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

Errata

I agree with Belfastgirl's POV. And ....... just a thought ....... you say you're claimnig benefits, if that is HB / CTB is the council aware you part own a property?

TBagpuss

Errata wrote: »

I agree with Belfastgirl's POV. And ....... just a thought ....... you say you're claimnig benefits, if that is HB / CTB is the council aware you part own a property?

She doesn't.The estate owns the property. OP is a beneficiary who will be entitled to a share of the net estate when it is wound up.

If the property is currently off the market, it may be worth getting a new agent to view it with you. Ask them what they think is a realistic price for the property *in it's current state*, and how quickly they think it would be possible to sell it. It sounds as though you haven't had much to do with the previous agents and that the values you've got are out of date.

I think your dad and sister are going to struggle to get a mortgage - if your dad has done an equity release then presumably he is not young - most mortgage lenders will only lend until the oldest of the people on the mortgage turns 70 (65 for some) So if he is 60, they will not be able to get a mortgage for more than 10 years, which will limit how much they can borrow.

If your sister has adverse credit this will also make it more difficult, and her overdraft(s) and any other debt will also be taken into account when they look at affordability.

Do you still have the solicitor involved? Perhaps they could advise you about a suitable way to set out things out for your sister?

for instance - It may be that one way forward would be to treat it as you would if it were a non family member seeking to buy the property - consider what you feel is a fair price (including getting a formal valuation if need be) work out how much she would need to pay and ask for proof that she can come up with that. Give her a deadline to provide the evidence and make clear that the property will be re-marketed from a set date (maybe a month from now?) That doesn't stop her buying it, but it would mean that she'd have to come up with the money rather than stringing you along.

Ames

I don't want to get too much into the benefit side - I've done so in the past and it's turned into a bit of a benefits discussion, which I don't want now. It's all above board though and I have a welfare rights officer dealing with that side of it.

TBagpuss:

I wasn't involved in the first agent, I was with the second - as much as they involved us anyway! I was there when they all visited and gave their opinions. The numbers might have changed slightly, but the advice wont have - spend thousands more on work or put it on at a few thousand less. I hope she wont mind me saying what was in a pm, but DGM (who saw the original rightmove listing) summed it up as 'you've clearly spent a lot - but on the wrong things'. There's no money left to spend on the right things.

The problem with getting an agent to get in, price it for a quick sale and get rid is that there's no such thing as a quick sale in that area. Houses just aren't moving right now. With hindsight we should have accepted last years offer, I don't want to wake up next new year and realise that with hindsight I should have accepted this offer.

Dad's almost 63. I assume if that would have meant a definite no to getting a mortgage then the banks would have mentioned it? If it would only be for seven years then I can see how they can only afford to borrow enough to give me £45k. Although the amount she said she'd be repaying on an interest only doesn't add up, or even the fact that it would be five year fixed rate interest only if dad's age is a problem? I need more details from them tomorrow I think.

I don't think sister has adverse credit as such. Whenever she's been close to defaulting she's threatened to kill herself and dad has paid it off. (yes, really).

I do have the solicitor still involved, but she's not much use. When I spoke to her about the offer we got last year she didn't give any advice. Asking her how to proceed with sister will just result in charges and nothing useful, it has in the past.

The problem with getting her to write to them as you suggest is that they'll just ignore her and reply directly to me, brow beating me into doing what they say.

To be honest, the more I'm having to write stuff out here that's happened in the past I'm remembering just how awful it's all been, and taking a hit on the money is probably worth several times as much just to get it all over with. I will though make it clear that I have nothing to do with the house when it's done - I don't want to be referee when they start arguing and messing up.

Thanks everyone who's replied, it's given me lots of food for thought and it's been good to be able to have a rant! This was kind of sprung on me yesterday and they want an answer tomorrow, so I haven't had chance to get any RL support.

theoretica

If you do choose to accept an offer from your sister and father for your half I would suggest you add a time limit to your acceptance or they could drag it out even longer. £50k but if you can't pay by Easter we go to auction, or whatever. I don't think there is anything stopping your family trying to be the one to buy it at the auction, which might be worth pointing out if they really think it won't fetch enough!

