Non-resident BTL with family member tenant
Discussion
I just received a phone call to tell me that a family member is at risk of eviction, as her current landlord is looking to sell. I don’t really have much more detail than that at the moment, but have been asked by a 3rd family member if I would consider buying the property.
For a multitude of reasons, I really don’t want to, but also for many other reasons feel an obligation to at least think it over.
The problem is it would need a mortgage, but I live abroad. I know (for a price) that you can get expat BTLs and it at least used to be possible to get BTLs with a family member as a tenant. Does anyone know of a product that cover all the bases (ideally with 75% LTV)?
Cheers
ETA it’s my grandmother in case that makes a difference and I have no intention of committing mortgage fraud. The rent would be at market level and paid for by housing benefit or whatever it is now called.
For a multitude of reasons, I really don’t want to, but also for many other reasons feel an obligation to at least think it over.
The problem is it would need a mortgage, but I live abroad. I know (for a price) that you can get expat BTLs and it at least used to be possible to get BTLs with a family member as a tenant. Does anyone know of a product that cover all the bases (ideally with 75% LTV)?
Cheers
ETA it’s my grandmother in case that makes a difference and I have no intention of committing mortgage fraud. The rent would be at market level and paid for by housing benefit or whatever it is now called.
Edited by eyebeebe on Tuesday 28th September 14:30
Edited by eyebeebe on Tuesday 28th September 14:31
Had a feeling you might say that! I‘ve found one potential option called Saffron BS, but seems only to be accessible through an intermediary and is 3.77% for a 2 year fix with a 1.5% arrangement fee. In any case it would depend on their definition of immediate family to qualify. They do a regulated BTL product for expats, but I wouldn‘t qualify, as I don‘t have any sterling income and they don‘t take into account the rental income from the property, even though this would be a arms-length deal with the council paying.
eyebeebe said:
ETA it’s my grandmother in case that makes a difference and I have no intention of committing mortgage fraud. The rent would be at market level and paid for by housing benefit or whatever it is now called.
i cant imagine any lender would support a BTL for what is going to be a contrived tenancy.Basically its fraud.
blue_haddock said:
i cant imagine any lender would support a BTL for what is going to be a contrived tenancy.
Basically its fraud.
I’m interested to hear why you think this is fraud?Basically its fraud.
My grandmother lives in rented accommodation (just around the corner from another relative who does a lot of the care for her, which is why it would be ideal for her to stay where she is). I’m told that she qualifies for the council to pay her rent, which they do to the current landlord. Current landlord wants to sell up. I’ve been asked if I would be the new landlord. The commercial terms would not change. In what way is this a contrived tenancy?
I don’t want to be a landlord and I don’t want this much exposure to sterling or the UK property market, but am looking at ways to help my family.
eyebeebe said:
I’m interested to hear why you think this is fraud?
My grandmother lives in rented accommodation (just around the corner from another relative who does a lot of the care for her, which is why it would be ideal for her to stay where she is). I’m told that she qualifies for the council to pay her rent, which they do to the current landlord. Current landlord wants to sell up. I’ve been asked if I would be the new landlord. The commercial terms would not change. In what way is this a contrived tenancy?
I don’t want to be a landlord and I don’t want this much exposure to sterling or the UK property market, but am looking at ways to help my family.
Because it's a way of the government paying your mortgage on the btl property.My grandmother lives in rented accommodation (just around the corner from another relative who does a lot of the care for her, which is why it would be ideal for her to stay where she is). I’m told that she qualifies for the council to pay her rent, which they do to the current landlord. Current landlord wants to sell up. I’ve been asked if I would be the new landlord. The commercial terms would not change. In what way is this a contrived tenancy?
I don’t want to be a landlord and I don’t want this much exposure to sterling or the UK property market, but am looking at ways to help my family.
https://www.ashburnham-insurance.co.uk/blog/2018/0...
If the council didn't pay her housing benefit and she had no way of paying you, would you evict her?
Almost certainly not so that means it's a contrived tenancy.
blue_haddock said:
Because it's a way of the government paying your mortgage on the btl property.
https://www.ashburnham-insurance.co.uk/blog/2018/0...
If the council didn't pay her housing benefit and she had no way of paying you, would you evict her?
Almost certainly not so that means it's a contrived tenancy.
Thank you for the link. It's quite interesting reading and based on the facts of this case it could go either way.https://www.ashburnham-insurance.co.uk/blog/2018/0...
If the council didn't pay her housing benefit and she had no way of paying you, would you evict her?
Almost certainly not so that means it's a contrived tenancy.
Yes the property would be purchased solely for her use and likely sold afterwards, but it would be a commercial arrangement (at the current HB rate) with a formal TA and deposit. The HB is already paid to the current landlord, so there would be no change in the economics for the council. There is also AFAIK no reason why the HB would be stopped for a nearly 90yo widow, so I don't see the non-payment of rent to be an issue.
I can see how the optics could look bad, but I'm genuinely trying to assess whether I can help my elderly grandmother stay in the place where she is comfortable and near family, after being forced to move from her decades long home a couple of years ago. Believe me the 6% yield that is on the table is nowhere near an appealing proposition to me when I take into account the currency risk, potential for maintenance and repairs, toppy RE market and not least as someone else mentions the issues renting to family can bring.
hellorent said:
Sir Bagalot said:
HB will not pay the rent.
I don't think that's correct, I know a lady who rents a house out to her daughter & HB is paid no problem, as I supplied her with all the TA agreements.
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