PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Difficult situation

Options
Hanko2983
Hanko2983 Posts: 12 Forumite
in House buying, renting & selling
Hello all,

I have a question that I'm struggling with.

My wife and I rent from my mother in law who will be selling the house to gift us £100,000 to help with a deposit for our first house. I also will be inheriting £30,000 from the sale of my grandparents house.

We plan to use this £130,000 as our deposit.

My question is how would this work during the process as I've read we would need to pay 10% deposit of the value of the property to secure the property we would intend to buy at the contract stage. Would it still work as a chain even though we don't own the property? Or would we essentially be "homeless" for a short period until we receive the funds from my mother in law from the sale of her property?

If so, I guess we could use the £30,000 from my inheritance towards the 10% deposit required.

I hope that makes sense? I couldn't stop thinking about it last night and wouldn't want to get all the way to completion for it to collapse at the final hurdle.

Cheers
«13

Comments

  • bouicca21
    bouicca21 Posts: 6,514 Forumite
    First Anniversary Name Dropper First Post
    Options
    Yes it's a chain. Furthermore your MiL won't be able to sell the house with you in it as tenants, so you will have to move out. Is there any reason why you can't simplify matters by buying her house?
  • Hanko2983
    Hanko2983 Posts: 12 Forumite
    Options
    There is no legal tenants contract so is that still a problem. If we put the property in our name we wouldn't be FTB so would have to pay stamp duty of £3,000
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    Name Dropper First Post Photogenic First Anniversary
    Options
    Hanko2983 wrote: »
    There is no legal tenants contract so is that still a problem. If we put the property in our name we wouldn't be FTB so would have to pay stamp duty of £3,000

    You pay rent in exchange for exclusive occupation of the property therefore a legally binding tenancy does exist.

    I don't get your second point. If you are FTB you are FTB regardless of whom you buy the property from.
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,003 Forumite
    First Anniversary First Post Name Dropper
    Options
    Why can't your mother in law simply sell the house to you? You will be FTBs and therefore will save the stamp duty. If the numbers don't work, then you move out, MIL sells the house, gifts you whatever she wishes to and you are FTBs on whichever property you buy.

    And as Pixi5740 has pointed out, you have a legal contract in place. Does your MIL declare the rental income you pay her for tax purposes? Does she fulfil her other legal responsibilities as a landlord?
  • Hanko2983
    Hanko2983 Posts: 12 Forumite
    Options
    If we put the house in our name and then sell we would have to pay stamp duty right? We want to move, not stay in current property.
  • Hanko2983
    Hanko2983 Posts: 12 Forumite
    Options
    The best option would be for my MiL to sell and we move out, then gift us the money. Only problem would be we have 2 small children and nowhere to live.
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,003 Forumite
    First Anniversary First Post Name Dropper
    Options
    How much is the house worth? It's a little more complicated than just "putting it in your name" for a start, but yes, if you become the owner of the current house, you are a first time buyer of that house and won't be FTBs of any other houses in future.

    If you want to move, then yes, your MIL sells the house and gifts you the money. But I ask again: Is she currently declaring the rental income from your tenancy and fulfilling her other obligations as a landlord? You have a legal tenancy which will have to be ended before the house can be sold.
  • Hanko2983
    Hanko2983 Posts: 12 Forumite
    Options
    The house is worth £170,000. Why is it more difficult than you think?
  • bouicca21
    bouicca21 Posts: 6,514 Forumite
    First Anniversary Name Dropper First Post
    Options
    You are a tenant. No normal buyer will get a mortgage on a tenanted property, they will require vacant possession. your promise that you will move out won't be enough to satisfy a lender. You will have to be living elsewhere at the time of exchange.
  • Aylesbury_Duck
    Aylesbury_Duck Posts: 14,003 Forumite
    First Anniversary First Post Name Dropper
    Options
    Not more difficult, more complicated. Look at the processes that have to be gone through in a house purchase. If you were to go down the route of taking ownership of the house you currently rent, essentially you would be purchasing the house from your MIL. That's not just a case of her writing a letter gifting it to you.

    I'll try asking a third time because you're either missing the question or being evasive: Is your MIL currently declaring the rental income from your tenancy and fulfilling her other obligations as a landlord?
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.3K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608.1K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 248K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards