Buying family members house before repossession. Help!

pleasedelete

Take a £10k loan. Pay off their arrears. Put the house on the market. They sell- you get £10k back with the actual interest. They get over £100k.

seems much fairer to me!

Morglin

If they live in London or most places in the South, £100k will go nowhere near buying another property, social housing is incredibly hard to get, and perhaps the OP doesn't want his parents in an insecure private let.

Lin

Dean_j_2

Morglin wrote: »

If they live in London or most places in the South, £100k will go nowhere near buying another property, social housing is incredibly hard to get, and perhaps the OP doesn't want his parents in an insecure private let.

Lin

Exactly that Lin. They live the wrong side of a road for a chigwell postcode so 100k won't go anywhere. That pretty much goes for the whole south east, or at least anywhere within reasonable distance to my little 4 person unit, two being their grand kids.

Plus, that home is my inheritance, which in turn will be my kids inheritance, which in turn.....etc etc. that's what parents strive to do I thought. Leave a house to their children. That's my plan anyway

Sarahspangles

Would you consider selling both places and buying a larger home together?

G_M

Dean_j wrote: »

I'd be looking to buy it for whatever is owed on it. Not looking for any financial gain out of this at all.

These two sentences completely contradiction each other.

You have said £110,000 is owed. So it will cost you £110,000.

The mortgage lender will receive £110,000.
Your parets will receive nothing.

And you will receive a property worth, errr..... £250,000.

You are £140,000 in profit.

Your parents are broke, and totally dependant on you as their new landlord. Seems totally unfair.

Dean_j_2

Sounds unfair to you, but to me it makes sense. I very much doubt they'd ever be able to move their mortgage to a more favourable rate, and so would be sitting in the same situation for years to come.

You can't seem to grasp the fact that there will be no financial gain in my favour until they both pass away, or one passes and the other ends up moving in with me and the missus. I'm hoping to be fast approaching 60 by the time any of this happens. Ultimately, it'll be my kids, and their kids who will benefit from this.

We'll work out what is the best route to take hopefully by Monday. I hope this all gets resolved without no such drastic measures. Me taking out a loan to cover the arrears is an option, but they will still be in this situation of struggling to pay their mortgage. We will look at how best to reduce their payments in the long run. At the moment, their mortgage is interest only to ease the pressure, and it's still pretty tough for them.

If they cannot keep the house, I'll see what I can do to help. Loan, mortgage, or even pay as much as I can of their current mortgage

MarkBargain

G_M wrote: »

You are £140,000 in profit.

What is the tax situation with that?

G_M

Significant once the OP sells and CGT kicks in.

Suppose the property sells in a few years for, say, 300,000, the capital gain will be

300,000 less 110,000 = £190,000

Currently the CGT allowance is 10,900. lets say at time of sale it has increased to 15,000

190K les 15K = 175,000, taxed at (currently) 18%

so tax payable is £31,500

Sarahspangles

You're going to hit several problems, I'm sorry to say (because I can see you are trying to help):

When you buy the property from them, you will incur Stamp Duty on the assessed value, not on what you've paid. So 1% of £249k - because the rate jumps at £250k! - making £2,500. The conveyancing solicitor can't ignore this because you'll have to have a valuation to borrow against the house, and there has to be a formal declaration to HMRC.

If you paid them the full value and they do, or could in future get get any benefits like pension credit, they will no longer qualify because they will be *deemed* to have a lot of capital attracting interest they could live on. And they won't qualify for any kind of housing benefit at all if they are renting from a family member.

They call this sort of sale at undervalue/giving away assets "deprivation of assets." There are questions about sales of houses etc on forms to identify where this has happened.

Similarly if one or both need care, assuming you have somehow managed to get away with undervaluing the house on transfer, the Council can proceed as if the transfer never happened and refuse to fund care.

You would also end up owning a home you don't live in, and be liable for CGT when you sell it.

Is it really not possible for them to downsize?

Dean_j_2

That is certainly another option. I'm not sure what they'd get with the money left over from the sale (i e found out it's nearer 140 still owed, so roughly 95k left going by the current market at 245k)

Wouldn't get anything for that around here. Even 150 wouldn't be enough.

We will obviously look at all options available.

Cheers for all your replies so far guys