Buying parents house for them to continue living in

Keep_pedalling

You say you can just about afford to buy the house for £60k which suggests that should you run into any financial difficulty through loss of a job, divorce then they would be at risk of being made homeless. The same may apply if you die before them, so this is the last thing they should be doing.

They don’t want to move but have been ignoring the looming demand for £60k and have failed to make provision for it, so they really have 2 choices if they are going to take responsibility for their poor financial management, downsize or equity release.

AnotherJoe

Computer_Beginner wrote: »

I would also ask the solicitor what the situation would be regarding LA care home fees assessment in this situation. Because, effectively the OP is becoming a mortgage lender. Would this be seen as contrived / deprivation of assets?

Eh? What assets would they have been deprived of ?

Computer_Beginner

AnotherJoe wrote: »

Eh? What assets would they have been deprived of ?

The council could take the view that the charge on the house was there to make the house sale difficult. Otherwise, what's to stop everyone who owns a house getting their offspring to put a charge on their house (in return for a "loan"), which deprives the council of the ability to sell the house?

In this case, the council could force the house sale for £200k. Pay the OP back their £60k "loan". Then use the £140k for care home fees.

But if I owned a house valued at £200k, what's to stop me asking my son to lend me £200k, get him to put a £200k "charge" on the house. Then I quietly pay him the £200k back. Then if I need care home, the council can't force the house sale without paying my son the £200k "loan" back.

Is this the easiest way to avoid care home fees? Or am I missing something obvious here?

bazzabear

I've been trying to talk them into using an equity release company (if they'll get enough from it), but they are reluctant because they hear that it's the worst option overall in terms of value for money. This is likely true, but I've told them that the inheritance doesn't matter - so as long as the amount of money they get is enough to pay of their debts and allow them to be comfortable, it doesn't matter if it's a 'bad deal' overall.

But nonetheless they are reluctant, which led to them making this suggestion.

No doubt, whatever we do we will be using a solicitor to make sure it's entirely legal.

Computer_Beginner

Keep_pedalling wrote: »

You say you can just about afford to buy the house for £60k which suggests that should you run into any financial difficulty through loss of a job, divorce then they would be at risk of being made homeless. .

Exactly. If the OP gets pursued for debts, the £60k "charge" may show up on the LR search, and be seen as an "asset" by the creditors.
I would check this with a solicitor.

Mojisola

Computer_Beginner wrote: »

The council could take the view that the charge on the house was there to make the house sale difficult. Otherwise, what's to stop everyone who owns a house getting their offspring to put a charge on their house (in return for a "loan"), which deprives the council of the ability to sell the house?

If you are assessed as needing to pay for your own care, the council steps back and you have a contract with the care home.

How you pay that bill is down to you. If you need to sell your house to raise the money, that's what you do - not the council.

diggingdude

Do they have any part of the £60k saved?

Computer_Beginner

AnotherJoe wrote: »

They can repay you from the interest they won't be paying on the loan. And when they die you'll get the remainder back. Document it so that if ultimately the house needs to be sold for care you'll get your £60k back. Indeed it would be better if they didn't pay it back.

If that's not acceptable to you (since you seem to want to rip them off by buying their £200k house for £60k) then they can perhaps do equity release to pay off the mortage which will result in completely wiping out any inheritance you might get. So from a completely selfish POV you'd be better off doing DIY equity release by loaning the money. By a substantial amount of money. Likely a hundred £k or more.

Presumably, the other advantage of the OP lending her parents the money and placing a "charge" on the property (as opposed to a 30pc "share" of the property), is the avoidance of a second home SDLT surcharge?

bazzabear

No, they don't have anything saved. They've never been good with money!

Computer_Beginner

Mojisola wrote: »

If you are assessed as needing to pay for your own care, the council steps back and you have a contract with the care home.

How you pay that bill is down to you. If you need to sell your house to raise the money, that's what you do - not the council.

Yes. But the council will take the value of the house into consideration.