Tenants in common/joint ownership

saajan_12

As you can see there's a few ways you could go - I thought I'd outline some of the 'pros and cons' I can see for each.

1) Father lends you money and you become his landlord
- PROs: You benefit fully from price increases/decreases; rental income if father pays rent
- CONs: Landlord obligations of deposits, PI, repairs, tax on rental income; may need to liquidate if father needs to extract his money for e.g. care; no income until you sell if father doesn't pay rent

2) Tenants in Common (i.e. own shares)
- PROs: Each benefit from price increases/decreases fairly
- CONs: may need to liquidate if father needs to extract his money for e.g. care; no income until you sell if father doesn't pay rent

3) Lend money to your father to buy outright
- PROs: no higher SLDT for second home; no Landlord obligations/formalities; you get your money back if he has to sell/go into care
- CONs: you don't benefit from any property price increase (or decrease). Your father could pay you interest to offset this but will he have the cash for that?

To me, 1) makes the least sense as you have the same pitfalls as 2) plus the landlord complications. I'd do 3) with the caveat that the loan is for a percentage of the house value, so its a proper investment with exposure to house value change, while if the value goes down your father can't go into negative equity.

staro30

Thank you all

staro30

Thanks Saajan_12 for the options and recommendation. Happy to lend my father some money and get him to agree to pay it back with interest, if the house value increases, but what is the best option for this agreement as I am concerned that, if according to the LR he owns the house outright, then if he has to go into care then I may have no remit to get my investment back? So do I:
1. Write up something informal between ourselves. No legal basis though?
2. Apply for 'first charge' on the property. Which LR form is this?
3. Use a solicitor to write up a 'trust deed'. Would prefer not to do this due to solicitor costs on an investment likely to be about 20k.


Thanks
Staro

xylophone

See post 11 above - I repeat, in your position I would not dispense with the services of a solicitor.

booksurr

saajan_12 wrote: »

1) Father lends you money and you become his landlord
- PROs: You benefit fully from price increases/decreases; rental income if father pays rent
- CONs: Landlord obligations of deposits, PI, repairs, tax on rental income; may need to liquidate if father needs to extract his money for e.g. care; no income until you sell if father doesn't pay rent

if father "lends" son money for a property the father then occupies himself, the father would need to pay son full market rent otherwise the father would be liable for income tax on the benefit in kind he gets under the Pre Owned Asset tax rule

staro30 wrote: »

but what is the best option for this agreement as I am concerned that, if according to the LR he owns the house outright, then if he has to go into care then I may have no remit to get my investment back?

you have already been given the answer to that (twice!)