however if the tenant receives money towards the rent etc then that could indeed breach the Terms of the current mortgage and if one was to regularise the mortgage then the landlord/ parent would need to find a lender who will accept such an arrangement with the mortgage being based on the landlords earned income and expenditure.
        The fruits of love could come with a price to pay!!

        Comment


          #5
          Thanks for the feedback.

          The property is jointly owned by myself and the missus (we aren't married), he's my son, not my missus's.

          No-one in the house is claiming benefits of any kind. The female isn't even claiming reduced CT for single occupancy.

          I'm pretty sure that putting him on the tenancy will breach the T&C's.

          So, thinking about options, here's what I've come up with - any feedback on these or any other ideas welcomed:
          • Ask him to leave - can't really do that
          • Take my name off the mortgage and put it solely into the missus name whilst he continues to live there (put my name back on if and when he moved out?)
          • Change mortgage to another BTL provider who would allow family - is there such a thing?

          Comment


            #6
            If you did put him on the Tenancy yes it would be a breach of the BtL mortgage and would have to be placed on a Regulated BTL scheme.
            Transfering to your other half is a disposable asset and therefore that brings legal and tax cost implications. I am also assuming that she enjoys the minimum income to meet the lenders basic affordability.
            As I have already mentioned there are indeed lenders who offer regulated BtL loans

            Comment


              #7
              Originally posted by loanarranger View Post
              I am also assuming that she enjoys the minimum income to meet the lenders basic affordability.
              Yes, I'm pretty much retired these days so the missus would meet the basic affordability criteria.

              If you did put him on the Tenancy yes it would be a breach of the BtL mortgage and would have to be placed on a Regulated BTL scheme.
              Is a Regulated BTL mortgage interest only or would it be like a standard repayment mortgage?

              Transfering to your other half is a disposable asset and therefore that brings legal and tax cost implications.
              So, the transfer could attract CGT, that right?

              Comment


                #8
                One name on the tenancy agreement is acceptable to mortgage lender .

                Adding second name to tenancy agreement becomes a breach , so don't add the second name .

                Comment


                  #9
                  No Regulated BtL can be either Interest Only or Capital & Interest.

                  Your other half is buying the property so Stamp Duty ( assuming transaction completes after concession deadline ) Plus SDLT premium becomes payable if your other half is party to your main residence. Remember your wife will need to show the origins of her Deposit since the mortgage will be based on the Loan to Value , normally 75%.
                  You in turn may have a CGT liability after taking account of your annual allowance .
                  I strongly advise you to discuss the implications with an accountant before kick starting the transfer.

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