Anybody know about tax, mortgages and cr*ppy families?

Ames

The looong saga of the house my mum left to me and sister is hopefully coming to an end, and I just want to check a few things out. I know this would probably be better on the mortgages board from a financial POV, but I find other boards scary, and there's a big dollop of emotional/family stuff too. Please can people not be judgemental, I'm a bit fragile right now for lots of reasons.

***ETA: Dad has no legal say in these things whatsoever. There was no will, but he and mum divorced long before her death. Me and sister are the only beneficiaries.***


Recap: mum died nearly three years ago, left a house and not much else. I'm administrator and sister's been squabbling over it all ever since, although it got better when I appointed a solicitor. The house has been on the market for about 18 months, with two different agents. Only one offer, and not many viewings.

Over new year there was an emergency with the house. Luckily from sisters original wail of 'we can't afford the thousands to repair it', the actual repair has turned out to cost less than £300. It has, however, put a rocket up her and made her realise that things can't go on. So she and dad have decided to buy me out (yay) but for a very low price (boo).

They've been to see banks but have been very cagey about how much they can actually borrow, although I haven't asked outright (I was having the conversation in a public place on my mobile after a long coach journey). They've offered me £45k, although as I've paid 5k off the mortgage, it's only really an offer of £40k. To put it in context, a year ago we got an offer which sister considered an insult. The EA agreement was with her, and I didn't find out till later that the potential buyers had gone as high as £158.5K from an initial offer of £145k.

The assorted debts on the estate are £30k to the mortgage company and other assorted places (our solicitor, utilities etc).

I've put in around 5k, as I said.

Dad around 7k, sister around 3k, but it seems to be a bit 'have your cake and eat it' of them to expect that back.

The rental potential is between £550 and £650.

They want/need to do work of around £5k to be able to let it.

So that's the house and it's finances. Now on to dad and sis.

Sister earns £13k from her main job, and a bit more from casual work besides. Everywhere told her she had no chance of getting a buy to let mortgage on that, and without being a homeowner. Which is fair enough.

Dad has a combined income of full time NMW job, big pension (10-12K going by the last info I had) and little pension (a few hundred a year). I know that's not the same as earning one salary of c.£20k as he's hammered by tax.

He's mortgage free via a 'I want a new car, stamp feet' equity release mid life crisis a couple of years ago (he bought a nearly new car with lots of fancy features that stop working in the rain. But I digress).

So the figures are, roughly:

Combined income of £30-35k gross.
Debts to the estate of £30k.
Offering me £45k.
Need £5k for work.

So they're saying that they can only get a buy to let mortgage of £80k on a house they could sell tomorrow for (at a very conservative estimate) £140k. It doesn't add up to me, but I don't know anything about mortgages, let alone buy to lets.

Onto me.

I'm living in a council house that's barely fit for habitation (no heating or ventilation, damp and mould). I'm band A for rehousing, but based on lettings results could be waiting another couple of years. If I am successful in a bid though I need to be able to move within a week. Financially at the moment, as I'm paying £190pcm as my share of the mortgage and council tax, that wouldn't be possible. I could get a credit union loan for the upfront costs, but my bills would go up by around £200pcm altogether.

So I'm pretty desperate to push this money pit of a house as far away from me as possible. Dad and sister know this, sister mentioned it in the conversation yesterday.

So, after all that info, am I right that they can get a much higher BTL mortgage than they're letting on? Am I complete mug for wanting to say yes, and jump at the chance to end this all?

My instinct is that they're ripping me off big time, but I'm not sure I have much choice. The main thing that's irking me is that they're partly paying me back with my own money!

I guess I could always top up the £45k by opening a book on how long before they're bankrupt by their slipshod approach to finances and being landlords. Or design a Bingo game based on potential disasters...

Sorry for the long post, I wanted to be as clear and put as much info as possible.

daisygirlmac

Hi Ames

Let me start by saying I am an estate agent and I know the housing board can be a little scary! I read through your post and I think you are possibly focussing on the wrong bits (in the nicest way possible!).

In my mind, there is only one real question here....should you accept their offer of £45k for your share of the house?

