Purchase house from OH parents under market value

sleines

Evening all,

I'm after some advice. My future parents in law have asked if we would like to buy their house when f-i-l retires Dec 2015 as they intend to buy a caravan and live in a caravan site. We a currently paying off debts before we start saving for deposit/wedding and living with them while we do it.

OH is one of three children so his parents plan is to get house valued then sell it to us minus a third of the value which would equate to his share of the inheritance. What is, if any, the implications of this?

On another note the condition of us buying the house is that they stay with us when the park closes. I keep debating if this is a good idea as we plan to start a family (would love 2 kids) once we buy a house and their house is 3 bed so for 4-12ish weeks of the year one child would be booted out of their bedroom.

Any advice much appreciated

kingstreet

There are no implications, unless their combined estate is more than £650k, then some inheritance tax might be payable on second death.

The other issue is your call, I'm afraid.

Annisele

I'm not certain that a mortgage lender would be happy about that (but I'm not sure).

If his parents were just gifting a third of the value of the house to him, that would be fine - but they're not. In effect, they're exchanging one third of the value of the house for the right to live in it for up to 12 weeks a years (i.e. pretty much one third of the year). If you didn't pay the mortgage, and your parents-in-law were living in the house at the time, I'm not completely sure the lender would be able to repossess the house out from under them - and if they couldn't, they won't lend in the first place.

What would happen in future if you wanted to sell the house? Would you have to buy somewhere acceptable to the parents-in-law, so they could continue to live in your house for 12 weeks a year?

Will they still consider it 'their' house (in terms of how you can decorate it etc)?

Finance aside I think it sounds like it could cause years of arguments.

TrickyDicky101

Annisele wrote: »

Finance aside I think it sounds like it could cause years of arguments.

^+1. What seems like a good idea now may well not a year or two down the line.

quidsy

And how will the other 2 siblings feel when they are told that one is getting his inheritances early in the form of bricks & mortar which will probably increasei n value over the years but they will have to wait for parents pop off to see if there any money left when they do.

Talk about a mine field.

Parents are better off selling at market value to you & oh, then distribute inheritances to all 3 when the time comes.

As for the living arrangement ting, what happens if one parent dies & the other doesn't want to live alone in a caravan? Will they expect to move back in regardless of how many kids you might have? Will siblings see it as a way of passing all responsibility of elderly parents to you as you were given financial preference?

It is prety much the most simple way of destroying whatever relationship your oh has with his siblings.

sleines

Thank you all for the replies.

When they first mentioned it I thought it was a great idea, ready to live in house for roughly £67k, we already live with them so could cope with them staying for 4-12 weeks a year but the more I think of it logically I don't think it's such a great idea.

Would they want to live in a caravan until they pass away which could be decades as both in good health at the moment?? And a very good point of if we wanted to move, would they expect to still stay with us.

What if they don't like living in a caravan - would they assume that they could move in with us - they are mortgage free now and £67k (minus living expenses and purchase and re-sale of a caravan) wont get you much around here if they gave up on the dream and decided to buy another property.

I've also thought about his brother and sister and its very likely that their inheritance would be much less than what OH would have.

There is a lot to think about and I need to discuss this thoroughly with OH.

Again thank you all for your point that I hadn't considered.

cattie

Your in laws really need to consider some of the negative points of living in a mobile home or caravan of which there are quite a few.

Some site owners will not allow caravans over a certain age to remain on site, so can be giving their marching orders which then renders them pretty much valueless.

Even if current owners are pretty good, who is to say if the site was sold the new owners wouldn't want any caravans say for instance under 7yrs old on the site. Or if they massively increased the service charges & rent?

Or what would happen if they didn't like living in a caravan after all, where would they go as they no doubt wouldn't have any money to buy another brick built property with? Often with caravans the site owner is the one who does the selling, charging a tidy commission for him/herself too & having the say over who can or who can't live on the site.

It's all very well your in laws deciding to sell up & help you get onto the property ladder, but crazy if they do it at a risk to their own security.

I know if it were my parents, I'd be wanting to talk them out of buying a caravan to live in & suggesting that they consider a flat if they want to downsize. Somewhere where they can live in comfort all year round & in a home that will not be rapidly decreasing in value every year as caravans do & facing some pretty chilly winters in a metal box that is badly insulated.

sleines

Too be honest I don't think they have thought it through fully just keen on the idea as they loved going camping/caravaning - I imagine its very different living in one for 9-11 months than few weeks in the summer. We will need to get them to find out every single possible outcome if they do decide to go ahead.

One option I have thought about is possibly park home? They look quite nice and in some lovely locations (they want to move from the area) and seem a bit more sensible financially etc. I haven't mentioned this yet but I know I'd prefer them to live in a park home than a caravan for the next 20-30 years (plus I don't have good memories of staying in a caravan myself haha).

cattie

Park homes, being mobile homes carry the same threats/problems that I mentioned above. If you do a google search, you'll no doubt find plenty of information about people who have sunk a small fortune into a mobile home only to find that the idyllic retirement that they envisaged has turned out to be anything but.

I've actually seen posts here on mse from residents not too happy about living in a park home any longer because of bad site owners or rising service charges.

I'm not saying all sites are bad, but obviously a lot of research needs to be done before spending a lot of money on a home that will only ever decrease in price instead of rising in price as a bricks & mortar property will.

The other thing to bear in mind is that a lot of mobile home/park sites are out in the sticks somewhere & consideration needs to be given to how a surviving partner might cope living there if one of them dies.