Buying below market value from family over seas

Itserendipity

Hello,

My husband and I wish to purchase his sister and her husbands house in London.they own the house outright.

It is valued at £400 000. We should be able to get a mortgage for £200 000.
From other threads on this forum we understand that they may be able to 'gift' us a deposit of £200 000 and we could get a mortgage for the remaining £200000. However, we would have to pay the £200 000 back when we sell the house so we were hoping to draw up an agreement with a solicitor that outlines this arrangement.

However, my sister in law and her husband do not live in the so are not residents for taxation purposes.

So are they able to sell us the £400 000 for £200000 and avoid tax liabilities such as capital gains/gift tax? Or is that too good to be true?

Which would be our best option, gifted deposit or buying below market value?

Thank you to anyone who can offer any advice!

kingstreet

No lender is going to accept a purchase at undervalue from a family member when you have to pay them back. It's the gift v loan scenario, except using property instead of cash.

I don't see any way of doing this. One of the others may have an idea.

Itserendipity

Thanks for your reply king street.

I was really hoping there was a way we could buy half a house! But I guess not!

Thanks

ViolaLass

If you want to buy half a house, why do you need them to gift the other half to you?

Itserendipity

Viola lass,

My sister in law wants to sell the house (we are currently renting it from them) and we cannot get a mortgage for the full amount , only half of the market value.

Therefore we are looking for a way that my sister in law can access some of the equity they have in the house while allowing us to live in the house, get a mortgage and start building our own equity.

It all sounded so straight forward to me...dam the government and their Laws!


Thanks

ViolaLass

So why can't you buy half the house and they keep owning the other half? Do you have anything for a deposit?

Itserendipity

Can we do that? I thought to get a mortgage you had to be on the property deeds. Could we be tenants in common and get a mortgage against half the value of the house?

I'm feeling optimistic,again!

Yorkie1

I don't think that idea is a starter, I'm afraid. I doubt the lender will allow 2 people to be on the deeds and not on the mortgage. It will be a nightmare for them if they ever have to repossess.