With this in mind, I would try and put to one side what income they have or don't have and I would also try and ignore what has been put it because it doesn't really have an impact.

I'm not too sure how the house has been left: was it left to one person to sell and split the proceeds evenly or was it left to all three of you jointly?

sassyblue

Was this actually left to you and sister or you, sister and dad?

If it's only going two ways, you and sister, l would hang on.

Is having £40k going to affect your benefits?

I guess the question is, can you live with £40k..... if the house sells and (if the split is two ways) you could have had £60k from a sale less the outstanding mortgage. Would that £20k bother you?

If the split is three ways then £40k sounds about right doesn't it? Unless I'm missing something.

Ames

Sorry, I forgot there are people who haven't been following the sorry saga from the start!

Dad has nothing at all whatsoever to do with the house. He and mum divorced well over a decade before she died. He has however put money into the house. I told them not to, but dad and sister went in one day and ripped out the old kitchen. It took dad over a year to get the new one in to the point that we could get in an EA, and little bits still aren't finished. They also decided on new carpets and redecorating - although again little bits aren't finished.

It wasn't 'left' at all - there was no will. My sister and I are the sole inheritors. Because I 'don't work' (can't work due to bipolar) I was left with the job of doing all the legal stuff. Dad (who has nothing whatsoever to do with it) and sister have complained about everything I did, and even when I appointed the solicitor they moaned about 'wasted money' for things like advertising in the Gazette.

In theory, we'd have sold it, paid all the debts (including dad), and split the money. But it hasn't sold.

I (stupidly, although as I was in hospital at the time I didn't have much choice) left it up to sister to put it on the market initially. She, naturally, went with the EA suggesting the highest asking price. She didn't even read the agreement properly, and was horrified after a few months when they suggested dropping the price substantially. It turned out the agreement said that their fee would be x% of the original asking price!

Eventually we got sick of them. They didn't show people round, we had to do it - despite me and sister living a good hours drive away (dad lived around the corner, but his idea of 'showing people round' was 'this is the kitchen. This is the bathroom. This is the bedroom...' They never gave us any feedback after viewings either.

The second agents were worse. We got a few round, and they all said roughly the same asking price (165k). We chose the one who seemed most enthusiastic and who had the best local knowledge.

As far as we knew until last week there hadn't been a single viewing.

In summer, the EA changed name. It looks like the branch broke away from a county wide chain and went solo. They didn't mention this to us. The first we knew was when the sign outside changed. And when the numbers we had for them stopped working.

Last week sister went and cancelled the agreement and got the keys. (We'd already decided that we were going to leave, and with the repair that needs doing we couldn't have viewings anyway).

She saw someone different, who when he gave the keys said 'oh yeah, that's the place that no-one wants because it needs loads of work doing'. So it seems that there have been viewings, they just haven't told us about it. More importantly, they haven't given us the feedback so we can decide about the 'work that needs doing'.

*Sigh*.

So leaving it on the market doesn't seem an option. There seems to be a code of silence amongst EAs in that town, where vendors don't get any feedback! And as we live so far away it's hard to be a constant thorn in their side. (A nice thorn, of course, but I'm sure you see what I mean!).

Ames

Sorry Sassyblue, your post wasn't there when I replied.

Hopefully my reply above has answered about who it's left to.

Yes, my means tested benefits will stop and I'll have to live off my share of the house at benefits rates until it drops below 16k. So from that point of view how much I get doesn't really affect me materially. In fact, from a mental health point of view, the less I get the shorter the time I have the money, and the less chance there is of a manic episode burgering everything up (although I'll be seeing a financial advisor to make sure I don't have access to it and just get dripped it every month).

Of course, I have a duty to the taxpayer to get as much as I can to minimise my take from the pot.

Would the 20k bother me... See above. Rationally I know that it makes no difference, but knowing that my family could shaft me like that will rankle, I know that. On the other hand, me and sister have been getting on really well lately and that's probably worth more than 20k.

I just felt that there was lots of gaps in the conversation, where she was rushing over facts and figures that were in my interest, and concentrating on hers. But then, I guess that's human nature.

daisygirlmac

It's definitely a tricky one...

