Parents want to release equity in house- advice please

margaretclare

Frank, thank you for your kind comments. It's my nature to do thorough research before taking any big step, although in a former existence I didn't do so as thoroughly as I should, consequently ended up making expensive mistakes. One was a crumbling Pennine cottage - no matter how my first husband wanted it, I should have said a firm 'no'. That place swallowed money like there's no tomorrow.

And car loans....redbabe, don't talk to me about having a 'well-funded retirement'. I could have had, but I've learned from my mistakes.

I've heard that Housing Benefit is not payable if you rent a house from relatives, whereas it is if you rent from any other landlord, council or housing association. Also if rent is paid, the people it is paid to must declare it as income on their tax return, otherwise HMRC will get very upset. This is obviously difficult if there are more than one to whom the rent is paid.

If parents are paying rent whereas now they own their home, I can't see how they would be any better off - in fact they wouldn't, they'd have the rent to find, plus council tax. At present I would imagine they're eligible for Council Tax Benefit.

Frank, you wrote: "Bear in mind to make anything to do with others properly legal. Unexpected things can and do happen, you or your siblings may get divorced, go bankrupt, get into unmanageable debt, be made redundant etc. etc. If that happens the others may be left with problems outside of their control such as someone not paying their share."

This evoked terrible memories of the events of 1990, when we sold the Pennine cottage to family members at below its real value, at a price they could afford.....Suffice to say, the reverberations have continued through three generations, caused an irrevocable split between 2 sisters, almost caused a fist-fight at younger sister's funeral, and I am only now in contact with 3 grandchildren after years of estrangement.

Be warned!

HTH

Margaret