can i sell my flat to my daughter?

gehngus_2

My daughter has grown up and she and her partner are get onto the housing market. They have been renting for 3 years at £460pm and it is money down the drain.

The average starting price for a flat in Rhos on sea is 100k - 120k

I have a flat which is above my hair salon and i've told her she can have it for 60k.

She has been told by her building society today that she can not have a mortguage.

1. because it is under valued and 2. because it belongs to a relative and they dont do deals between.
there was also mention that because its over a business it might require a comercial mortguage.

I cant see what the problem is as far as value goes? surley i can sell it for what ever i want. as for family ties? cant i sell it to whom i like?

does it really come under comercial. its a seperate address and isnt attached other than it sits on top of the shop?

Can anyone advise as to who would do a mortguage for this amount.

thanks
Steve

Snaggles

If you are selling a property significantly under market value, particularly to a family member, your daughters solicitor will probably advise her to take out insolvency indemnity insurance, which I believe is to protect her if any creditors you may have try to stake a claim on the property if you were to be made insolvent. I think this is to stop people who know they are about to become insolvent selling the property on cheap to their family so that it can't be repossessed (this is the general jist of it, but may not be exactly correct as I only have second hand knowledge of it). If the flat has a different title number to the shop, and is being sold completely seperately, then you shouldn't need a commercial mortage. Not sure why the mortgage company are not able to assist more with this - might be worth shopping around.

chivers1977

It would depend on the use of the property whether the lender is prepared to lend. ie future saleablity of the property.

Does the flat have a separate entrance?

herbiesjp

You should be able to find a lender to do this for you.

It does not need to be a commercial mortgage - although some lenders do not like to lend above commercial properties

MortgageMamma

Your daugther needs to speak to a broker about this really, you need a lender who will lend on flats over shops, with gifted equity - whats the tenure of the flat? freehold? leasehold?

You could go round lots of lenders trying to get a mortgage and they all could decline on something minor, and this would damage your daughters credit rating and make any new lenders she approaches extra cautious

Jamz

Would it not be possible for you to give her the property and she pay you a monthly fee direct? get it drawn up through a solicitor so it's tight incase you ever fall out, or do you need the full funds straight away

gehngus_2

The flat is a two story freehold with seperate entrance, it is a seperate listing.

Initially i just owned the shop, then the flat came available so i bought it and refurbished it.

I have no debts. overdrafts or visa bills. everything i have is paid for (and some).

I already have a house of my own (self converted barn) and am looking at doing a new build next (anyone know where i look for a plot?)

Id rather my daughter got a mortguage simply so that she has the responsibility of one.

I will visit a broker and see if something can be done.

i cant see the price being a problem? im not valuing it at 60k, its value is 100k.

its more like she needs a 60% mortguage and im paying the 40k deposit as a gift i supose?

the technicalities im not sure of? if nescesary ill give her the 40k deposit so she just gets the 60% mortguage. crazy init!

thanks
S.

MortgageMamma

Hi There

Getting a mortgage on a freehold flat is difficult enough (lenders don't like them) without the gifted equity as well. I can only think of one lender that would do it off the top of my head and they are not the most competitive. One way of getting round this would be to convert it to leasehold. There will be legal fee's involved for this but it will ensure the saleability of the property in the future.

As for buying plots of land, when my uncle built his house he approached local farmers and asked to buy a small plot. He managed to buy quite a big patch for about 60k but that was five years ago. Its worth asking if you live semi rurally as plenty of farmers need a bit more cash.

ducky2004

Hi gehngus,

I think you will also have capital gain tax problem as well as the property is deeemed to have been transferred at market value. This may not be much after proportionating (this was part of the shop), deducting taper relief etc, but will probably still cost you a few k £.