Best/easiest way to buy someone a house

half100

Hi everyone. I have always followed the MSE news and forums for good advice, but now I have a question to ask.

I'm approaching my 60s, and can easily retire now due to having a very fortunate life in many ways.

I'm a homeowner with no debts or mortgages. My parents are still alive, albeit in their 90s, and obviously at some point there'll be inheritance involved. Point I'm making is, I'm very well secured, with a combined £2mil pension/savings pot, and I still have a good income.

I'm very good friends with a young married couple in their late 20s, who have helped me immensely in life, but just like a lot of people today, they're economically challenged and most likely will never be able to own a home, or live a nice life if things continue like this.

I want to buy them a house, which they kept refusing adamantly, but I managed to crack them. They don't want to be just "given" a house, even though I'm more than happy to do so, so I've come up with something else.

They're quite crafty, smart and frugal people. I would buy a house somewhere in the £120k - £160k range for them to live in. I will not charge them any rent, and they'll be liable for all the bills. It would be a house that needs some minor work, which they'll "fix up" at their own pace.

They'll live there for 5, 6, 10 years, as long as it takes until they can get something of their own, and in return I'll still have another property which has been well taken care of and improved.

The idea is clear and "simple" in my head, but I don't know what's the best way forward with some technicalities:

1.) I would be the owner of the house, but I would want them to be owners as well, because they'll get better rates of car insurance, home insurance and so on. I would want them be legally classed as "homeowners" for all intent and purposes.
2.) Can all of us be homeowners, but with me being the only person who can actually sell the house? Not that I expect trouble, as I trust them 100%, but they're actually imposing this on me as a stipulation.
3.) Once they get their own home, they would just make me the sole homeowner. If something happens to them, the house becomes fully mine. If something happens to me, the house becomes fully theirs. How to do this legally?


I may have forgotten some other questions I had, but this should be the gist of it.

Thank you all, and have a nice day!

ProDave

Why not buy it. Then let it to them on a rent to buy scheme? i.e anything they pay you in "rent" is actually buying the house in installments.

It sounds like you don't need or expect to profit from this, so you could charge them a below market "rent" for the property and gift the house to them in your will, so should you die before they have paid for the house, they get it anyway.

If you are paying £150K for the house, charge them £500 per month, then they will own it in 25 years, or when you die if that happens first.

half100

Hi,

Thank you for your reply.

I don't need the money and don't want to profit from them, only eventually from the house should they no longer need it.

I do not wish to charge them any rent, as I want them to be able to enjoy a carefree life and do as they please with their money, just as I did when I was younger.

Ideally I'd just give them the money and tell them to buy whatever they like, but they are refusing it. I suppose they fear I will become senile in my retirement, forget it was a gift and cause them problems, hahaha.

They also insist on a solution in which I can have the house hassle-free should something happen to them, whereas it doesn't bother me even if I should somehow lose it.

ProDave

Well let it to them for a peppercorn rent then? and still gift it to them in your will.

Mojisola

half100 wrote: »

I'm very well secured, with a combined £2mil pension/savings pot, and I still have a good income.

I'm very good friends with a young married couple in their late 20s, who have helped me immensely in life

I want to buy them a house, which they kept refusing adamantly, but I managed to crack them.

They don't want to be just "given" a house, even though I'm more than happy to do so

Unless you have some clever inheritance tax planning in place, your estate could be in for a big payout.

Could you 'sell' the young couple the idea of giving them the money to buy a house by showing that, if you don't give away some of your assets, the money will go on tax and you'd prefer that they benefited from your surplus assets.

xylophone

Lend them the money to buy the house and take a first charge on the property as security for the debt. In effect you become the mortgagee.

Your solicitor, ( make sure that you consult one) can draw up the loan documentation - the repayments can be interest free and at a level that suits you - your will can specify that any amount outstanding at death is to be "forgiven" (amounts to a legacy to the couple in question).

If they choose to sell before you die, any outstanding loan can be secured against the new property in a similar way.

half100

ProDave wrote: »

Well let it to them for a peppercorn rent then? and still gift it to them in your will.

I may be misunderstanding, so I do apologise, but if they're renting from me then they can't be homeowners? As they'll pay for all the insurance and other costs, being homeowners would give them discounts (supposedly at least). Additionally, I don't want to deal with "landlording" and paperwork if they end up having to need my permission for whatever they decide to do.

Mojisola wrote: »

Unless you have some clever inheritance tax planning in place, your estate could be in for a big payout.

Could you 'sell' the young couple the idea of giving them the money to buy a house by showing that, if you don't give away some of your assets, the money will go on tax and you'd prefer that they benefited from your surplus assets.

My assets are with a wealth management company who have been serving me for a decade already with favourable conditions, so I'm trusting them to have made everything in my best interest.

However, I do like your idea. White lie never hurt anyone, and even if it wouldn't be a lie then I would indeed rather have them benefit from it. I haven't thought of that, and it's probably the best way forward. Thank you so much!

tlc678910

RIf you buy a house in the normal way and then let them live in it for free any extra costs to them in terms of insurance etc for not being homeowners (,as you mentioned) will be a pittance compared to paying rent.

These people are obviously important to you and you value their friendship very much but that only makes it more important to think through the potential consequences so you don 't strain the friendship. "No good deed goes unpunished" For example now would repairs work? Would you get sick of it if you keep being asked to make expensive repairs or improvements? Your tenants may not want to carry out expensive repairs if it is not their property even if they lived rent free. What about it they want to move house or area?

I think you also need to be wary of accidentally doing something that makes their lives worse in some way for example when you say "don't pay rent - enjoy your youth" if they don't make provision for their future they could find themselves unable to move house/ relocate, get their own mortgage e.g. no deposit, no savings. Don't think that just because you save them e.g. £600 a month they will be able to save it! That could mean more insecurity for them in the future.

I think the suggestion of a private mortgage is a very good one if it's all set up legally. They pay their mortgage payments to you with no interest and this will save them a whole load of money but they won't be reliant on your charity, can choose the home they want within your price constraints, maintain and improve it themselves and move or sell up if they choose to in the normal way by paying you the remainder of what they owe. The couple don't sound like they would be happy being given "charity" by you and in the private mortgage arrangement they keep their dignity and their future is more secure as they have legal rights. They can still have great times striving for their future rather than being given housing for free perhaps more so.

Tlc
Edit: because of your previous offers to give them a house they may think the house you ask them to fix up (in your original post) may then be gifted to them afterwards and be disappointed if it isn't but feel guilty of it is.

xylophone

Additionally, I don't want to deal with "landlording" and paperwork if they end up having to need my permission for whatever they decide to do.

You would not consider a loan as in my post above?

half100

xylophone wrote: »

You would not consider a loan as in my post above?

I do apologise, but as I was writing a reply to another member, you have posted in between, so I haven't seen it until today. I will ask my solicitor about such a loan, but since the other user recommended just making an excuse of "having to give money away for tax reasons", I will first try that as it seems like the easiest way for me. Failing that, that kind of a loan sounds good as well.

Thank you for your input, I really appreciate it!