right to buy & gifting

tjp01357

i think it's more likely that the mother in law will leave her property to her grand children (my children) so i have nothing to gain personally from doing this ! i was trying to ask generic questions so as to have a better understanding. I don't want to buy the house just for her but her children, and believe me when i say it seems the only way to help other than big big problems. so will transferring the property after 10 years (to grand kids) or by will. Does this effect me or my children in future!!??

Keep_pedalling

tjp01357 wrote: »

i think it's more likely that the mother in law will leave her property to her grand children (my children) so i have nothing to gain personally from doing this ! i was trying to ask generic questions so as to have a better understanding. I don't want to buy the house just for her but her children, and believe me when i say it seems the only way to help other than big big problems. so will transferring the property after 10 years (to grand kids) or by will. Does this effect me or my children in future!!??

What do you mean by the only way to help? This scheme does not help her in any way just puts her and you at greater financial risk, as per the previous posts.

This is a bad idea, just forget it.

da_rule

tjp01357 wrote: »

i think it's more likely that the mother in law will leave her property to her grand children (my children) so i have nothing to gain personally from doing this ! i was trying to ask generic questions so as to have a better understanding. I don't want to buy the house just for her but her children, and believe me when i say it seems the only way to help other than big big problems. so will transferring the property after 10 years (to grand kids) or by will. Does this effect me or my children in future!!??

The answer depends on whether she intends to transfer for it for free or sell it at market value to the grandchildren.

If it passes under a will then it will be charged to inheritance tax and there may be tax to pay depending on the value of the rest of her estate.

For 7 years the value of your gift to get will be charged to your inheritance tax should you die in that time, which may mean you have to pay inheritance tax (depending on the value of the rest of your estate).

If your MIL gives the property (for free) to grandchildren you will have potential deprivation of assets. If she continues to live there for free you'll also have a gift with reservation of benefit meaning that the value of the property will still be counted towards her inheritance tax threshold.

And again, if you're planning this now then the transfer will also fall under the deferred resale agreement provisions of the Housing Act.

Cakeguts

tjp01357 wrote: »

i think it's more likely that the mother in law will leave her property to her grand children (my children) so i have nothing to gain personally from doing this ! i was trying to ask generic questions so as to have a better understanding. I don't want to buy the house just for her but her children, and believe me when i say it seems the only way to help other than big big problems. so will transferring the property after 10 years (to grand kids) or by will. Does this effect me or my children in future!!??

It doesn't help anybody it just makes problems. It makes problems for your mother in law if no one pays the mortgage and the property gets repossessed it makes problems if your mother in law doesn't own the house and no one else pays for repairs. It makes problems for your children if they finish up as landlords and then can't access any of the first time buyers help. They will have to pay extra stamp duty if they buy a house because they already own one. Plus if your mother in law needs care whoever owns the house at that time will have to sell it so that the money from it can be used to pay for her care under the deprivation of assets rules so someone will at that point lose any money gifted to buy the house.

The simplest thing to do is to leave your mother in law as a tenant. As a tenant she is not at risk of becoming homeless. All care home fees with be paid for her as she doesn't have any assets. She will be better off as a housing association tenant than a tenant of her grandchildren or children.

Children or grandchildren would have to sell the house to pay for care home fees so the chances of anyone getting a house or inheritance out of this scheme is close to zero. If you want to provide for your children start saving now so that you can give them a deposit for a house where they can access first time buyers schemes and not pay an extra 3% stamp duty. If you have the money to gift your mother in law to buy the house for your children it will be less hassle and better value to just gift the money straight to your children and let your mother in law remain a tenant of the housing association as this is what is best for her.

xylophone

Could you make your MIL a loan to enable her to buy the house and take a first charge on the property?

You would take legal advice as would she.

The house would be hers absolutely.

She can make repayments of capital/interest just as she would if she were paying a mortgage.

You would have to declare any interest payments to HMRC.

If the house had to be sold to fund care, you would be entitled to repayment of the loan before the balance was used for care.

theartfullodger

tjp01357 wrote: »

mother in law has asked us to help her buy her housing association property and only way that seems open to us is to gift the money..............

So mum has little or no savings but wishes ( err.. perhaps other people wish her to...) to buy the place thus going from where she may be entitled to Housing Benefit if with limited funds to no HB and nowhere to go if she can't afford repairs or service charges or woteva...

Bad idea:

Owain_Moneysaver

xylophone wrote: »

Could you make your MIL a loan to enable her to buy the house and take a first charge on the property?

That could work if the loan is for the full purchase amount. However,

- MIL will probably be unable to obtain a subsequent mortgage for the rest of the purchase amount

- MIL will not be able to claim housing benefit for any repayments towards a secured loan. She would (I think) be able to claim HB for interest payments on a mortgage, but not on the capital repayment.

- MIL may be unable to afford to maintain the property. The value of the property may fall below the amount of the loan even taking into account the RTB discount. The value of housing association properties can be very influenced by the allocations policy of the association which determines the sort of neighbours there are, and this may change over time

- If it's a flat or a house with any common parts / landscaping etc, there will still be communal maintenance and service charges.

- MIL may have other debts which have to be settled at death, so the house might still have to be sold to meet them after repaying the loan

- MIL might not leave the house in her will to her children or grandchildren

- MIL might sell the house, repay the loan, and spend any additional cash

xylophone

which determines the sort of neighbours there are, and this may change over time

I'm afraid that wherever one buys a property, one has no control over the kind of neighbours one might end up with.........

She would (I think) be able to claim HB for interest payments on a mortgage,

Are you thinking of support for mortgage interest?

https://www.gov.uk/support-for-mortgage-interest

MIL may have other debts which have to be settled at death, so the house might still have to be sold to meet them after repaying the loan

The OP's only entitlement would be to the repayment of his secured loan but that's fair, isn't it?

MIL might not leave the house in her will to her children or grandchildren

- MIL might sell the house, repay the loan, and spend any additional cash

Also perfectly fair provided that the loan is repaid.....