Renting to parents

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  • Renting to parents

    I have 2 properties that i am currently renting out on Buy to Let Mortgages with good tennants with no problems.......

    My parents are having a few problems and having to sell their house and it looks like they will have to move into rented accomodation.

    I Could afford to buy a further property for them BUT it would have to have a MORTGAGE and i am not aware that you can have a buy to let mortgage with your parents as tennants.

    This would be a good investment if i could arrange it but i would like to know the legal side and if any mortgage companies do allow this

    Many thanks rrrtc......

  • #2
    Mortgage lenders are not interested in who the tenants might be, just that you can get a 130% return on the mortgage payments. As far as I am aware, the only time renting to a relative is called into question is when the tenant is claiming housing benefit.

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    • #3
      thank you for your reply, i was told this might be a problem is there anyway around this?

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      • #4
        You've just been told it's not a problem, so why do you need a way round it?

        As long as you get evidence that your rent will be 130% of your mortgage no further questions will be asked regarding who the tenants are.

        Just get 2 or 3 agents to give you written confirmation of expected rental income.

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        • #5
          It will be a problem if my parents need to claim housing benifits
          they are both fit and able to work at the moment but what happens if they are not?
          I just want to know what my options are?

          Getting the mortgage isnt that much of a problem like i said i have 2 properties and i have a decent deposit to put down.

          Thanks rrrtc!

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          • #6
            Mortgage companies do indeed ask whether a property will be rented more than 40% of the time to relatives.

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            • #7
              I have taken 2 buy to let mortgages out and are at the moment re mortgaging one of the properties and they have all stated no family members


              thanks rrrtc

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              • #8
                The reason the mortgage companies ask about relatives at the property is because buy to let mortgages are not regulated. If the house has a close relative occupying more than 40% of the property it will then become a regulated mortgage. Not sure what difference this would make to them, but if they were not told, it is not something they will check up on at a later date.

                Re housing benefit. I have a niece living in a property and she receives HB. I was told by the council that they will pay HB as long as it is not an immediate family member. I have heard of different council interpreting the rules for family members differently. Why not just phone the HB department at the council and ask if they would pay HB in these circumstances. There is always one way around it, and that is to buy a property with a limited company. Their landlord would therefore be a Ltd Co and not you as an individual.

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                • #9
                  Originally posted by Steve C
                  Re housing benefit. I have a niece living in a property and she receives HB. I was told by the council that they will pay HB as long as it is not an immediate family member. I have heard of different council interpreting the rules for family members differently. Why not just phone the HB department at the council and ask if they would pay HB in these circumstances. There is always one way around it, and that is to buy a property with a limited company. Their landlord would therefore be a Ltd Co and not you as an individual.
                  New rules from my local council, new tenants are asked who the shareholders of a limited company are and HB is not paid until they answer this. This is designed to discover any familial relationship. I asked the council what they would do in the case of a FTSE 100 company, no answer to that one yet.

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                  • #10
                    Contacting the housing benefit must be my frist approach but i think that they will say they are immediate family members.

                    Still i will see what they have to say thank you all for your help and keep any ideas comming in it is all good advice

                    All the best
                    rrrtc

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