Buying with a family member...

angiekaren

I live in London which means prospects as a first time buyer are literally zilch unless you earn mega bucks!

I'm thinking of propersitioning my dad to buy a place with me in a years time or so, where i'd buy a 30% share or whatever I could afford.

Does anyone have experiences or advice on this kind of buying method and would it be a good investment for both of us?

sozzifer

angiekaren wrote: »

I live in London which means prospects as a first time buyer are literally zilch unless you earn mega bucks!

I'm thinking of propersitioning my dad to buy a place with me in a years time or so, where i'd buy a 30% share or whatever I could afford.

Does anyone have experiences or advice on this kind of buying method and would it be a good investment for both of us?

Spooky - I'm thinking of doing exactly the same thing. I live in Oxford, and things are almost as expensive here as London. I reckon I can get a mortgage for about £70,000, but the cheapest 1 bedroom flat is about £150K. We should keep each other posted!

At the moment, I'm just trying to get myself as organised as possible, and do plenty of research, to make myself seem like a good investment partner. Have an appointment to see a mortgage broker on Saturday to see how big a mortgage I can actually get.

angiekaren

spooky indeed! Yeh i'm pretty much doing the same - keeping my finances nice and organsised etc. I only graduated in the summer (although i'm 25) so my dad has been supporting me financially quite a bit - I want to proove to him i'm managing my finances well and managing to save and have no outstanding debts etc, so that he'll take my proposal seriously.

I'm also going to focus and making my credit score as good as possible.

I think at the moment I could get a mortage of about £70k also, though I'm hoping as my salary will have increased alot after another year and a half this should rise a little!

I figure that a) its going to be a sound investment for my dad. and b) even if i only own a small percentage, that percentage share will still grow and increase as i improve the house and its value goes up!

Good luck sozziefer and yes lets keep each other posted! Who are you thinking of approaching to buy with you?

merlinthehappypig

I suspect that, strictly speaking, your parents' part of the investment will be subject to Capital Gains Tax if they don't live there with you, but whether the Inland Revenue would actually find out or not, I can't say.

sozzifer

I'd be buying with my parents. I've already spoken to my mum, and in principle she's agreed, but she obviously needs to speak to my dad (which she's hopefully doing tonight!) What I'd really like would be if they just let me have the money as a massive deposit, rather than guaranteeing a bigger mortgage - then I'd probably get a much better mortgage rate, but obviously it's up to them - I'm totally at their mercy!

angiekaren

what is capital gains tax? well if i came to do this with my parents my dad would know the most financiall shrewd way to do it!

sozziefer that sounds like a good way to do it, keeping it simple and between the family - i'm sure the mortgage advisor will give you advice on this. It would be like your parents putting the money in a savings account I guess!

ameliarate

There is another option, which is buying with a housing association so you own a percentage, which I believe you can increae. I don't know much about it and am not sure how easy this is, my brother is looking into it at the moment in York where prices are very high £150,000 for 2 bed flat average wage around £20K).

sozzifer

ameliarate wrote: »

There is another option, which is buying with a housing association so you own a percentage, which I believe you can increae. I don't know much about it and am not sure how easy this is, my brother is looking into it at the moment in York where prices are very high £150,000 for 2 bed flat average wage around £20K).

The problem with that is, certainly in Oxford, I don't earn enough - you have to earn over a certain amount to qualify. Also, I'm hoping my parents will be more flexible than a housing association when it comes to paying rent on the part of the property I don't own - otherwise I just can't afford to do it.

macaque_2

angiekaren wrote: »

I figure that a) its going to be a sound investment for my dad. and b) even if i only own a small percentage, that percentage share will still grow and increase as i improve the house and its value goes up!

Why would it be a sound investment for your dad? You have looked at housing trends of recent years and concluded that property is a one way bet. That is a naieve and stupid conclusion. The value of property (like any other commodity) goes down as well as up. In the case of another crowded island (Japan), house prices have been falling for 20 years.

This week, the IMF suggested that UK property could fall by as much as 40%. The remarkable longevity of the UK bull market in property owes much to floods of immigrants and BTL. For different reasons, both of these groups now look like endangered species.

I don't take issue with you wanting to buy a house. Having your own home is nice. My concern relates to the tripe you are spouting about 'sound investments'. Every week, queues in bancrupcy courts get longer with people who claimed that property would be a "sound investment".

If you are going to rope your father into risking money on your behalf, recognise that he could lose a packet. If he does agree, it should be for parental love not investment. If you try to convince him otherwise then are either a very foolish or a very dishonest daughter.

JonnyBravo

[quote=macaque;6690848

If you are going to rope your father into risking money on your behalf, recognise that he could lose a packet. If he does agree, it should be for parental love not investment. If you try to convince him otherwise then are either a very foolish or a very dishonest daughter.[/quote]

dont hold back eh macaque???

i presume youre certain that property prices are going to drop?
some people have been saying this for years already, and whilst its true it will happen at some point, whether its in 6 months, 2 years, 5 years or 10 years is up for debate.
you've had a detailed conversation about how long the house is going to be held for, the rent he'll get for his half or whatever %age??? etc etc

you may be right, but putting it across that shes a dishonest daughter is a little strong, im sure her dad is old enough and wise enough to work out the risks for himself

macaque_2

JonnyBravo wrote: »

dont hold back eh macaque???

i presume youre certain that property prices are going to drop?
some people have been saying this for years already, and whilst its true it will happen at some point, whether its in 6 months, 2 years, 5 years or 10 years is up for debate.
you've had a detailed conversation about how long the house is going to be held for, the rent he'll get for his half or whatever %age??? etc etc

you may be right, but putting it across that shes a dishonest daughter is a little strong, im sure her dad is old enough and wise enough to work out the risks for himself

Wrong! First of all I am not saying whether prices are going to rise or fall. No one knows the answer to this.

When is the right time to buy home? It can be argued that anytime is right. A home is like a fridge or a car. If it serves your needs, it does not have to generate a profit.

The same arguement does not apply to property investment however. For this, risk and yield have to be factored in. On both of these scores, the red flags are well and truly flying.

I have no idea how streetwise angiekaren's father is, but procuring money from a parent under the auspices of investment is a sensitive matter. To sell the idea to them as a safe investment in the current circumstances is decidedly is stupid or dishonest.

How people whine about estate agents overselling properties but here we have a woman who is prepared to do it to her own father.