Zac asks: “My brother is currently living in a property worth £80k he’s renting the property for £425 per month from our cousin. Would it be better for me to have a buy to let mortgage and he pays me direct like im the landlord?”

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Q&A 46 – Should I Buy My Brother’s Property? – Shownotes

Today’s question comes from Zac:

My brother is currently living in a property worth £80k he’s renting the property for £425 per month from our cousin. I was wondering how I could structure a bailout if I was to pay his deposit of say £10k then he can live and pay the mortgage. When the time comes he can then buy me out of the house and pay me off.

Questions: I was thinking, if he was to lose his job could he claim housing benefit to pay off his mortgage. Would it be better for me to have a buy to let mortgage and he pays me direct like im the landlord?

What’s the best way?

Zac – the best way is to probably not do any of it.

 

Do You Want To Be A Landlord?

My understanding of your current situation is that your cousin currently owns the property and rents it at a very reasonable rate to your brother. This seems fine.

Your question (and the wording regarding “structuring a bailout”) are then somewhat bizarre. It seems that you want to buy the house off your cousin for £80k and get a mortgage in your name. Then, you would receive rent from your brother at a lower amount (equal to the mortgage expense) and then he can buy the house from you when he can afford it.

There are a lot of questions here, but the two I would suggest you think about the most are:

• Why is your brother not happy with paying the rent?
• Who is going to pay for repairs, maintenance and all ongoing costs outside of the mortgage once you own the house?

You seem to also understand the risk that you may not get your rent if he loses his job. If this is a real possibility, your brother may not be the best landlord. Also, your assumption regarding the fact that your brother would get housing benefit if he lost his job is not actually correct.

 

 

There’s Better Ways To Help Your Brother

I understand your desire to help your brother out, but putting yourself in this situation is probably not going to be the best solution for either you or your brother, and will certainly not be the best solution for your relationship.

Instead, it will be much more beneficial to look at the underlying problems and then make a plan for both yourself and your brother to improve your financial situations so that paying £425 per month rent is not an issue and so that he can afford to buy his own house when the appropriate time comes.

Good luck to you both.

 

 

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