Parent landlords on the rise amidst rising property prices

by Jason McClean

14:25 PM, 12th October 2016
About 2 years ago

Parent landlords on the rise amidst rising property prices

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Parent landlords on the rise amidst rising property prices

There is a rising number of parent landlords letting second properties to their children, according to new research.parents

250,000 parents are already letting properties to their offspring and a further 1.4 million would be willing to let their properties to their children.

50% of landlords let to their children because they are struggling to see them ‘fly the nest’ and want them to live close by and want to provide them with a safe property.

25% of landlords reveal the reason behind their decision is because their children are currently unable to get on to the property ladder as a result of increasing prices.

Saving money is the reason behind the remaining 25% of parent landlords.

“Landlords who are parents have a great opportunity to help their children take their first steps on to the housing ladder by saving money on rental costs. However, it is still important that a property is protected against a number of perils such as flood and fire,” said a spokesperson for Property 118’s landlord insurance provider Discount Insurance.

Only 5% of landlords charge their relatives the going rental market rate, the research by Post Office Money has revealed.

Many landlords (30%) agree for their children to pay what they can afford and 12% continue to pay the bills for the property.

However, being a landlord to your children is not always plain sailing and parent landlords’ biggest concerns are arguments and disagreements about rent and concerns about their children hosting parties.

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Comments

Carole Stanton

8:28 AM, 14th October 2016
About 2 years ago

If you rent to one of your children or other family member and the rent just covers the mortgage, do you still have to declare it for tax purposes. How would this be affected once S24 starts in 2017

Stephen Smith

8:34 AM, 15th October 2016
About 2 years ago

Hi,

A difficult situation for all, however the following comments should be noted.

1. Why do children assume they should have a property as a right?
2. What is wrong with moving area?
3. The concept of thrift seems to be ignored. When I was younger, a lot younger, young couples moved in with their parents and continued to save.
4. Young couples assume they should all the trappings of wealth, holidays, new cars, expensive jewellery adornments (mobile phones!!) without being wealthy.
5. I quite agree that more social housing should be built, but in the instance of a growing population difficult choices have to be made.

I applaud parents that are wealthy enough to provide housing for their off-spring but am a little aggrieved that it is all the fault of the baby-boomer generation.

Light touch paper and retire to a safe distance!!

Michael Barnes

16:21 PM, 15th October 2016
About 2 years ago

Reply to the comment left by "Carole Stanton" at "14/10/2016 - 08:28":

All property income must be declared.

Don't forget to declare all expenses, not just mortgage interest.

If you let to family below market rent, then (I believe) you are taxed on the market rent, not on the rent received.

There is no exemption in S24 for lets to family.

S.E. Landlord

16:49 PM, 15th October 2016
About 2 years ago

Reply to the comment left by "Michael Barnes" at "15/10/2016 - 16:21":

I think tax is limited to being on the actual rent (assuming no expenses) if let below market rent to family but allowable expenses would also be limited to the actual rent.

Michael Barnes

20:50 PM, 15th October 2016
About 2 years ago

Reply to the comment left by "S.E. Landlord" at "15/10/2016 - 16:49":

You are right.

Thank you for educating me.

S.E. Landlord

21:23 PM, 15th October 2016
About 2 years ago

Reply to the comment left by "Michael Barnes" at "15/10/2016 - 20:50":

Pity CGT isn't treated in the same way.

darren howe

13:56 PM, 16th December 2016
About 2 years ago

I was under the impression that you can not rent to your children using a mortgage as it stipulates this in the mortgage conditions. Are all these parents purchasing properties with cash. Any advice on this subject would be really appreciated.

Michael Barnes

10:15 AM, 17th December 2016
About 2 years ago

Reply to the comment left by "darren howe" at "16/12/2016 - 13:56":

I have raised BTL finance in the past by mortgage against my home.

(And for those that don't know, yes this is tax-deductible (at the moment): it is the purpose of the loan, not what it is secured against that is important for tax.)


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