Helping a parent...

Pay_Da_Gals

Hi, my mum has just turned 60, she owns two flats both worth about £170k, one she lives in and one she rents out, but this is not enough money to live on and has no real savings to speak of. She has just lost her job part time job and is struggling to find a new one. She is perfectly healthy, but damaged her knee in 2012 and now has difficulty walking and standing for long periods of time. My mum is desperately stressed and unhappy about the situation she is in.
I would like to buy the flat my mum lives in – this would give my mum the additional money she needs to live without working so she can ‘retire’ making her happy, and I will have an investment in the flat she owns.
Also I do not have the full amount of cash to buy the flat outright – there would be a large deposit now and then monthly payments to my mum. I do not want to get a mortgage as I would rather the full amount of money goes to my mum and not the bank.
Basically I want to give my mum money each month as she needs it (I already give her money each month to support her income) and in return I’d own her flat, but I am not sure about doing Gift with Reservation as my mum needs to live in the flat and cannot pay me rent as she doesn’t have any money. I would own the flat so there would be no issues with IHT. And then if my mum needs care in later years she can sell her second flat to support the cost, I am not trying to swindle the local authorities, just support my mum.
Any advice gratefully received..
Many thanks

Savvy_Sue

I'd suggest that you both need independent advice on this one: what's 'best' for you may not be 'best' for your mum, and you definitely need a proper legal agreement drawn up so that it's clear what the situation is.

For example, if you are in a situation where you need to claim benefits, owning your mum's flat will cause a problem. If you end up in the divorce courts, that flat is part of your assets. And so on.

Farway

As Savvy Sue says, you really are walking into a legal minefield, with the best of intentions

Unfortunately cunning folk before you have really made life difficult for others

You really do need an expert here, especially as tax rules and pension rules change almost monthly it seems

Ilona

Why doesn't she just sell the flat she isn't living in?
Ilona

PennyForThem_2

If she is has difficulty moving because of knee injury is she entitled to any health related benefits?

If the rent from the second flat isn't that much she could explore whether the return on the capital would provide more.

Independent Financial Adviser seems to be way to go - I think most offer a free first consultation but after that they do cost.

zygurat789

PennyForThem wrote: »

If she is has difficulty moving because of knee injury is she entitled to any health related benefits?

If the rent from the second flat isn't that much she could explore whether the return on the capital would provide more.

Independent Financial Adviser seems to be way to go - I think most offer a free first consultation but after that they do cost.

She should be getting c£6k in rent but only £5250 in interest. There is always the expectation iof a capital gain with a flat which is not there with a savings account.

p00hsticks

Pay_Da_Gals wrote: »

I would like to buy the flat my mum lives in

Why the one she is living in rather than the one she rents out ?

I susect you'd find it far easier to get a BTL mortgage on a proerty rented by a stranger than one lived in by a relative - and if for any reason you did get in debt, repossesed etc and needed to sell the property it wouldn't put your mother on the streets

Mojisola

p00hsticks wrote: »

Why the one she is living in rather than the one she rents out ?

Because Mum needs/wants the capital plus the income from the rental property for living expenses.

It would be worth getting a full benefit check and pension forecast done and then get her to post a SOA on the debt-free board to see if she could reduce her spending.

Savvy_Sue

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