Buying Parents house.

Jessiepig

Yes that is true but there are virtually no private rents available. You have to contact each sheltered housing owner seperately and then be added to their list which are not as long but when a rent comes up they assess everyone on list and see who needs it most.
Until you have to consider it you wouldn't know the mindfield it is to go though.
I want the best possible for my dad

getmore4less

Thrugelmir wrote: »

You would immediately incur capital gains tax on selling the property. If the value didn't drop.

Gifted equity, would have to go up to attract any CGT assesment.

getmore4less

I am trying to do the best I can with both my Dad and my daughter. The house also needs about £20,000 spent on it as it needs central heating,a new kitchen as the current one is falling apart and re-decorating.
This is all quite upsetting for me as its my dad:([/QUOTE]

Is there any compelling reason to keep the place?

Can you raise the money to do the place up?

If you do want to keep it and buy another place for dad and house the daughter there may be better ways to structure depending what other property and mortgages you have.

Take the full picture to a broker.

Moneyhelper

Do not panic!! This is easily achievable and, despite some very rude and downright disgusting comments this is actually becoming more and more common with the current climate of:

1. Grandparents getting older and wanting/needing to downsize to something more managable
2. Grandchildren wanting to move out but not wanting to pay sky high rents nor able to get the funds together for a deposit.
3. Council's unwilling to help anyone who is a homeowner or has a assets they could sell.

To confirm most lenders will be happy to assist with this, however some may ask a letter from your father confirming his intention to move out of the property and not to continue to live there.

If your intention is too rent this out to your daughter with most lenders, this scenario wouldn't apply for a 'Buy to Let' mortgage due to renting to an immediate family member and you would purchase this through a normal mortgage application. This would mean that a lender would be unlikely to include income/rent from your daughter and the application would have be achievable on yours and/or your partners income and outgoings.

As long as it does then all a lender would need would be another letter from your father confirming that he is happy to sell the property to you (called 'gifting equity') for the reduced price and most lenders will use the equity gift as the deposit, therefore not needing a deposit from yourselves. You can also raise the extra funds needed for any home improvements, provided the usual affordability criteria are met.

This issues that may arise from this would be;

1. As with previous posts you may be liable to capital gains tax on this when it is sold and also may be liable to a higher stamp duty charge due to changes coming in place on 01/04/16.
2. Even after selling the property some councils still are unwilling to help even though the house is now sold.
3. As a side step to this, if you do have another children some may want/expect you to do the same for them when the time is right, so as a future thought if you do decide to proceed with this maybe put some stipulations in place so others don't get left out.

Alternatively, and if you are fortunate enough to have some land available on your own property, maybe sell up and build a 'granny annex' at the back of your home, which again others are doing as some find it cheaper to do this and would also mean as the money would stay in your fathers back pocket to spend as he wishes.

Good luck with what you decide.

p00hsticks

Moneyhelper wrote: »

This issues that may arise from this would be;

1. As with previous posts you may be liable to capital gains tax on this when it is sold and also may be liable to a higher stamp duty charge due to changes coming in place on 01/04/16.
2. Even after selling the property some councils still are unwilling to help even though the house is now sold.
3. As a side step to this, if you do have another children some may want/expect you to do the same for them when the time is right, so as a future thought if you do decide to proceed with this maybe put some stipulations in place so others don't get left out.

4. As other posted have pointed out, if the grandfather is selling below market value and is (or becomes) reliant on means tested benefits or needs to go into council funded care, then this could be viewed as a deliberate 'deprivation of assets' and he may find that he is treated as if he still had the amount that he had effectively gifted.

Jessiepig

p00hsticks wrote: »

4. As other posted have pointed out, if the grandfather is selling below market value and is (or becomes) reliant on means tested benefits or needs to go into council funded care, then this could be viewed as a deliberate 'deprivation of assets' and he may find that he is treated as if he still had the amount that he had effectively gifted.

No that wouldn't be the case. He would buy a sheltered property for the price of the mortgage that I would need to buy his. He has a good amount of savings so would never qualify for council funded or means tested benefits.
If and when it became necessary to reconsider things in the future we would sort it out so that my dad has the best care we can afford.

Jessiepig

Moneyhelper wrote: »

Do not panic!! This is easily achievable and, despite some very rude and downright disgusting comments this is actually becoming more and more common with the current climate of:

1. Grandparents getting older and wanting/needing to downsize to something more managable
2. Grandchildren wanting to move out but not wanting to pay sky high rents nor able to get the funds together for a deposit.
3. Council's unwilling to help anyone who is a homeowner or has a assets they could sell.

To confirm most lenders will be happy to assist with this, however some may ask a letter from your father confirming his intention to move out of the property and not to continue to live there.

If your intention is too rent this out to your daughter with most lenders, this scenario wouldn't apply for a 'Buy to Let' mortgage due to renting to an immediate family member and you would purchase this through a normal mortgage application. This would mean that a lender would be unlikely to include income/rent from your daughter and the application would have be achievable on yours and/or your partners income and outgoings.

As long as it does then all a lender would need would be another letter from your father confirming that he is happy to sell the property to you (called 'gifting equity') for the reduced price and most lenders will use the equity gift as the deposit, therefore not needing a deposit from yourselves. You can also raise the extra funds needed for any home improvements, provided the usual affordability criteria are met.

This issues that may arise from this would be;

1. As with previous posts you may be liable to capital gains tax on this when it is sold and also may be liable to a higher stamp duty charge due to changes coming in place on 01/04/16.
2. Even after selling the property some councils still are unwilling to help even though the house is now sold.
3. As a side step to this, if you do have another children some may want/expect you to do the same for them when the time is right, so as a future thought if you do decide to proceed with this maybe put some stipulations in place so others don't get left out.

Alternatively, and if you are fortunate enough to have some land available on your own property, maybe sell up and build a 'granny annex' at the back of your home, which again others are doing as some find it cheaper to do this and would also mean as the money would stay in your fathers back pocket to spend as he wishes.

Good luck with what you decide.

Moneyhelper, do you have experience of this situation as you have given me hope that it's all possible and I thank you for it.
Just need to speak to the right people now

Pixie5740

The best care you could afford would be better if he wasn't planning on giving away £70k. If your father fully understands the implications of giving away £70k then wouldn't it be easier for him to gift your daughter the £70k of equity so that she can then get a mortgage of £180k. That way CGT and income tax on the rent will never be an issue for you.

Jessiepig

Pixie5740 wrote: »

The best care you could afford would be better if he wasn't planning on giving away £70k. If your father fully understands the implications of giving away £70k then wouldn't it be easier for him to gift your daughter the £70k of equity so that she can then get a mortgage of £180k. That way CGT and income tax on the rent will never be an issue for you.

The best care is getting him out of a house where he is vunerable, having him in an environment where he has company around and is safer so I don't worry so much. He does understand what's hopefully going to happen and is fully happy about this. I constantly ask him.

Do you know how hard it is for young people to get Mortgages???.
Virtually impossible unless they have a huge deposit and her partner is also self employed.
I thought this all would be much easier but until you start looking for elderly care you will never understand.
I would sell the house in the future to pay for the best care home if that became necessary.
Don't judge if you don't know please

MacMickster

Your dad also needs to bear in mind that many retirement flats and sheltered housing come with eye-watering service charges, ground rents etc, so he may need to have a significant amount of savings to help to cover these charges in future years.

I take it that if his current home is in need of expensive repairs which have not been carried out that he doesn't have huge savings or excess pension income currently.