Buying a home from a Grandparent

dwilkins

Hi All,

My boyfriend and I live in a 2 bed flat and have the opportunity of buying his grandmas 3 bed house.
She has recently moved into a care home and the property is vacant.
It has been valued at £160k but his parents have said we can buy it for £140k plus we have £20k of equity in our flat.
What is the easiest way of doing this and are there tax implications for his parents/grandma.
When talking about LTV% for mortgage purposes do we base it on the £160k valuation or the £140k buying price??
Any help would be great.

Thanks
dwilkins

poppysarah

You'd only have 20k equity in your flat if you can sell it at the price you think.

BitterAndTwisted

Why would someone who is supposed to be acting in the best interests of someone else choose to sell a property for less than it's real value? How do you suppose they can prove they were acting in their best interests under such circumstances?

TrickyDicky101

There are no tax implications in doing this (CGT/IHT perspective, anyhow). I do not know if selling @£140k would fall foul of deprivation of assets legislation though.

bryanb

Nobody has said Grandma is in a care home at public expense

tbs624

dwilkins wrote: »

Hi All,

My boyfriend and I live in a 2 bed flat and have the opportunity of buying his grandmas 3 bed house.
She has recently moved into a care home and the property is vacant.
It has been valued at £160k but his parents have said we can buy it for £140k ...

As you say that GM is now in care home you may like to Google "deprivation of assets".

A property is obviously only worth what someone will pay at the time its put up for sale but if it could be shown that your GM had disposed of a property for less than its real value then her finances may be treated as if the full value had in fact been paid.Does GM have a mortgage on this property/any other outstanding debts?

bryanb

tbs624 wrote: »

As you say that GM is now in care home you may like to Google "deprivation of assets".

A property is obviously only worth what someone will pay at the time its put up for sale but if it could be shown that your GM had disposed of a property for less than its real value then her finances may be treated as if the full value had in fact been paid.Does GM have a mortgage on this property/any other outstanding debts?

See my post above

tyllwyd

If the flat has been valued at £160K, it still might only sell for £140K on the open market, so that doesn't seem unreasonable on the face of it (although it is probably best to talk it through with a solicitor in case there are any hidden traps).

But if you are looking for a mortgage I think it would have to be based on the actual selling price, not the valuation.

Richard_Webster

Two points:

1. Is grandma mentally capable? If not are parents acting under a lasting or enduring power of attorney for her? If so then they can't sell at an undervalue - that would be beyond their power unless this is expressly allowed in the power of attorney itself.

2. Assuming grandma is mentally capable and has decided to give OP the benefit of the price reduction of her own free will and she is not been paid for by the Council in the home then that part is OK - next problem is getting mortgage.

Some lenders will consider this (base the LTV on the value rather than the price) where there is an element of gift by a family member but it is very important to be completely open and upfront with the lender as to what is happening. Some brokers try to be clever at this point and put down half truths as to what is going on, and then when the real truth comes out, it backfires because the lender thinks someone is trying to con them.

ekkygirl

They can sell it to you ay 20K below value, the same as they can sell to any buyer that offers the 20K below the value. My son did the same when his Gran went into a care home and no one ever questioned it.

martindow

GM will be paying care fees until her savings of cash from the house sale get down to a certain value (23,000 I think) when benefit payments can be claimed to partially or totally pay them. At 2 or 3 thousand a month cash can be eaten up very quickly.

If the house has been sold below its market value couldn't deprivation of assets cause a problem in the future?