Swapping to BTL after relationship break-up?

by Readers Question

16:30 PM, 27th April 2015
About 4 years ago

Swapping to BTL after relationship break-up?

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Swapping to BTL after relationship break-up?

My partner and I have unfortunately broken up after 7 years together, during which time we have cohabited on a residential mortgage in both our names. We also have a 2 ½ year old son.

Thankfully the split is amicable so we are in discussions over what to do with our house. We are very reluctant to sell as we only bought it in November 2014 (we’d previously had a res mortgage on our previous property for 4 years), have spent a lot of time and money into doing it up and our son being settled into the area (nursery etc.).

The current thought process is that I will move out and rent somewhere nearby while my ex and son remain in the house. However, as my ex only works between 8 – 20 hours a week on a zero hours contract (she works in home care), she can’t afford to take on the mortgage by herself. I’m happy to continue paying it, but will then struggle to pay rent on my ‘new’ place as well.

While the mortgage is in both our names, the agreement was achieved only using my financial information for the reason outlined above.

I mentioned this to a friend who suggested the possibility of switching our mortgage to a BTL solely in my name, whereby I effectively become the landlord and my ex the tenant. The rent to cover the mortgage would then be made up between my ex’s earnings and housing benefit.

Does anybody have any thoughts on whether this is a feasible approach and the potential pitfalls / consequences? Do lenders allow mortgages to be swapped in such circumstances?

I’ve put a call into our mortgage advisor to discuss but am waiting to hear back from him.

If I’m honest, I’m not convinced at how ethical this would be (I despise those who claim more than they should) but am willing to consider any option that enables us to keep our house and give our son some continuity going forward.

Any advice / thoughts would be welcome.

Thanks

Samirrelationship



Comments

Neil Patterson

16:37 PM, 27th April 2015
About 4 years ago

Hi Samir,

I am sorry to hear of your situation, but I seen nothing wrong with the transaction if it is broken down and simplified.

Basically you will be applying for a regulated Buy to Let remortgage in your sole name. It will be regulated as you have a close family member (your son) living in the property. You will also need to transfer the deeds into your sole name as the mortgage has to be in the same name as the owners.

Your ex partner cannot be party to the Buy to Let or hence the direct ownership of the property as she will be residing in it.

Jay James

19:21 PM, 27th April 2015
About 4 years ago

Hi Samir

Under the circumstances described above, your ex would not get HB.
The close relationsip between claimant and landlord would disqualify her.
Further, the house being formerly owned by her would disqualify her from HB.

Dont take my word for this, seek advice from the CAB or the like.
--
On a personal note, the circumstances noted above are a recipe for disaster down the road. Eg how will you feel when your ex meets her next partner and he wants to move in, whilst you feel it's you providing their home?

Mandy Thomson

21:18 PM, 27th April 2015
About 4 years ago

As with all cases of the landlord and tenant being related, the basis is that you would need to prove to that this wasn't a contrived tenancy - i.e. the landlord would have no choice but to evict the tenant if rent wasn't paid, and a genuine (written) tenancy exists on this basis. In the case of a relationship breakup, there will often be investigations from the Compliance Team, in the form of interviews and checking bank statements. However, in order to get to this stage where there is a review into the claim, you will need to be pretty persistent. Source - former Job Centre Plus customer service manager.

Mark Alexander

10:32 AM, 28th April 2015
About 4 years ago

Hi Samir

I agree with what others have said in terms of complications.

May I ask how much the property is worth and how much it would cost to repay the mortgage?

My thinking is that it would be best to sell, divide the profits and for you both to move on. If either of you decide to buy or rent another property it will be much easier for you both this way.
.

Luke P

12:04 PM, 28th April 2015
About 4 years ago

This is likely to end badly (emotionally so).

The overall problem is that your ex cannot afford to live, certainly not without HB. If it were me, I would stay in the house with your son and your ex will have to make do renting whatever she can afford on the few hours she does.

Whilst your proposal is attempting to find a solution, without HB (which your ex won't get because of the closeness to you as the landlord), she cannot afford the rent, nor you to rent elsewhere.

