Strange house buying/selling situation - advice please

EMIsc

Hi,

My in-laws currently have their house on the market with a view to moving locally.

They have viewed a house they love but the deal the seller is trying to strike with them goes something like this (I'll try and keep it as simple as possible!)

In-laws bungalow on the market for £230k (probably worth around (£210k) they don't have any mortgage and have enough cash to buy next house outright

House they want on the market for £275k and is currently landlord owned with an elderly tenant.

Tenant can no longer afford rent on this house so landlord wants to sell this property and buy somewhere the tenant can live for less rent.

Seller/landlord has offered to lower the price of new house to £249999 (to avoid upper stamp duty) if they will sell them theirs for £175k.

Now my in-laws seem quite keen on this arrangement and everything will be handled through solicitors and estate agents, so I think it's all above board legally but there's just something about it all that makes me really uncomfortable. I've told them that they should see a financial advisor about it all, the problem is they think they know what they're doing but I'm not sure they do!

Any advice would be much appreciated.

Thanks

warehouse

Hang on:

Current difference between house prices is £45K

Other person wants prices that are different by £75K

Wouldn't work for me.

DRP

don't see much wrong with it* if your parents can get their price up a bit - presumably they will be making a counter-offer?

*assuming legal reps are happy

mrginge

Its possibly the worst deal ever and is a borderline con.

Seller is unlikely to get 275k for their house. Best offer will always be 250k
So he has effectively given away nothing from his best expectation, where as your parents have given away 35k from their best expectation.

Ivana_Tinkle

Agree with warehouse and would add: with an asking price of £275k, he's going to get offers of £250k anyway, so (arguably) he's not giving your parents any extra discount at all.

Edited to add: cross-posted! Great minds think alike!

SternMusik

In principle there is nothing wrong with this arrangement. I know people who have done it - effectively swapping house with another person.

However your parents-in-law need to make sure that they are not thousands of pounds worse off than they would be if they were in a traditional chain. As the previous poster said, at the moment it doesn't look like a good deal for them. It is very doubtful that the vendor would get £275k for their house.

Maybe an independent valuation (by a surveyor, not estate agent) of both properties could help.

Annie1960

And don't forget HMRC. If they think that something dodgy has gone on to keep the value under £250k, they will pursue your parents.

This seems a very one-sided deal to me, with your parents getting the rough end of it.

CH27

It all seems a bit fishy. I think he's trying to diddle your parents.

AndyT678

Annie1960 wrote: »

And don't forget HMRC. If they think that something dodgy has gone on to keep the value under £250k, they will pursue your parents.

Why not buy the house for £40,000 and sell the bungalow for £1?

If it looks like tax fraud and it smells like tax fraud then it's probably...

kingstreet

As this is a let property, the vendor is trying to reduce his CGT liability as well by selling below market value.

bouicca21

And what proof is there that the tenants will comply?