Buying a portion of Parents house

Mojisola

Will the extension to the house put it out of the price range of the local houses? There's a property near us which has been improved and extended but has been on the market for years. Anyone with the money to buy what the owners are asking can afford to live in a better area.

Cauli

No. Next-door-but-one just sold for >£2M.

carefullycautious

Do come back and let us know how you get on with this.

It is interesting in that if you were not there to 'bail them out' so to speak they would be in a situation whereby they could loose their home. Even if they threw every penny of savings at it there would be a shortfall.

You must also look at the facts that this has been their home for 40 years and this may cause some problems when you move in.

There have been some horror stories regarding things going wrong between families who have tried this. Just be aware of what can go wrong.

jackyann

You don't mention if wife has any siblings, who might want a say in the arrangement.

Cauli

carefullycautious wrote: »

Do come back and let us know how you get on with this.

It is interesting in that if you were not there to 'bail them out' so to speak they would be in a situation whereby they could loose their home. Even if they threw every penny of savings at it there would be a shortfall.

You must also look at the facts that this has been their home for 40 years and this may cause some problems when you move in.

There have been some horror stories regarding things going wrong between families who have tried this. Just be aware of what can go wrong.

We are already in there house and have been for the last couple of years whilst we (I) obtained planning permission.

They are aware that we are (potentially ) bailing them out.

My wife does have a brother, the p-in-l's plan is that he is willed some of the house contents.

JimmyTheWig

Could you and your wife raise £800k from a mortgage plus savings?
In which case you could buy the property as it is at market rate. Then there would be no problem with deprivation of assets / IHT as nothing has been given away.
The p-i-ls could then use that money to repay their mortgage.
They could then use the remaining money to build the granny annex.

This would, I guess, involve them buying back a share of the property. Not sure how this would work in terms of your mortgage. Trouble would be that they would need a share of the property before the annex was built and so before the value of the property had increased.

Obviously their share in the property should be liable to be offset against care home fees and on the second death should be split between their two children with IHT due if appropriate.

dotchas

While one of the in-laws remains in the house it cannot have a charge placed on it for care fees.If and when the remaining parent requires a care home ,the authorities can disregard a half share in a property on the basis that no-one would buy half a house so therefore its value is low or even nil.

xylophone

With a sibling to take into account there is even more reason to take expert legal advice about the wills.

BitterAndTwisted

Separate expert legal advice. Meanwhile garner all of the documentation you may require later to prove that your intention is and always was to bail them out of the mire without losing their home of 40 years.

They are not of an age or potential income to ever be able to settle their mortgage.

I can't understand the need for an annexe: is the house in an incredibly expensive area? I would have thought that an £800k property would be absolutely massive unless it was in Bucks/Berks somewhere where that could only buy you something the size of a rabbit-hutch in some places.

Cauli

JimmyTheWig, we could raise the finances to buy the house for £800K. It is an option we have considered. However, this would incur £32K in SDLT (+SDLT on the bit the p-in-l would buy back?). So whilst it is an option and is perhaps cleaner, it feels expensive.

BitterAndTwisted, I like you’re thinking re: documentation.
Yes the house in Berkshire - one bedroom + 3 box rooms. Plus (++) I need the Annexe for my sanity, p-in-l are lovely but I don't want to live 'with' them J