Part buy of inherited house - opinions please

poppysarah

I have the feeling you're not listening to people in this thread. You want someone to say it's the best idea ever for your daughter to buy half a house and be responsible for maintaining it and never perhaps being able to buy the other half and have to put up with someone sharing half their home.

It's an insane idea. It's pretty insane that housing associations do it. It's utterly insane to do it with someone who's a "friend" because money and friendship often don't mix.

Don't put your daughter in the position of buying half a house. If you want her to have half a house then sell her half of yours and live with her.

Even buying half a house with a husband/partner is fraught with issues when relationships break down.

Half a house is worse than no house.

What if she wants to move and can't find anyone else to buy her half a house and the friend only wants to give her a tiny fraction of what she paid?

Cat695

whats the value of the property?

zzzLazyDaisy

Okay, before people spend more time trying to help you....

Have you actually consulted a broker, and obtained a mortgage offer in principle?

My bet is that you cannot get a mortgage on this arrangement, and you will be hard pressed to find anyone with experience of such an arrangement for precisely this reason.

neverdespairgirl

PasturesNew wrote: »

It's always a bad move to tie yourself to somebody else with property.

Apart from, perhaps, husband / wife, or similar.

neverdespairgirl

Krafty wrote: »

Basically he wants to release some equity... as the market is quite stagnant at the moment.

The market's not stagnant at the moment, it's falling fast. So your daughter's at risk of a property snake, rather than ladder.

mlz1413

My Mum bought a share of a housing association place, I think it was 50% and she then paid the mortgage on the 50% she 'owned' and rent on the 50% she 'didn't own' (the rent is hugely cheaper than any mortgage/loan.

I don't know what the maintenance agreement was as nothing ever went wrong but I know she could decorate and have people to stay as she wished (unlike rental) but I would want to know who was responsible for roof repairs / storm damage / subsistance / replacement kitchen and bathroom etc.

Also the biggest draw back was when she sold, as Mum lived there in a rising market when she sold she had to pay back 50% (not the amount she original paid for it) and you first have to offer to the list of people on the HA list and leave it a certain amount of time before you can progress to the open market so it was a huge time delay and would be awkard for any chain.

so my question would be have your daughter / owner discussed what would happen if they both want out in a falling market - would your daughter be left in negative equity?

Personally I wouldn't want to own 50% of a house with a friend, when I wanted to treat the place as my home and live in it like I owned 100% of it.

Krafty

mlz1413 wrote: »

My Mum bought a share of a housing association place, I think it was 50% and she then paid the mortgage on the 50% she 'owned' and rent on the 50% she 'didn't own' (the rent is hugely cheaper than any mortgage/loan.

I don't know what the maintenance agreement was as nothing ever went wrong but I know she could decorate and have people to stay as she wished (unlike rental) but I would want to know who was responsible for roof repairs / storm damage / subsistance / replacement kitchen and bathroom etc.

Also the biggest draw back was when she sold, as Mum lived there in a rising market when she sold she had to pay back 50% (not the amount she original paid for it) and you first have to offer to the list of people on the HA list and leave it a certain amount of time before you can progress to the open market so it was a huge time delay and would be awkard for any chain.

so my question would be have your daughter / owner discussed what would happen if they both want out in a falling market - would your daughter be left in negative equity?

Personally I wouldn't want to own 50% of a house with a friend, when I wanted to treat the place as my home and live in it like I owned 100% of it.

Thanks for your post... which I believe is the first one with some level of experience.

The sale is progressing well... mortgage funds have been secured...a "Heads of Agreement" has been fomulated to last a period of 5 years so that each party has equal profit/liability in the housing market.

My daughter has singular residence/access to the property as the other interested party resides abroad and has no interest in living in the property.

The "Heads of Agreement" stipulate who is responsible for what maintenance and who is responsible for monthly bills etc.

So far the deal looks likely to succeed... neither party is looking to take advantage of the other and both are in for the longer term not a quick win (which sadly seems to have been the norm these days!!).

Speaking as someone who is in his early 50's, retired on a pension substantially greater than the national average wage and owning my own mortgage free 5 bed/two bathroom property, I'm quite proud of the actions my daughter is taking.

I've read many of the other postings on this thread with interest (sometimes sympathy) as many seem to have been stung/influenced by what have perhaps been negative experiences or indeed the opinions of "victims" rather than "conquerors" of the world in which they live.

For my part I am comfortable that my daughter is taking a positive step in taking a (part) owning interest in a property, in an area that she has been brought up in.. with a view to purchasing the whole within the agreed 5 year period.

If the doom merchants are correct and the venture fails... then at least she has taken on the challenge and not shrunk away from it!!

Either way I'll be proud of her!

Thanks again for your post which is based on the experiences of your mother and I hope she is now comfortable in whatever arrangement she now has.

Krafty.

mlz1413

Morning Kafty, reading the last post I would say that if your daughter fully intends to purchase the house as a whole after the 5 years then she should do well, I would guess the second 50% will cost her less than she is due to pay for the first 50%.

Are you sure the owner of the house is happy to take current market value in 5 years time? Or will they wait until the market 'picks up' - in other words does the owner only want to sell 50% now as they want more in total than its current worth?

Much as though I realise you are proud of your daughter and are in a position to be able to help her out if everything goes wrong I think what others are saying is your post is written from a 'house prices only go up' view and you need to think about 'what if': prices come down or, daughter loses her job, house owner refuses to sell in 5 years. Which I realise are negatives but if you can't talk them through with owner now will these always be taboo subjects?

Thanks for asking about about my Mum, she has now retired to a lovely 3 bed, 2 bath penthouse overlooking a habour on the mediterranean sea.

huntersc

Krafty wrote: »

If the doom merchants are correct and the venture fails... then at least she has taken on the challenge and not shrunk away from it!!

Either way I'll be proud of her!
Krafty.

There's a difference between taking on a challenge and jumping off a cliff hoping that somehow you can flap your arms quickly enough to fly.

Your daughter is putting herself into a position that is grossly unfair to her. The benefit is all with the owner, he is the one doing well out of this deal. You should think again before telling your daughter this is a good move, it is for the owner, not for your daughter. It seems to me like he is going to come out of this rather nicely!

Catblue

The reality is that this is a great deal for your friend.

It really isn't a win/win for both parties. It is a win/win for your friend. The majority of the financial risk is on your daughter.

Your friends get to have absolute security on their current home (your daughter's cash allows them to live mortgage-free in their own home), so if this deal goes wrong then THEY won't be homeless.
They have transferred the homeless risk onto your daughter. Great deal for them.
They get to release equity from the inherited house. Great deal for them.
They don't have to sell in a falling market. Great deal for them.
They get to decide IF and WHEN they want to sell to make more money for them. Great deal for them.

Your friend holds ALL the cards in this deal, and no offence but they sound like they would want to gain the maximum possible for the sale of the house on their terms. They already have decided that the housing market owes them more money than the house is currently worth. They may decide the same in 5 years time. If the market is not great in 5 years time, then your daughter will still be paying a mortgage for half a house. If the house has significantly increased in value in that time, then your friend might decided to hold off selling until it has gone up some more.

Really struggling to see what your daughter gets from this. It will be practically impossible for her to try to sell half a home.

The reason that no poster has replied with direct experience of this should tell you that that this is an unusal idea that most people wouldn't even consider.
mlz1413's mum was part of a proper shared ownership scheme, and not a private arrangement as you are suggesting.