Uncles house available very cheap confused

Benn07

Hi me and my fianc!e have been offered her uncles house for just £20k but market value is £65k. The house needs quite a lot of work ie damp proof re skim and a few other bits. I'm just wondering would we be able to take a mortgage out for £40k and use the £20k spare to renovate.

Bluebirdman_of_Alcathays

How much deposit do you have?

foxy-stoat

If your uncle sold the house to you for £40,000 then gifted the £20,000 back to you it would be ok....as long as the house valuation was £40,000 then there shouldnt be a problem.

You would not be able to take a mortgage for £40,000 on a purchase price of £20,000 for you to keep half of it.

AdrianC

foxy-stoat wrote: »

If your uncle sold the house to you for £40,000 then gifted the £20,000 back to you it would be ok....as long as the house valuation was £40,000 then there shouldnt be a problem.

There would be the usual implications over the £45k gift, though, assuming the valuation really was the £65k figure.

You would not be able to take a mortgage for £40,000 on a purchase price of £20,000 for you to keep half of it.

Specialist renovation mortgages do exist, but I'd be surprised if they'd go down to values that low.

Benn07

Any suggestions as to how we could work around it or would we have to buy for £65k we currently have the deposit for the full amount

AdrianC

You can buy for however much you and he agree and you can raise the money for. A tenner or a million.

If that's below market value, there are implications for him.
There may be implications for how you raise the money.

zagubov

AdrianC wrote: »

You can buy for however much you and he agree and you can raise the money for. A tenner or a million.

If that's below market value, there are implications for him.
There may be implications for how you raise the money.

How is that? I remember yonks ago Glasgow council sold off a stack of difficult-to-let (in fact almost derelict) council homes for a ridiculously low price (maybe a thousand pounds). I think they called the policy Flatsteading, the houses were in a rundown part of Blackhill, I think it was the early? 70s..

The buyers had to queue for the sales and had to be first-time buyers and they were expected to put a load of money into renovating and decorating the houses themselves. I thought it seemed like a smart idea as it would re-vamp the area, get existing houses occupied, and get housing security for some young families.

How's this different?

AdrianC

zagubov wrote: »

How is that? I remember yonks ago Glasgow council sold off a stack of difficult-to-let (in fact almost derelict) council homes for a ridiculously low price (maybe a thousand pounds). I think they called the policy Flatsteading, the houses were in a rundown part of Blackhill, I think it was the early? 70s..

The buyers had to queue for the sales and had to be first-time buyers and they were expected to put a load of money into renovating and decorating the houses themselves. I thought it seemed like a smart idea as it would re-vamp the area, get existing houses occupied, and get housing security for some young families.

How's this different?

Liverpool have done similar for a quid.
http://www.liverpoolecho.co.uk/news/liverpool-news/take-look-inside-one-homes-10223264
https://goo.gl/maps/TuyVf274SAG2 shows the state of some of the properties they're "refurbishing", under this scheme and others.

The main difference is because "next-to-zero" was the market value.

The other difference is because there's not the same implications for a corporate entity - no risk of IHT if the uncle dies in the next few years, no risk of deprivation of assets claims if the uncle needs residential care funding by the LA.