Buying House from Elderly Relative HELP!!

machell21

I will try to explain this as best as possible.

My Grandma (90 years old) is in ill health and has recently been moved to a residential care home. It is unlikely she will live for many more years.

We are arranging to take out a part annuity policy to pay for the cost of her care which we have been advised will be between (£40K and £60K)

In order to pay for this her house has to be sold as there is no money in savings.

Myself and my wife would love to buy her house (valued at £200,000) however dont have the £20,000 deposit.

My question is this. Is there anyway that we can buy this house without the deposit? releasing equity? gifting? etc (I am aware of the 7 year rule in relation to gifting) My mother and uncle are due to receive half (each) of everything in the will.

I am mainly appealing to anyone with previous experience or with a financial advising background?

Any help is much appreciated!! I cant be the only one who has ever been in this predicament.

Regards

G_M

To gift the property to you, or sell it below market value, would effectively reduce the value of the Estate, and deprive your mother & uncle of their inheritance.

However, if they were in agreement (either to accept this reduction in inheritance, or to treat it as a loan which you would pay them back for), you might be able to buy for, say, £150,000. Could you then afford the required deposit to get a mortgage?

But who is going to 'sell' the property? Is grandma of sound mind? Have you discussed with her? Is she in agreement?

Or is she incapable of managing her own affairs, in which case, who has POA?

Yes, as you say 7 years for Inheritance tax.

And if she ever claims (means-tested) council support for care costs, the value of the property would still be taken into account ('deprivation of assets')

Yorkie1

I think the first thing is that it would probably be deprivation of assets if your grandmother sold the property at less than its worth? i.e. if the annuity wasn't enough to pay for care and your grandmother's assets were depleted sufficiently then to require means-testing. She would be treated as if she still had the amount given away.

The fact that your aunt / uncle are due to inherit the property in the will is really neither here nor there, as it has to be sold now. The will only deals with what is in the estate at the time of death, of course.

G_M

Yorkie1 wrote: »

The fact that your aunt / uncle are due to inherit the property in the will is really neither here nor there, as it has to be sold now. The will only deals with what is in the estate at the time of death, of course.

That's true from a legal stand-point, but does not alter the fact that selling at less than full price will reduce the amount available for care costs, and ultimately reduce the inheritance.

If, say, aunt has POA, she may be unwilling to agree.

Or if the decision is grandma's, or the OP's, bad blood might be created if auntie/uncle are annoyed by loss of future inheritance to the current advantage of the OP.

Families are funny things.......

Yorkie1

True, families are funny things ... !

Though any PoA who puts their own interests above maximising the interests of the person for whom they are an attorney needs to be 'struck off', so to speak!

machell21

So just to clear things up, the annuity policy will cover all of my grandmas care fees but obviously the house needs to be sold to pay for the annuity.

The house is valued at 200,000 so in today's market we need a minimum deposit of 20,000. We can probably raise 10,000.

Her whole estate is worth much less than the current Inheritance tax threshold of 325,000.

She has no savings, all capital is in her property.

She still has capacity to make decisions for herself.

I don't want anyone to get my intentions wrong. I am happy to pay full market value and don't wish to deprive anyone of any money. Simply, I don't have the deposit and feel that as it's my grandmas house and is owned outright, there must be a way.

My grandma has told me that she wants to give me and her other grand children some money once the house is sold.........

Just to add insult to injury an offer on her cottage has been accepted and the potential buyer is a builder looking to improve the house and resell!!

Feels like a kick in the teeth. Lol.

machell21

So just to clear things up, the annuity policy will cover all of my grandmas care fees but obviously the house needs to be sold to pay for the annuity.

The house is valued at 200,000 so in today's market we need a minimum deposit of 20,000. We can probably raise 10,000.

Her whole estate is worth much less than the current Inheritance tax threshold of 325,000.

She has no savings, all capital is in her property.

She still has capacity to make decisions for herself.

I don't want anyone to get my intentions wrong. I am happy to pay full market value and don't wish to deprive anyone of any money. Simply, I don't have the deposit and feel that as it's my grandmas house and is owned outright, there must be a way.

My grandma has told me that she wants to give me and her other grand children some money once the house is sold.........

Just to add insult to injury an offer on her cottage has been accepted and the potential buyer is a builder looking to improve the house and resell!!

Feels like a kick in the teeth. Lol.

ViolaLass

If grandma wants to give you money after the sale, would she be willing to sell the house to you for a lower amount in lieu of giving you money after the sale?

CLAPTON

she can chose to sell the property to you with a 'gifted ' deposit of 10k (to add you your 10K) if she wishes

have you asked her?

however with the new help to buy scheme you might get a 95% mortgage ; have to asked a lender?