Help advice please before family fall apart

vicster933

Hi

I am really hoping that some might have an answer or suggestion. My parents currently own there house but there is still 56k mortgage and the lender wants there money.

house is worth 220 and there is a 12k charge on the house.

they were going to move into my nan's retirement flat and sell the house it was about to go through. My mum would need to pay my Uncle a 1/3 for the flat as this was in my nans will. my mum was going to give me 10k to help us with our deposit and they would have the equity.

My tells them to take house off the market and he said he is about to complete on his flat his he doesn't live in and raise 80k so he would pay off mortgage and charge etc then he would rent out house for 1k a month parents would get half the rent the rest he would claw back from what he put down.

all sounded like a good plan my parents get the long term income and he gets back his equity. except then then goes back to his girlfriend (they are getting married next year) she wants him to keep the 80k and she will have a 80k from one of her house sells next year and they use as it as a deposit.

so the plan changes, i was told this would be best as it keeps the house in the family.

my brother sells the flat and gets his buy to let mortgage transferred to family home he buys it off my parents for 200k using 75 deposit with a buy to let mortgage that is offset from the rent and my parents keep the rest of the rent. he then gets back his 75k.

The house whole is solely in his name he doesn't want to a repayment mortgage with me and I cannot go on a buy to let as I don't own a home (we are just about to try and buy).

So I am told we will be equal as I will be left the flat currently worth 60k and he owns the house equity would be currently 75k.

My argument is in 20 years time the house will be worth 300k and the value of the flat cannot move that much further. once the house is sold to him he can do whatever he likes in the event of my parents death or before. He can supplement his pension (rent is currently valued at 1k a month this house will never be hard to let, i could have a retirement flat which is hard to let compared to a 3 bed house.

Now i am wondering is there anyway we can now jointly own the house and he has the mortgage in his name (he wont have a montage with me).

Any suggestions I would be grateful.

thank you Victoria

Keep_pedalling

You might be better off posting this in the house buying,selling and renting forum.

Pricivius

Have I got this right?:

House A: owned by M and D worth £220k, mortgage of £56k and charge of £12k

Flat B: owned by nan (or is she deceased? in which case owned two thirds by M and one third by U?)

(Ignoring B's plan 1 as that is now not happening)

Plan 2: B buys House A from M and D for £200k with a btl mortgage. M and D pay U for his one third share of Flat B and live in Flat B.

If that is correct:

1. Why are M and D getting any of the rent from renting out House A? Is this because B wants them to pay back £75k out of the money they receive for the house? This seems a very complicated way of doing things and raises issues of income tax on the rent and the liabilities of a landlord.

2. Why would M and D sell House A at a lower price? This raises potential issues for inheritance tax and deprivation of assets.

I *think* the question you are asking is whether you are hard done by if M and D give B £20k plus £75k less the balance of the rent, and you stand to inherit the retirement flat. M and D have not given B the house - he has bought it from them at an undervalue of £25k and they have given him £75k which he is repaying with the balance of the rent. I would suggest that is an impossibly difficult question to answer and the arrangement is needlessly complicated.

Check on the housing forum as suggested above...!

TBagpuss

Is the brother's plan still a plan or has anything actually been done?

It all sounds horribly complicated.

Do your mum and dad want to stay in their house, or do they want to downsize?

If they want to stay, then your brother buying the house off them and renting it back is a way forward for them.
They would need advice - if he is going to buy it for £200K and it is worth £220K then the simplest way to do it would be for them to have a charge over the property for 9% of the value, payable on the house being sold or upon them moving out.

That 9% would be part of their estate when they die 9assuming they haven't spent it by then!) and they can make wills leaving the estate eqaully between you and your brother.

If they chose to use some of the money your brother pays them for the house, to buy your uncle's share of the flat then the flat, too, will be part of their estate.

They would need to pay your brother rent for the house (unless he wanted to let them live rent free) but they'll have the rent from the flat plus the capital for the house sale to fund that.

Alternatively, they can sell the house to your brother at an under value in return for him, letting them live their rent free in which case they need advice to ensure they are protected.

If they want to downsize then they should simply sell the house - to your brtoher if he can afford the open market price, or to a third party, clear their debt and buy somewhere smaller. If they want to live in your nan's flat then they will need to buy out your uncle's share.

Either way, your parents are free to leave what they want to whomever they want.

It may well be that the house is a better investment than the flat and that the value of each may be different by the time you and your brother inherit - don't forget rhat any increse in value due to your brother paying down his mortgage is down to him, not your parents.

If your parents wished, they could stuipulate that in return for them selling the house to your brother at an undervalue, he must grant you a charge over the proprety for a % of its value, - if you are saying that he is getting £75K and you are 'getting' £60K then the charge would need to be for £7,500 or about 3%.

The other issue they may wish to bear in mind is that if they need care, the first claim would be agaisnt assets they held, so you could end up with asituation where the flat was needed to fund care.

I would sugges to your mum and dad that they go and get advice from an experienced solicitor, preferably one who is a member of STEP and Solicitors for the Elderly, who can advice them about how to achieve whatever outcomes *they* want, and about the advantages and putfalls of different options.

G6JNS

vicster933 wrote: »

Hi

I am really hoping that some might have an answer or suggestion. My parents currently own there house but there is still 56k mortgage and the lender wants there money.

house is worth 220 and there is a 12k charge on the house.

they were going to move into my nan's retirement flat and sell the house it was about to go through. My mum would need to pay my Uncle a 1/3 for the flat as this was in my nans will. my mum was going to give me 10k to help us with our deposit and they would have the equity.

My tells them to take house off the market and he said he is about to complete on his flat his he doesn't live in and raise 80k so he would pay off mortgage and charge etc then he would rent out house for 1k a month parents would get half the rent the rest he would claw back from what he put down.

all sounded like a good plan my parents get the long term income and he gets back his equity. except then then goes back to his girlfriend (they are getting married next year) she wants him to keep the 80k and she will have a 80k from one of her house sells next year and they use as it as a deposit.

so the plan changes, i was told this would be best as it keeps the house in the family.

my brother sells the flat and gets his buy to let mortgage transferred to family home he buys it off my parents for 200k using 75 deposit with a buy to let mortgage that is offset from the rent and my parents keep the rest of the rent. he then gets back his 75k.

The house whole is solely in his name he doesn't want to a repayment mortgage with me and I cannot go on a buy to let as I don't own a home (we are just about to try and buy).

So I am told we will be equal as I will be left the flat currently worth 60k and he owns the house equity would be currently 75k.

My argument is in 20 years time the house will be worth 300k and the value of the flat cannot move that much further. once the house is sold to him he can do whatever he likes in the event of my parents death or before. He can supplement his pension (rent is currently valued at 1k a month this house will never be hard to let, i could have a retirement flat which is hard to let compared to a 3 bed house.

Now i am wondering is there anyway we can now jointly own the house and he has the mortgage in his name (he wont have a montage with me).

Any suggestions I would be grateful.

thank you Victoria

Get some urgent paid for professional advice for all involved members. Without it you will end up will all sorts of problems. However well meaning the advice here is none of us know enough details.

dancingfairy

I am unsure what your parents are trying to achieve. If it's to deal with the debt then my first port of call would be a debt charity such as national debt line, step change or your local cab. If your parents actually want to sell then they need to decide where they want to live/ what would suit them best. Your parents also need to consider whether they want to be landlords and are happy to deal with all the rules and regulations that involves. Lots to think about but start with what you are trying to achieve.
Best wishes
Df