Dad wants to Transfer house to me

ta5mhu

Hi there,

Really hope someone can provide a few pointers on this.

My dad who is now 61 wants to transfer the house over to my sister and I, but still live there. At the moment, he does have a mortgage on the property and is paying interest only on this.

My questions are:

a) how do we go about changing this over to us
b) Will we need to get a mortgage for the property and he pays us rent etc
c) If he ever did have to go into a home, would we be liable for this?

Any comments, suggestions would be greatly appreciated. Also links to recent documents on the web would be good

Thanks

SmlSave

If there any particular reason why he wants to transfer the property to you?

You'll need to do a Transfer of Equity and get the consent of the lender to do so. Perhaps it might be best to have all three of you on the Deeds so that its secure?

You want to charge your father rent?

If you do 'take over' his house then i would suggest getting Wills drawn up to protect his right to reside there.

If your father doesn't have enough savings to pay for a home (should it come to that) then surely the equity in the house was what he was expecting to cover it?

Jowo_2

Google 'deprivation of capital' and 'notional capital' to understand why means tested benefits and social service provision ignore people that are seen to transfer their capital to get out of paying care home fees - they get treated as if they still have it during the means testing process. He should get expert advice on this area, perhaps an advice charity like Help the Aged or similar can assist.

Landlords can rent their properties to relatives (as long as they don't live in the same property together). In order to understand why a claim for LHA made in the future could be denied (if his income reduces and he wants to continue paying you rent, google 'contrived tenancy'. This is where a local council will investigate if its a true commercially run tenancy or one just set up to exploit the benefits system.

Fire_Fox

ta5mhu wrote: »

Hi there,

Really hope someone can provide a few pointers on this.

My dad who is now 61 wants to transfer the house over to my sister and I, but still live there. At the moment, he does have a mortgage on the property and is paying interest only on this.

My questions are:

a) how do we go about changing this over to us
b) Will we need to get a mortgage for the property and he pays us rent etc
c) If he ever did have to go into a home, would we be liable for this?

Any comments, suggestions would be greatly appreciated. Also links to recent documents on the web would be good

Thanks

A conveyancing solicitor should do the transfer; either the lender will have to agree or the mortgage will have to be paid off. You will either need cash or a mortgage to do this - most lenders will not allow letting to family.

If your father pays you rent you will be a landlord with all the responsibilities that entails, so you will need landlord's insurance, gas safety certificate, to pay capital gains tax and income tax. As you will have an asset your sister and you will probably not be able to claim any means tested benefits. It is unlikely your father will be able to claim any means tested benefits either: how does he propose to afford the rent?

If your dad ever needs residential care the state may look at the fact that he has given away the property and refuse to pay. You will not be liable to pay for his care as he is an adult, he may be liable. As others have said use the search function for 'deprivation of capital' rules.

Baggysdad

My questions are:

a) how do we go about changing this over to us

You will need to see a solicitor or a conveyancer. Hopefully if he is any good, he will refuse to do the work, because....


b) Will we need to get a mortgage for the property and he pays us rent etc

You and your sister will need to take over the mortgage. Your fathers lender is not going to allow him to sign away their security!!

Its up to you whether you charge your father rent. If you do, be sure to declare it and pay the income tax and national insurance on it.

c) If he ever did have to go into a home, would we be liable for this?

You wouldn't - but your father would. So you will need to decide whether you look after your father, to avoid the costs he won't be able to pay, or whether you and your sister sell your house (that was his house) in order to meet his fees.

Also be aware that you and your sister will also be liable to pay Capital Gains Tax on any increase in value during your period of ownership (currently 18% on a gain of more than £10,100 each).

There is a potential solution - but I am not going to put it on here to tell the whole world how it works, including local authorities who are responsible for meeting care costs. Get yourselves and your dad in front of a solicitor who is a member of Solicitors for the Elderly or STEP.

B

ItMightBeUsefulOneDay

One final word of caution in this:

If you (or your sister) are declared bankrupt for any reason, you will lose the house. That means your father will be kicked out so the house can be sold to pay your debts. You may think, "This will never happen to me" but life can throw a curve ball now and again so be aware.

ta5mhu

Hello All,

First of all, thanks to everyone who has posted on here so far (have also pressed the thanks button for you all). The information given is a good start to me.

I think some of his reasons for doing it, were to ensure that the local authority would not "drain away" all the value of the house, should he have to go into a care home. From what people have said on here, this could still happen anyway. Currently he pays his mortgage using his pension, and this would continue (either by paying us or the lender directly), so would be no difference there (apart from us being coming landlords and the tax etc implications there).

Will definitely have a chat with a solicitor about it all.

bitsandpieces

ItMightBeUsefulOneDay wrote: »

One final word of caution in this:

If you (or your sister) are declared bankrupt for any reason, you will lose the house. That means your father will be kicked out so the house can be sold to pay your debts. You may think, "This will never happen to me" but life can throw a curve ball now and again so be aware.

Owning a house you don't live in would also be an issue if either of you have to claim means-tested benefits.

The house could be caught up in the divorce settlement if either you or your sister get divorced. From your dad's point of view, there's a risk that one or the other of you could decide they want to sell before he does.

Hopefully your dad will have many years of good health to come so this won't be an issue. As well as CGT, though, the gift could be liable for inheritance tax (on a sliding scale, depending how long he lives after giving you the house).

You and your dad should definitely speak to a solicitor about this - lots of potential complication.

RAS

You need to explain to dad that

1. if he transfer the hosue to you and your sister, it counts as derivation of assets for the purposes of benefits (although the capaital is not counted) and nursing home fees, so they will treat him as if he owns the hosue.

2. it screws up you and your sister as far as your own mortgages, benefits and any relationship breakdown.

3. If he dies, it amy still be counted as his for the purposes of IHT, unlss he pays full rent,

ta5mhu

Hello All,

Thanks to all those who have replied since my last post..

I have been reading about "asset protection trusts".. would this be of any benefit.. My dad is divorced, so he is the only person on the deeds for the house. His mortgage is approx 100k which he is paying interest only (was a settlement to my mother", of house value 180K..

Would it make any sense in getting this trust, having my sister and I as owners in common of the property with him??

Fire_Fox

ta5mhu wrote: »

Hello All,

Thanks to all those who have replied since my last post..

I have been reading about "asset protection trusts".. would this be of any benefit.. My dad is divorced, so he is the only person on the deeds for the house. His mortgage is approx 100k which he is paying interest only (was a settlement to my mother", of house value 180K..

Would it make any sense in getting this trust, having my sister and I as owners in common of the property with him??

Sorry but you have already been advised to get legal advice. This is far too serious to be taking advice from unqualified people on a forum!!