A friend of mine is in a similar situation and despite having moved out, continues to pay the mortgage (as his ex can't afford to), but yet she refuses her permission to sell below a certain value she has deemed suitable for her to have 50% equity of. If she stays put, he pays and she's happy; if it sells (above her arbitrary valuation) then she stands to reap 50% of the equity leaving her sitting pretty.

Steve From Leicester

12:18 PM, 28th April 2015
About 4 years ago

Jay James comments about considering the personal side of it are excellent.

Having come this far there's a good chance you and your ex will remain on good terms, which has to be a good thing, if only for the sake of your child. Even so, sooner or later you'll both want to move on with your personal lives and settle down with someone new.

When this eventually happens, having your ex-wife as a tenant could make things at best untidy, and at worst become a wholly avoidable source of future conflict.

As you may have guessed, where marital splits are concerned I've been there, done it, and got the proverbial T-shirt 🙂

Jay James

13:00 PM, 28th April 2015
About 4 years ago

Thanks Steve, it's always nice to be agreed with.
--
Hi Samir
There's no getting away from the fact that under what you describe at the top of the page, you would become a landlord for (seemingly) the first time.
Have a good read for an hour or two around this website, randomly.
Then ask yourself if you want to be a landlord.
Then ask yourself if you want to be a landlord to your ex.
Then have a long hard think about being a landlord to a benefits claimant.
Perhaps have an online chat with members of this website.

I guess you will either then be put off or at least have your eyes opened for you.

Samir Jones

16:05 PM, 28th April 2015
About 4 years ago

Hi all

Thanks so much for your comments, they really are appreciated (this website really is brilliant). In response to some of your comments:

Luke P
This would be ideal but I work full time and really don't want my boy spending all day with childminders etc. My ex currently works 2 evenings and alternate weekends so (finances through HB allowing) it would be better for him to stay with her during the days and then with me at when she's working and at other agreed times. This is obviously subject to her being able to get the necessary financial support.

Steve
Just to clarify that my ex and I aren't married, though you're right in saying that the potential future conflict could get very messy and undo any amicability we're currently experiencing.

Jay James
You're absolutely right that this would be my first experience of becoming a landlord, and while its something I hope to do in the future, it's not something I would ideally want to pursue at this stage of my life. My job / life is stressful enough as it is!

Mark A
Selling the house at this stage isn't really an option - as we only completed 6 months ago,the early repayment charge would wipe out any potential profits we could hope to obtain. I also don't imagine the value has raised very much in the time since we purchased.

Having spoken to my mortgage advisor this afternoon, the most viable solution I can think of is to pay to change the deeds into my name alone (approx £500) and remain in the house for at least the next 18 months. There shouldn't be any issue with my ability to manage the payments as it was all originally approved based on my earnings alone anyway. I would then look to either sell or port the mortgage to another smaller property and then divide any profits between us equally.

I think our next port of call is a meeting with the DSS to explain our situation and determine what she's eligible to financially. That should give us a clearer idea of how we proceed.

Mark Alexander

16:28 PM, 28th April 2015
About 4 years ago

Reply to the comment left by "Samir Jones" at "28/04/2015 - 16:05":

Hi Samir

You will also need to obtain Consent to Let from your mortgage lender, to produce an inventory of condition, a tenancy agreement and to protect any damage deposit you take. Please see >>> http://www.property118.com/managing-buy-let-properties/73298/

Remember also to switch your building insurance over to a landlords insurance policy - see >>> http://www.property118.com/landlords-insurance-landlords-buying-group-2/

I appreciate the mortgage redemption penalties will wipe out your profit but nevertheless, I'd heed the advice people are offering here. What will you do if your ex spends the benefits money and fails to pay you the rent? Would you really be prepared to evict her?
.

Jay James

16:39 PM, 28th April 2015
About 4 years ago

Reply to the comment left by "Samir Jones" at "28/04/2015 - 16:05":

The local district or borough council are the deciders on HB and have far more knowledge about it than the DSS / JCP or whatever they now call themselves.

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