Question about mortgage and renting

  exdragon 10:02 29 Oct 10
Locked

Hi - scenario: some years ago, daughter in New Zealand bought her father's council house in N. Ireland, transferred the deeds into her name and is paying the mortgage (he's been living there rent free). Said father will probably be in a home shortly and daughter's nephew wishes to rent the house, to cover the mortgage.

Presumably she will have to notify the mortgage company (don't even know if she can rent it out officially) but can anyone see any other pitfalls? The purchase etc was all done through the official channels.

  wee eddie 10:22 29 Oct 10

Probably an Estate Agent or specialist Company, otherwise big potential problem with Tenants not paying and being un-evictable.

  Quickbeam 10:26 29 Oct 10

It's simpler to just sell it and build an extension or something on the house in NZ if the house is no longer required for the fatherr.

  Blackhat 10:39 29 Oct 10

Be very careful & definitely talk to the mortgage lender.

Some while ago I vacated my property to move in with lady friend & let out to students for 2 years. I am now back in the property and nothing came of it but I have since been told that I was in breach of the mortgage terms & conditions.

  exdragon 10:58 29 Oct 10

I thought she'd be in breach of contract, but as you say, the lender should be aware of the current position.

She's going back to NI soon so she can get it sorted, hopefully.

I'll leave this open for a while in case there are any more examples of what can/did go wrong!

  hastelloy 10:59 29 Oct 10

There is a possibility (only that) that the Council will decide that the house was put in the daughter's name to avoid care charges and count the house as belonging to the father when setting the care charges.

  spuds 12:44 29 Oct 10

I would imagine that the CAB, local Law Advice Centre, Shelter or Trading Standards would have the answers to your question. If not I am sure that they would have information as to who would help.

These sort of purchases and arrangements can have all sorts of implications, something that the average lay-person would not understand until it is to late, with perhaps dire consequences for any innocent party.

Mortgage companies do have special policies for buy to rent or landlord agreements, the same applies to some insurance companies.

  jakimo 13:10 29 Oct 10

The house in question is in N.Ireland not N.Zealand

  Woolwell 13:16 29 Oct 10

The rent free bit could be a stumbling block when it comes to care charges etc as it is possible that the authorities will declare that he retained an interest in the property. It also depends on how many years ago. Her solicitor should be able to advise.

  john bunyan 13:19 29 Oct 10

When she eventually sells she will have to pay capital gains tax if the increase is over the £10000(?) limit.If the motgage lender is happy it should be ok. Not sure if she will have to pay income tax on the rent if more than the mortgage, nor if the liability is in UK or NZ

  exdragon 17:00 29 Oct 10

A veritable minefield, I fear.

Thanks for the comments, everyone - I'm tempted to pass them on to her, as I did counsel caution when they first decided to do this, but then, who listens to their mother?

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