IMO if you've had an offer on the property at £158k then it's worth something close to that...let's say for arguments sake the best offer you will get now is £150k.

Take off the £30k debts and you're left with £120k, so £60k each.

The fact that your dad has done work to the property is pretty irrelevant when it comes to splitting the money down as he has no legal right to the property or any proceeds from the property. He has even directly gone against your wishes to do this and sounds like he hasn't done a good job. Has this added any value to the property whatsoever? Your sis and your dad have put a combined £10k into the property, for this amount I would expect it to be in pretty good condition!

At this stage you are weighing up a potential future offer in the region of £60k, or an offer on the table right now of £45k. Assuming you and your sis agree that you want to pay your dad back for his work from the proceeds of the potential future sale (and I'm really not sure I would pay him anything) this could reduce your potential future £60k down to £57k ish.

£12,000 is a lot of money! However you also have to weigh up the hassle of keeping it on the market to sell and the potential time frames involved, what if it doesn't sell in 12 months - would you regret not taking the £45k when you could?

Personally I would ask your sister and your dad to up their offer. Explain that if it stayed on the market and sold you feel you would get more from that outcome and see if they will reconsider. I certainly wouldn't allow them to take advantage of me. Presumably if it's a buy to let they stand to make some money on it over the years - why should you pay for that? I understand you want to get rid quickly but I really wouldn't be taking a penny under £55k from them. If they don't want to pay you that, it can stay on the market.

ostrichnomore_2

Quickest, easiest way out?

sell it at auction. Property developer buys it, instant sale, instant money,split 50/50.

sassyblue

Every house is saleable if it's priced correctly. Would this help....? Go on rightmove and search for properties like your mums in that area and choose 'include under offer, sold stc' and see what's selling, specifically see what agents are selling those properties, they may be more proactive?

I would say hang on and get it sold, what bothers me is that you seem to resent your sister and dad so l wouldn't cut myself short as l think that's going to annoy you if you settled for (much) less than it would sell for.

I agree with poster above £55k seems a good offer. I have followed your posts Ames but couldn't remember the finer details. x

daisygirlmac

I'm more than happy to take a look for sold prices if you want to PM me the postcode and a few details of the house (number of bedrooms etc)

Ames

Has the work added value? I don't know.

When we got values for probate it came in at 150k as the mid point. More if x,y,z was done. So dad and sister spent about 10k doing that.

When we got values for sale, they all came in at between 150k and 175k.

When we got values to change EAs, they came in at around 160k.

So, they've spent 10k, to add 10k, but according to most of the EAs, the work would make it more attractive and get more viewings. Clearly not.

All the EAs then went on to suggest even more work, which was getting into doing serious stuff changing the layout of rooms etc. I said no to that, there's a point where it really isn't worth it.

Everybody who's viewed it said how nice the kitchen was (I showed one couple round myself), but it's the finishing touches that haven't been done that put people off. And the few cheap bits of 'essential' work that needs doing (new garage roof, for instance).

As for nearby houses, there aren't any that are similar - it's a small village and you're lucky to get a handful of houses that were built at the same time. There's a few unique anti-selling points, that I can't go into on here because it would be too identifying. It seems to be priced mid range for the area and type, at one point in the last year houses were selling for a lot less, at another a lot more.

I think the problem with putting it on again at a lower price is that it will be the third EA (fourth if people don't realise that the one who changed is the same one) and the second price drop, so potential buyers will think it's something dodgy.

DGM, thanks for your offer, I'll pm you now.

Kynthia

Your dad and sister can only get a BTL mortgage if they meet the lender's criteria, can prove they can afford the repayments, and can only borrow a maximum of 75% of the property value but might be less depending on the likely rent and their provable income and other risk factors. However none of that is your concern as all that should matter to you is how much do you want to sell your share for, and how they get the money is up to them.


So do you have a figure in mind that is realistic? Would you rather sell the whole place to someone else and what price do you realistically think you'll get and would there be estate agent fees that you'll avoid if you sell just your share?