Helping your kids onto the property ladder

[Guest JudgeMental]

We want to help ours son and daughter onto the property ladder. Son starting Uni in Swansea next week but daughter in London at LSE, she is starting her second year next week....

 

students tend to rent a 2 bedroom flat and use living room as a 3rd bedroom, so 3 can share. This way daughter can have smallest room, let the 2 better rooms, and she can live rent free (in theory)

 

She will probably be working in City anyway and when son finishes likewise. At that time they can either share or whatever or sell and split the money and do their own thing, entirely up to them,

 

Now my question is: What is the best way to do this, a buy to let mortgage? or we can finance on our offset mortgage I think...But worried re tax liability and would prefer if everything in kids names, (realise we would have to be guarantors for loan as they have no income)

 

anyone any idea as to the best way to go around this? :-S

[donna miller]

Absolute minefield, mortgage and financing aside, she would become a landlord, not only that, a landlord in residence, which is a whole different ball game.

Multi occupancy laws come into effect and therefore strict insurance and legal implications are involved.

You will need landlords certificates for the heaters, cookers and fires, bedding including mattresses have to be renewed every time there is a change of tenant.

Then there is the income from the rent which will be declarable and taxable, I think you can only claim relief on the mortgage interest, not the capital, but someone will know more about that than I do, I leave it all to an accountant for our 3 houses, the difference is, we own the properties outright.

 

yes the rents you can charge may well cover the mortgage, but the rest of the outlaying and all other involvement may be more than you first believe.

[bob b]

If your daughter puts locks on the bedroom doors, it would be treated as a 'house in multiple occupation' (HMO). Then the property would be subject to the Housing act 2004 & the Regulatory Reform Order 2005.

In other words, you would have to fit fire doors, an automatic fire alarm system (hard wired), emergency lighting & a host of other stuff. The property would also be subject to periodic inspections.

If you don't fit locks on the bedroom doors, its just three friends sharing a house. 

[LordThornber]

Speaking as a Landlord Eddie, I don't envy you at all. This may help you decide.

 

http://www.communities.gov.uk/publications/housing/lettingrooms

 

Martyn

[Guest JudgeMental]

My idea was to just supply a decent deposit and inital expenses and leave it totally up to them.... I really dont need any hassle :-S

[nightrider]

I helped all four of my kids to get on the property ladder subject to terms and conditions, I said if you are serious in buying a house show me proof positive that you have saved £5000 and I will match it, they did and I matched it

[Guest JudgeMental]

knight of the road - 2011-09-18 12:12 AM

 

I helped all four of my kids to get on the property ladder subject to terms and conditions, I said if you are serious in buying a house show me proof positive that you have saved £5000 and I will match it, they did and I matched it

 

unfortunately Malcolm, here in London the amounts required are significantly higher *-)

 

I weep openly (into my beer) when I see these property programs on telly, and what is available in other parts of the country :-S

 

 

[nightrider]

JudgeMental - 2011-09-18 10:43 AM

 

knight of the road - 2011-09-18 12:12 AM

 

I helped all four of my kids to get on the property ladder subject to terms and conditions, I said if you are serious in buying a house show me proof positive that you have saved £5000 and I will match it, they did and I matched it

 

unfortunately Malcolm, here in London the amounts required are significantly higher *-)

 

I weep openly (into my beer) when I see these property programs on telly, and what is available in other parts of the country :-S

 

Judge,

Thats the down side of living in a capital city, where I live, about 12 miles north of Manchester there are many beautuful houses going for the right money, the house I live in, I bought it off the Methodist church, it is a 6 bed detached with a huge garden, I won't tell you how much I paid for it as I don't like to see grown men cry.

I understand what you mean about trying to help your kids onto the property ladder, the situation we have got now means that a lot of people are going to be still living with their parents when they are in their 30's and 40's.

 

[antony1969]

Glad I live in " The Pits " and not that there London . Up ere you can buy a hole village with land the size of Dorset for little more than the cost of a second hand Ford Capri

[nightrider]

antony1969 - 2011-09-18 11:32 AM

 

Glad I live in " The Pits " and not that there London . Up ere you can buy a hole village with land the size of Dorset for little more than the cost of a second hand Ford Capri

Tony,

Just think, if you were to move out house prices in uddersfield would go thru the roof

[antony1969]

Malc , end of October and its going to happen , seems a shame to have rooms empty in your house when poor homeless types like us are going to be on the streets .

[Guest Tracker]

Are you sure that property prices will not fall again Eddie before you commit to any deal - because if they do it makes any exit strategy by re-selling potentially very expensive?

 

We considered the same ideas for our son but eventually decided to just subsidise his student accomodation for him and then give him his first home deposit after he had qualified and knew where he wanted to be.

 

In the event prices rose and we/he could have made much more than the cost - but c'est la vie - plus you just don't know how it would have worked in practise with other students also involved! Might have been more aggro than enough!

 

It's a potential minefield whatever you do and I wish you luck!

 

 

[Guest JudgeMental]

Indeed it is a bit of a minefield...But London prices seem to be pretty firm. we have just sold our house (downsizing) and it was not easy! All being well we move next month..its only 4 miles further out, but we lose the London postcode . Its far enough out to buy a lovely house with a very decent lump of money left over. It was with some of this that I wanted to look afer the kids or else with all other savings the taxmans going to have a party at my expense! *-)