Son As Landlord=Free House?

[EDDIE51]

Further to my question a few days ago
http://www.theanswerbank.co.uk/Law/Question1471147.html
I have been doing a bit more thinking.
How is this for a plan?
My son moves back in with us and after a year he can apply to buy the house with us as co-tenants.We keep the right to buy and discount under this arrangement so he applies to buy the house under the 'right to buy' law.
I have already established that we do have the right to buy , as it was transferred to the housing association, from our previous council tenancy of the same house. The discount is the maximum of £77,900, the house is valued at £162,000 so £84,100 mortgage.
He gets the mortgage which works out at £100 a week. After the mortgage we will no longer be housing association tenants but tenants of my son.
We then tell the Pension credit dept that our landlord has changed and is no longer the housing association but a private landlord ( my son)
We then claim housing benefit as private tenants . The LHA for my area is £123 a week for a 1 bedroom house, which is what we are entitled to claim as a couple. But this more than covers the mortgage of £100 a week.
Any one see a problem with this?
From what I see we get a free house for life and my son gets a £162,000 house for nothing as long as we live (as we will use the housing benefit to pay my sons mortgage) ,after we both die my son just has to keep paying the mortgage to get a house which should be worth around £250,000 .

[sherrardk]

Can he actually get a mortgage for that amount?

[wolf63]

I am sure that getting housing benefits to pay rent to a landlord under the same roof may be a no-no.


I can't remember where I heard or read that.

[ubasses]

I am sure Wolf is correct
http://england.shelter.org.uk/get_advice/housing_benefit_and_local_housing_allowance/what_is_housing_benefit/housing_benefit_if_renting_from_a_family_member

[murraymints]

will not get Housing Benefit ..parent/child

[Peter Pedant]

oops your son cant usually be your landlord for benefit purposes or else we would all do it

What you are doing is OK tho

everyone wants to give / pass on a house to the doting son
and for the assignment to work, you have to pay a market rent
bit of a long shot to expect the tax payer to bank roll it tho

and you know incredibly when you put pencil to paper
some deals dont look like good deals .....
this may be one

[Postdog]

You should also remember that maximum discount applies to you, not him. Why not just buy jointly like me and my mum did?

[EDDIE51]

sherrardkhe earns way more than enough to get a mortgage for that amount.
OK,so we forget the housing benefit and he pays the £100 a week mortgage. That is still less than he is paying at the moment to rent one room in a shared house. Still looks like a win/win situation to me. In 25 years he will own a house worth £250,000 ( and that is a very conservative estimate) for which he has only had to pay £100 a week.
A lot better than renting a room.

[EDDIE51]

postdog we are retired pensioners no chance of a mortgage in our names.
We may have to fix it that we apply for the mortgage with him as guarantor.

[ubasses]

As far as I can see he needs to hold the tenancy for 3 years before he can apply, then it will be 50% increasing 2%per annum after 5 year
https://www.gov.uk/right-to-buy-buying-your-council-home/discounts

[EDDIE51]

ubasses we will apply for the right to buy with my son as guarantor for the mortgage.

[ubasses]

At 21.53 you said 'we are retired pensioners no chance of a mortgage in our names.' If you cannot get a Mortgage how is you son going to Guarantee it.

[Postdog]

My first answer still stands then buy jointly. My mum was a pensioner too, and made no contributions towards paying the actual mortgage. Our deal was she was largely responsible for the bills but I paid the mortgage. The main thing though was insure the mortgage payer otherwise if anything happened, you're out.

[Postdog]

One very important thing also was that back then 100% mortgages were available, and I don't think they are now no matter how much of a bargain the house is. You may have to get a deposit together first.

[EDDIE51]

Postdog the discount of £77,900 is the deposit 48% , just 52% mortgage needed. If he guarantors the mortgage it will be for the entire 25 years he is happy with that . We will have to get suitable life insurance of course in case anything happens to him.

[Postdog]

So are you borrowing from the council or housing association? If you are borrowing from a building society, they still require proof of ability to pay and a deposit. Also, what's with the guarantor business? Those I've heard of are either rip offs or for parents helping their kids, and those require there is already a properly to guarantee against. Seriously, if you can afford it, get all of you on the mortgage application...that signifies who owns it legally, and the lender doesn't care who out of you pays.

[VHG]

Note also once he owns the house, if you have an argument he could throw you out !!!

[bednobs]

the other unknown is how your son feels about moving back in with his parents. Clearly he moved out for other than economic reasons, and those reasons wont hve gone away. Clearly not everyone has aspiraations or the ability to be homeowner