Buying uncles share in house.

AdamPD

I've posted about my housing issues in the past, so I'll just briefly summarize the situation.

I co own a house with two others, my dad and uncle.
I need to remortgage in April (2019) as we're currently on a part interest/part repayment mortgage
Uncle moved out 5-6 years ago, leaving us with 5k of mortgage arrears and hasn't paid anything since, he never paid anything into the house, or any deposit.
I want to get him off the deeds and mortgage and he too wants to come off of them, as he struggles to get housing benefit now, because the council/government know he's on the deeds of this house
So he's willing to sell his share for a small price (£5000) if I can remortgage and get him off the deeds, which I've accepted verbally.
My dad will also be coming off of both, in exchange for living in the house rent free for a minimum of 10 years, which again, I accepted and have a drafted letters agreeing to both parties requirements.

So my question is, is the process relatively straightforward when I remortgage?
Everything will be done the proper way, but I'm just not sure how the procedure works.

getmore4less

You have quite a few complications with this.

ALL
What is the current beneficial interest of each person?

Uncle
Has a potential CGT as PRR not available for the full time of ownership.
if sold undervalue there will be gifting/deprivation of capital to consider


Dad.
here you have a mix of things to get advice on
Interest in possession trust
Gift with reservation
Deprivation of capital.


I suspect you biggest issue is the lender won't be happy with Dad having a right to live in the place and not be a legal owner or part of the mortgage.

csgohan4

This is messy, family and money shouldn't mix.


I hope it goes well, but the Uncle could force a sale to get his equity and you could do the same as well

AdamPD

Thanks for the replies!

What is the current beneficial interest of each person?
Please excuse my ignorance on the different terms you use, but I assume you mean how much equity does each person have?
If so, I would say about £50,000 each.
House was purchased for 180, father put down 40k deposit, rough estimate on house value now is around 280-300k.

Has a potential CGT as PRR not available for the full time of ownership.
if sold undervalue there will be gifting/deprivation of capital to consider
Capital gains tax I Assume? I'm not sure what all that means, sorry.

here you have a mix of things to get advice on
Interest in possession trust
Gift with reservation
Deprivation of capital.
I suspect you biggest issue is the lender won't be happy with Dad having a right to live in the place and not be a legal owner or part of the mortgage.

Understood,
Are there ways around this in some way? Such as if I purchased his share for an agreed upon price? and without the agreement he can stay there for 10 years.

AdamPD

Just a quick follow up question
What would be the best person to speak to with regards to these issues? a conveyancing solicitor? or would it fall under something else?

somethingcorporate

Given you do not understand half the terminology it's really important you seek impartial advice. Getting it wrong could be extremely expensive & messy for you all.


I'd start with a solicitor and go from there but it is going to be complex given it has financial and benefit implications.

AdamPD

Yea it is a mess
I wish we'd never done this, but on the other hand, I've had a roof over my head for the past 15 years, so not all bad.
There is one silver lining though, my uncle has no partner, kids or will, so if he were to die tomorrow, my dad would inherit his share of the bungalow automatically, if I'm reading the rules of intestacy correctly, but it's possible he has a will now, who knows.

getmore4less

Read up on legal ownership and beneficial ownership.

Establishing the uncles beneficial interest as low as possible given there has been no financial input is a good start.

AdamPD

Thanks very much for the help, I really appreciate it.