Buying a BTL property for Brother in Joint name or single?

Buying a BTL property for Brother in Joint name or single?

8:56 AM, 28th July 2015, About 8 years ago 2

Text Size

I am in process of buying my first buy to let property. I have couple of questions:brother

(i) The property we are in process of buying is for my brother who doesn’t own any property in his name. Ideally we want to have property in his and his wife name but he couldn’t get mortgage due to not having indefinite leave to remain in the UK visa and income restrictions ( company director but not having SA302 for last 2 years). He has no plan to live in this property, but it’s purely for investment purpose. He couldn’t get even joint mortgage with me/ my wife being British Citizen. We are in good terms so he is happy for us to have our names on property.

(ii) So we are going ahead purchasing this property in our names. I am not sure whether should I buy in Joint name or sole name either in mine or wife’s name. Background: Joint owner with wife for our residential property since June 2014. No other mortgages. I am higher tax payer and wife is basic tax payer. May looking to buy additional couple of properties in next 3 years time. In 5 years time, we might looking to relocate ourselves by putting our existing property on rent. All the properties we have or going to buy, we are looking to keep them (no plan to sell them ) however, we might looking to borrow money from existing properties in order to purchase more properties. at some point in the future, we would like to transfer the property we are buying presently into my brother’s name. so kindly suggest what will be the best options for us.

Some states: PV 148,000 We are putting 25% Deposit. rental income is £700 pcm.



Neil Patterson

9:11 AM, 28th July 2015, About 8 years ago

Hi Rupand,

In my 20 years experience in the mortgage market I have seen that helping a family member, or friend with property is such a big commitment and financial tie that it nearly always puts stress on the relationship.

Have you considered the tax implications as since the summer budget you can only claim basic rate tax relief on the mortgage interest payments. Therefore it would be cheapest to do it in your wife's name, but then you are using up your tax allowance on your brothers property when you are looking to purchase more yourself.

Is your brother willing and able to pay all the extra tax liability he will be causing you including possible CGT?

Eduardo Prato

13:55 PM, 29th July 2015, About 8 years ago

Hi Rupang,

I agree with Neil with regards of the delicate situation that you may create if you decide to do business this way. Nevertheless it is something that can be done if you are prepared to put your brotherhood at risk (for the sake of helping your brother!). I've done something very similar with some family members.

Please seriously consider the following:

- Tax implications on rent
- Capital Gains Tax: Sooner or later you will be passing on the property to your brother, which will attract CGT. The value of that future transaction should be supported by a reputable valuation, as it should be done at 'arms-length'
- Separation: what happens if you divorce? Your brother's interest need to be protected. It doesn't matter how much we love the person next to us, things can change (and do change) very fast.
- Death: You should have a will that clearly passes on the property to your brother if you die... again now you also need to look at inheritance tax, etc
- Maintenance: what happens if there is a major repair and money has to be put into the property: will your brother be ready to pay for it?
- Arrears: who will be paying the mortgage and the legal costs if the tenant is in arrears?

And the list could go on. So, as you can see there are many implications. I have done it with my family because I'm very lucky to have a very, very close relationship with them, but this is not something that is appropriate for the average family.

Good luck,


Leave Comments

In order to post comments you will need to Sign In or Sign Up for a FREE Membership


Don't have an account? Sign Up

Landlord Tax Planning Book Now