Advice on buying Parents house under value

sunshinetours

Fire_Fox wrote: »

You would not lose your home as you will have bought it legally and you will not be liable for their care home charges. However your parents can be treated by the state as if they still have the money they have gifted to you, i.e. they may not be entitled to state support until they have spent all the notional profit from selling the house at market rate. That means you might have the Hobson's choice of seeing your parents destitute or helping them out financially.

Five to seven years is not very long, I think the state may take a dim view of your parents leaving themselves insufficient to live on. My understanding is each case is taken on it's merits, but the larger the gap between the gift and needing benefits the better. The lower the valuation of the property the less money your parents will be deemed to have gifted to you IYSWIM.

I assume your parents are already fairly old if they are going into sheltered housing? Have your parents considered selling their home at market value and then buying a sheltered housing place outright? This will not have to be sold whilst one is still living there, so your parents have a fair chance of being able to leave you something when they pass on.

Seems to me that the transaction at under value is being done for right reasons for both parties. i.e parents want to see their kids sorted and they have a little nest egg to last them say 6 years.

Can't see this being a transaction that could be attacked too strongly for deprivation of assets. I think a letter lodged with the family solicitor who is dealing with the sale could help setting out why its being sold at whatever price

My main concern would be that your parents are in their 70 's and only thinking of a nest egg for 6 years or so? personally I think the value is too low. What happens if their rent goes up or one of them dies and they cannot afford the rent on their own

Person_one

I think your parents stand to come out a lot worse off in this. I completely understand that they want to see your family settled and happy but really you shouldn't take advantage of this. They could end up in quite a pickle when the money runs out and you've already said you wouldn't be able to pay for their care so where would that leave them? How bad would you feel living in your parents house that they pretty much gave you and watching them struggle?

I think you need to find another solution and so do your parents, separately. You should live somewhere you can actually afford, even if it means being a bit cramped or in a different area. Your parents should sell their house at its actual value and use that money to fund their whole retirement, not just 6 or 7 years of it.

SandC

You've told us what equity you have, but how much mortgage do you have?

I know your parents have set this price but perhaps you could do the right thing and pay them more. As it stands you are looking at mortgaging £45k and paying them £35k when you've got £55k equity - you are keeping £20k for your own spends? It doesn't sound like much of a nest egg for them and they may genuinely start to struggle soon after that runs out. Or maybe you will then be in a position to help them out?

Personally I would dissuade them from this idea. Does your income really only allow you to borrow £45K and be comfortable?

If they had loads of savings then I could understand them helping you to have no financial worries if they didn't either. As it stands they could face a very stark future. I have relatives still going strong in their 90s.

Brock_and_Roll

As someone whose family runs care homes, you need to be very careful here. Rest home fees start at around £350 per person per week and nursing home fees can be £500-£800 per week i.e. damn expensive.

If in the next few years, your folks went into a care home, and the cost was circa £36k per annum, it would not be long before their funds were exausted and they had to ask the DSS to pay. The DSS these days are getting pretty hot on sniffiing out attempts by people trying to shift assets (almost always houses) before requiring long-term care - in this case the taxpayer is potentially being "ripped off" by £55k). Conseuqently, they may refuse to pay the fees or seek to overturn the sale.

Ironically, and rather interesting from a social and moral perspective, the best way to put your assets out of reach of the state....is to spend it! It is not unknown for OAPs to blow fortunes on cruises etc just to as to get their assets below the required level for state support. Not much of an incentive to save!

curious_george_4

Hello I have just been reading the posts above and although this thread is old I have a similar question to that of the original.

If the situation arose, I.e. you were selling/buying a property privately, and the seller some how ended up selling for considerably below market value. Can UK law protect the seller in any way?

If so what would be the qualifying criteria? E.g 50% below market value?
What rights does can seller call upon?
What timeframe would the seller need to react in?
Is anyone aware of UK test cases?

DVardysShadow

curious_george wrote: »

Hello I have just been reading the posts above and although this thread is old I have a similar question to that of the original.

If the situation arose, I.e. you were selling/buying a property privately, and the seller some how ended up selling for considerably below market value. Can UK law protect the seller in any way?

If so what would be the qualifying criteria? E.g 50% below market value?
What rights does can seller call upon?
What timeframe would the seller need to react in?
Is anyone aware of UK test cases?

Separate thread started on this by CuriousGeorge https://forums.moneysavingexpert.com/discussion/3041660 - I suggest discussion to that thread.