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  • FIRST POST
    • staro30
    • By staro30 19th Sep 16, 5:16 PM
    • 31Posts
    • 1Thanks
    staro30
    Tenants in common/joint ownership
    • #1
    • 19th Sep 16, 5:16 PM
    Tenants in common/joint ownership 19th Sep 16 at 5:16 PM
    Hi,
    I would like to buy a house as an investment with my father. He owns no house. I own 1 house as joint tenants with my wife. I will be supplying the majority of the cash needed to buy the house outright. How do we form ownership of the investment? All in my name? Tenants in common unequal shares? I expect I will be hit with extra stamp duty?
    Thanks
    Staro
Page 1
    • Guest101
    • By Guest101 19th Sep 16, 5:18 PM
    • 11,183 Posts
    • 10,503 Thanks
    Guest101
    • #2
    • 19th Sep 16, 5:18 PM
    • #2
    • 19th Sep 16, 5:18 PM
    You will be anyway, no way around that
    • Pixie5740
    • By Pixie5740 19th Sep 16, 5:47 PM
    • 8,370 Posts
    • 10,981 Thanks
    Pixie5740
    • #3
    • 19th Sep 16, 5:47 PM
    • #3
    • 19th Sep 16, 5:47 PM
    Where is the rest of the money coming from? Does your father have the cash or will he require a mortgage?

    You say the property will be an investment, who will live in it? Tenants or your father?
    Annual income twenty pounds, annual expenditure nineteen pounds nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds nought and six, result misery.
    • staro30
    • By staro30 20th Sep 16, 12:25 PM
    • 31 Posts
    • 1 Thanks
    staro30
    • #4
    • 20th Sep 16, 12:25 PM
    • #4
    • 20th Sep 16, 12:25 PM
    Father has cash, he will not require a mortgage. Father will be living in it.
    • G_M
    • By G_M 20th Sep 16, 12:34 PM
    • 35,964 Posts
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    G_M
    • #5
    • 20th Sep 16, 12:34 PM
    • #5
    • 20th Sep 16, 12:34 PM
    Tenants in Common 75%/25% (or whatever) Draw up a Deed.

    Yes, You'll pay xtra SDLT.

    Or he either gifts you or lends you the cash and you own outright and become his landlord.
    • staro30
    • By staro30 20th Sep 16, 1:52 PM
    • 31 Posts
    • 1 Thanks
    staro30
    • #6
    • 20th Sep 16, 1:52 PM
    • #6
    • 20th Sep 16, 1:52 PM
    Thanks. If he gifts how do I officially become his landlord? Setup a standing order for me to receive a nominal amount each month?
    • xylophone
    • By xylophone 20th Sep 16, 2:41 PM
    • 18,416 Posts
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    xylophone
    • #7
    • 20th Sep 16, 2:41 PM
    • #7
    • 20th Sep 16, 2:41 PM
    If this is to be a cash purchase and the house will be your father's home, why don't you lend him the money (against a first charge on the property) so that he is the sole owner and no additional SDLT will be payable?

    You will need to decide whether you will charge interest, will require monthly repayment/will only require repayment on sale etc - your solicitor will draw up the deed and will advise.
    • TBagpuss
    • By TBagpuss 20th Sep 16, 9:45 PM
    • 4,596 Posts
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    TBagpuss
    • #8
    • 20th Sep 16, 9:45 PM
    • #8
    • 20th Sep 16, 9:45 PM
    Lending your father the money and securing it by way of a charge over the property would mean you don't incur SDLT. The charge can be for a % of the value of the house, or for a fixed sum, with or without interest.

    You would need to discuss, and agree on, the circumstances in which you could require repayment. Get advice about this.
    • konark
    • By konark 21st Sep 16, 1:33 AM
    • 673 Posts
    • 509 Thanks
    konark
    • #9
    • 21st Sep 16, 1:33 AM
    • #9
    • 21st Sep 16, 1:33 AM
    You would effectively be your father's mortgage lender, for ,say, 75% of value of house. Make sure the charge is registered at LR in case your father needs care.
    • staro30
    • By staro30 21st Sep 16, 10:50 AM
    • 31 Posts
    • 1 Thanks
    staro30
    "Make sure the charge is registered at LR in case your father needs care." How do I do this? Is this in case he needs to go into care in the future thus the council won't then touch the bit I invested? Can we write our own trust deed rather than paying a solicitor to do it?
    • xylophone
    • By xylophone 21st Sep 16, 11:07 AM
    • 18,416 Posts
    • 10,334 Thanks
    xylophone
    Have you read post 7 above?

    Your father has saved a deposit for a property.

    Rather than approaching a bank or building society for a mortgage loan, he approaches you.

    You agree to be his mortgagee.

    You need a formal loan agreement and it seems to me that it would be wise to have this drawn up by a solicitor.

    You agree as to how/when the loan is to be repaid, whether you will charge interest/whether any such payments will be monthly/rolled up etc.

    The solicitor registers a first charge at the Land Registry
    to protect your interest.

    In the event that your father needed care and the house had to be sold, you would have a legal right to repayment as per your formal agreement before any money could be used for care.


    In your position, I would not consider doing without a solicitor's services.
    • saajan_12
    • By saajan_12 22nd Sep 16, 6:47 PM
    • 10 Posts
    • 3 Thanks
    saajan_12
    As you can see there's a few ways you could go - I thought I'd outline some of the 'pros and cons' I can see for each.

    1) Father lends you money and you become his landlord
    - PROs: You benefit fully from price increases/decreases; rental income if father pays rent
    - CONs: Landlord obligations of deposits, PI, repairs, tax on rental income; may need to liquidate if father needs to extract his money for e.g. care; no income until you sell if father doesn't pay rent

    2) Tenants in Common (i.e. own shares)
    - PROs: Each benefit from price increases/decreases fairly
    - CONs: may need to liquidate if father needs to extract his money for e.g. care; no income until you sell if father doesn't pay rent

    3) Lend money to your father to buy outright
    - PROs: no higher SLDT for second home; no Landlord obligations/formalities; you get your money back if he has to sell/go into care
    - CONs: you don't benefit from any property price increase (or decrease). Your father could pay you interest to offset this but will he have the cash for that?

    To me, 1) makes the least sense as you have the same pitfalls as 2) plus the landlord complications. I'd do 3) with the caveat that the loan is for a percentage of the house value, so its a proper investment with exposure to house value change, while if the value goes down your father can't go into negative equity.
    • staro30
    • By staro30 23rd Sep 16, 1:37 PM
    • 31 Posts
    • 1 Thanks
    staro30
    Thank you all
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