It might be worth asking about auctions? I find it odd that a £150k property would sell at auction for £30k because surely it would be snapped up by someone who fancied nearly £120k profit?

Ames

Oh they wont drag it out, they're champing at the bit to get going. I'm the one wanting a bit of time to think everything through (bearing in mind that as administrator I have a duty to get the best price for the estate. I'm obviously not going to sue myself, but I don't want the DWP to say 'hang on, it's worth 150k according to probate valuations, with 30k debt, so why's it gone for so little. I need to talk to my benefit advisor about that, but can't do it on a weekend).

Theoretica, I'm just basing it on the auction results I found online for the area. There'd be selling fees to pay, plus the debts to dad and sister would be added. Looking at the huge townhouses that have gone for 60 or 70k, I think buyers would look at those and see a couple of hundred grand profit (more if they're developers who can subdivide) and see it as more attractive than a bog standard tatty semi in a slow market part of town, with two big new build estates to compete with almost on the doorstep. Also, about half the auction results went for less than guide price. So I'd be wary of those valuations too.

Errata

Sorry - didn't mean to be insensitive about benefits.
This house malarkey has caused and is causing you so much stress and pain, it may be worth paying serious consideration to throwing money at it to remove ongoing emotional trauma.

flamingo747

I think I'd be inclined to take the 45k and get a fresh start from the situation, it sounds like it's been really stressful. Good idea to take advice from benefits advisor just in case.
Good luck for tomorrow

Savvy_Sue

Ames wrote: »

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.

That may be what he tells you, but he's talking rubbish: he's actually almost certainly LESS hammered by tax and he would be if he had one salary of £20k, because he'll only be paying NI on the job.

He probably feels hard done by because both his pensions are taxed at BR (20%), because he's used all his personal allowance in his job.

Ames wrote: »

ETA: although after looking at local auction results we quite probably wouldn't even get enough to cover the debts. Which puts things in perspective.

But you can put a minimum reserve on.

Beyond that, I have no advice to offer ...

theoretica

Ames wrote: »

Oh they wont drag it out, they're champing at the bit to get going.

They may be champing at the bit - but that won't stop it dragging on if they have trouble getting a mortgage.

CRANKY40

So, assuming that the property is worth £150k, the actual amount left to split would be that less £10k your dad and sister spent less £5k that you have spent less £30k debts = £105k. Half each is £52.5k plus you would need your £5k back = £57.5k.

I've just looked on a mortgage brokers web site, and with a property worth £150k giving an expected rental income of £550 per month you would be allowed to borrow £110,500.

Your sisters share is also worth £52.5k.

If your dad borrows £52.5k to pay you the house value, then he will have an equal share with your sister. They will both then have to borrow a further £35k between them to pay the £5k they owe you and to pay the debts.

The only reasons I could see why you would be agreeable to letting your dad off with £12.5k that he owes you would be that a. You love him loads or b. he will make a will saying that when he dies you will be given a share of the property or c. you retain a share of the property...you could ask for a share of any rent they are paid each month.

So...assuming they borrow £90k at 3.9% the repayment figure on a repayment mortgage would be around £470 at 3.9% interest rate. That's not making them a lot of profit when you think they'd be charging rent of £550 and they'd be responsible for repairs.

If the knock you down to 45k, that reduces their mortgage to £77.5k, which would come in about £405 a month, so even if they pushed for £650 rent, they wouldn't be making much profit except of course in 25 years they would own the house outright (they'd have to pay life insurance out of the profit too) and all the rent would be profit.

If your dad is going to leave his share of the house between the two of you then I don't see any reason not to just take the money they have offered and leave them to it to be honest as you will ultimately benefit from a rise in property value while he is paying the mortgage with rental income. Quarter of £150k property now is worth £37.5k, in 25 years it could be worth £200k or more and you would inherit a further £50k assuming he doesn't leave it to someone else. Mercenary way to look at it yes, but why should he leave it all to your sister when it's you doing them a favour and helping them afford it in the first place?