Son buying parents' rented home, becoming their landlord - two basic questions please

[Hannay100]

 

We, the parents and in our 80s, live in a private rented house (1970s and sound but unimproved, good area, okay rent), the tenancy aranged via an Estate Agent/personal friend. We've been there almost 6 years and have a good relatiionship with the landlord who has always behaved fairly and promptly.

Landlord notified us they will be selling the house at the end of our current term (10 months).

They first offered the house to us at a small discount - easiest exit for them, avoids upheaval+ for us. This did get our attention though we already knew our circumstances made it impossible - no assets/savings after business collapse, income now only state pension + benefits, no chance of mortgage/loan at this age + zero prospect of change now.

Landlord/EA have since been exploring investor-buyers first so we might remain and continue, but no interest to date. Local EAs I've spoken with separately say there's significant investor caution, with only *clean* new/newish houses that can fetch top rent and make the numbers work getting a look-in.

The house is now planned to go on the open market in Spring if not sold to an investor before, and landlord is looking at modernising options (Kit, Bthrm, flooring, fireplaces, conservatory, CH, datapoints etc.) to make an attractive sale (current val 280, improved 345-365).

Which brings me to  ...

Recently and without letting us know our son has looked at stepping-in and buying it, initially so that we can stay and be secure, plus whichever of us outlives the other has no worry ahead. Afterward it continues as an investment in whichever way he then prefers.

He let us know this just yesterday "to avoid the upset of another move and stop the worry and uncertainty", and feels from his broad conversations that in coming days he will have decided which of a couple of mortgage options he feels suits him best, and will be able to set the wheels in motion.

I have just two questions :

First Q - can landlord and tenants actually be close relatives? It occurs to me that there could maybe be some formal/legal/title aspects that have a bearing? Just to emphasize, it wouldn't be purchased as a gift for us, he would become our new landlord and we would continue our tenancy, all properly contracted.

2nd Q - he may well have discussed mortgages in the context of us still living there not he himself, but in case not I am looking for some insight in to whether mortgage lenders would consider this any differently and he might need to reassure himself accordingly with further words?

Any other pointers I/we should be aware of would also be gratefully received, it is all a bit nervous-making.

[Ethel Street]

I can't think of any reason in law why the LL and tenant can't be related. But many reasons why your son should ensure he deals with you on a proper business-like basis as far as the tenancy is concerned. I'd advise him to leave the EA to manage the property on his behalf. 

I assume he will be buying the house with a buy to let mortgage. Do b-t-l lenders ask who will be living there or if they are related? I don't think so but I'm not a b-t-l landlord.

Is he thinkimg of making an offer to buy it unimproved and improving it himself? If so the scale of the work would need you to move out while it took place. Have you discussed with your son where you would live  while the works took place, several months at laest? And what your rent would be afterwards?

[Hannay100]

Thank you Ethel for your thoughts.

I too can't think of a logical reason against related parties, it just crept in to my wonderings because occasionally something you never imagined to be relevant to something turns out to be a factor after all, or even a requirement. Best to have no surprises!

I have done a little research since I posted, and it appears not to be  a problem as long as the relationship is entirely proper and under contract, just person B renting from person A.

And in this specific case, yes for sure, neither of us would wish to continue unless on a proper business-like basis anyway.

I don't believe he was asked about relationships when exploring his mortgage options, however thanks for raising that and I will be speaking with him later and will suggest a without-prejudice check conversation to be sure.

Regarding condition, the house is in good order just gently tired because of its age. In a perfect world it would benefit from a new kitchen, totally facelifted bathroom, replacement windows to the newest standards and a couple of other touches making it today-new not '70's new - much has advanced in all of those things over 40-plus years.

But it is still a good house today and comfortably offers what we long-pre-1970s folks need

Maybe our son would choose to make upgrades at some point(s) in time, and no doubt for-sure before eventually selling it if/when that comes along later. Right now however nothing is broken so there are no plans to do any fixing  just get this change of owner/landlord in place if actually achievable, and be able to relax and breathe. He really is a Saint!

Thank you again for your thoughts, I will add them to our words when we compare notes later.