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How to split a plot of land with siblings?
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Carl45
Posts: 1 Newbie
My parents own a plot of land that we are currently seeking planning permission on to
build three houses.
I am one of 4 siblings. I am to receive one of the homes my parents will downsize to
also live in one of the houses and the final house will be sold to cover the cost of the development. I am the only one without a home my other siblings have homes.
Each house should sell for 700,000 . The build will cost 1million. I am going to try and finance the entire build with the help of the bank.
My other 3 siblings have not discussed what they want to get out of this arrangement yet. What can be done for them? The family home will later be sold for about 1.5millon - should they split that as inheritance and I stay out of that? I want a fair deal for everyone.
build three houses.
I am one of 4 siblings. I am to receive one of the homes my parents will downsize to
also live in one of the houses and the final house will be sold to cover the cost of the development. I am the only one without a home my other siblings have homes.
Each house should sell for 700,000 . The build will cost 1million. I am going to try and finance the entire build with the help of the bank.
My other 3 siblings have not discussed what they want to get out of this arrangement yet. What can be done for them? The family home will later be sold for about 1.5millon - should they split that as inheritance and I stay out of that? I want a fair deal for everyone.
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Comments
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See a solicitor , so there's legally binding paperwork
See a financial planner , to ensure tax planning is done correctly
Not questions we are qualified to answerEx forum ambassador
Long term forum member0 -
Nothing to add but do update us when you find a way to make this happen and be a fair deal for all concerned !0
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.....build three houses.
I am one of 4 siblings. I am to receive one of the homes my parents will ...live in one of the houses and the final house will be sold to cover the cost of the development.
Each house should sell for 700,000 . The build will cost 1million. I am going to try and finance the entire build with the help of the bank.
* your parents will have down-sized. This does not affect anyone but them.
* you will have a £700,000 house which will have been paid for (eventually) by your parents (sale of their current home)
* your siblings will therefore be due £700K each to keep things fair.
Correct?
(I'm using your basic figures - bank loan costs, transfer fees, legal costs, estate agents costs etc will all be in the mix too)
You say:The family home will later be sold for about 1.5millonthe final house will be sold to cover the cost of the development.
Are you planning to buy your £700K house from your parents? Or get a mortgage? Or is it a straight gift?
Do your parents have other asssets? Could tthey sell shares for example and give each sibling £700K (seems unlikely!). And if they could/did, would it leave them vulnerable?
Have you (all) considered 'Deprivation of assets' and potential care home fees?
Lots of unanswered questions before you seek professional advice!0 -
[FONT=Verdana, sans-serif]The figures at the moment do not seem to add up.[/FONT]
[FONT=Verdana, sans-serif]If you have a £700k house then £2.1m is needed for your three siblings if you are all to be equal.[/FONT]
[FONT=Verdana, sans-serif]The cash available though is only:[/FONT]
[FONT=Verdana, sans-serif]Parents house £1.5m + sale of one house £700k less build cost £1m = £1.2m[/FONT]
[FONT=Verdana, sans-serif]To even things up you would need to take out a mortgage of £225K meaning your net gain would be £475k.[/FONT]
[FONT=Verdana, sans-serif]There would then be cash of £1.2m + £225k = £1.425m / 3 = £475K each[/FONT]0 -
So the £1m cost will be met by selling one home for 700k and you keeping a 300k mortgage on your home.
I assume you have some plan to fund the build until the property is sold.
Your parents are contributing the land, you are contributing the funding costs, so this looks like a joint venture. Rough and ready calculation on these sort of developments is one third land, one third build costs and one third profit. The net result is that you have one home and your parents another with the 3rd sold off.
Your siblings don't really come into this.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0 -
The build will cost 1million. I am going to try and finance the entire build with the help of the bank.
Do you literally mean "You" want to finance the build - not your parents?
If so - How much cash do you currently have?
Do you have any assets that a loan could be secured against? (As the land isn't owned by you.)
Even if you have assets, without a track record in property development, I think you (and/or your parents) will find it hard to persuade anyone to offer you development finance.0
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