Buying my parents home-help please!

RICARDOMINSKI

Hi I am extending my mortgage to give my parents the money to buy their home from their local authority (they are both retired). My question is after three years,during which they can't then sell the house without a penalty charge being applied, can they sell me the house for a nominal sum?

tanith

There are all sorts of legal implications from doing this , someone better informed will be a long I am sure to tell you the pitfalls..... you need to have a legal document setting out the terms of ownership etc before you go ahead....

hethmar

I think things have tightened up a lot of this "ruse" - you may even find the waiting period has extended to 5 years now (has in some areas).

If the "authorities" smell a rat you could find that you cause a lot of problems for your parents in the future should they seek council housing/care home facilities.

You need to see an expert before you go any further - even speak to Citizens Advice Bureau to find out the possible consquences.

BobProperty

Let me see if I can cover all the possibilities:
Your money to your parents is a gift? I will assume yes.
They buy the property, which they now own in their joint names.
First potential problem, they can do what they like with it, it's their's. So it can be willed to the Cats Home, whatever.
You buy it back for a "nominal" amount. Are you going to rent it to them, or buy it back as a reversion?
If at some time after the resell, they need to go into care (and I think it needs to apply to both or the surviving partner if one dies), then the Local Authority can question whether they have "deliberately deprived" (?) themselves of an asset. The question can also be asked IMHO if Inheritence Tax is involved too.
Also, the question will be asked as to how come you bought it for your "nominal" amount? You're CGT calculation on the final sale will use the market value at aquisition, not what you paid for it, if you buy it for a "nominal" amount.

Zammo

You should be ashamed of yourself. Conning the council and disadvantaged families out of much needed social housing all so you can make a profit...and on top of that making your own parents accomplices in your dirty little scheme. How do you sleep at night?

sparkle84

Hey I help pay for your parents housing through my taxes and now you come on here trying to scam me out of my hard earned money p*ss off

mountainofdebt

RICARDOMINSKI wrote:

Hi I am extending my mortgage to give my parents the money to buy their home from their local authority (they are both retired). My question is after three years,during which they can't then sell the house without a penalty charge being applied, can they sell me the house for a nominal sum?

Personally I wouldn't do this....too much scope for you to be left high and dry.

Couldn't you act as guarantor for them to get a mortgage?

Having said all that I think that the right to buy should be stopped if only as the first step to address the problems of a lack of affordable housing.

cattie

In my borough I understand if someone buy's under the RTB, then should the property be sold during the following 10yrs it has to be offered back to the local authority, as they maintain first refusal on the sale during this period.

Zammo

cattie wrote:

In my borough I understand if someone buy's under the RTB, then should the property be sold during the following 10yrs it has to be offered back to the local authority, as they maintain first refusal on the sale during this period.

Thats a spanner in the works for poor old Ricardo. He's going to have to make sure his folks stay healthy for at least ten years before he can cash in on their council house.

Out of interest, what would happen to the house if he were to bump them off. Would the house revert back to the council or would Ricardo be able to get his grubby mitts on it?

Certainly one to consider eh Rico?

:money:

JennyB

You can download a very comprehensive leaflet on the right to buy here:
http://www.communities.gov.uk/index.asp?id=1151285

Definitely make yourself aware of the inheritance tax issues that may be raised by your parents selling their house to you and issues with local authority care costs.

The amount of the discount and the period of restrictions relating to resale varies from one area to another so it would be a good idea to get in touch with the Housing Association to find out what the rules are in your area.

Seeking legal advice would certainly be a wise move as there are expensive pitfalls to avoid.

seven-day-weekend

We payed two-thirds of the price for my mother-in-law's RTB property. She paid the other third. She had a mortgage lasrtng for seven years and we helped her with this. She gifted it to my husband with a deed of gift after about eight years (because she no longer wanted the responsibility of it).

A year later, unexpectedly, she had to go into full-time care. We wrote to the Social Services, pointing out that up until she had her massive stroke, she was fit and healthy. There was no reason to suppose when she gifted the property to my husband that she would soon have to go into care. We were able to produce receipts that showed we had paid two-thirds of the mortgage (and all of the deposit).

They decided that she hadn't deliberately deprived herself of assets and we were able to keep the property.