Buying parents house for them to continue living in

bazzabear

Computer_Beginner wrote: »

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?

The SDLT would be hardly anything anyway, because of the purchase price - even as a second property. Part of my worry is that this might be seen as fraudulent in some way.

Computer_Beginner

bazzabear wrote: »

The SDLT would be hardly anything anyway, because of the purchase price - even as a second property. Part of my worry is that this might be seen as fraudulent in some way.

It wouldn't be seen as fraudulent.
But the council could just disregard the £60k "charge" you put on the house.

So if your parents needed a care home they could just say that your parents own a home worth £200k. (They'd just say the £60k loan was "contrived" and ignore it). So your parents would need to sell the house to pay for the care home. And you wouldn't get your £60k back.

bazzabear

So isn't that an argument for buying the house rather than offering a loan?

AnotherJoe

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?


Because it doesnt make the house sale any more difficult than a house with a mortgage on it. All a mortgage is, is a loan with a charge against a property. The council is no more "deprived of the ability to sell the house" than any other house where theres a mortgage, eg not at all.

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?

The council would spend some considerable time looking for the £200k, decide it had been hidden (if they couldn't find it but these days that would not be easy to hide) , and force a sale through the courts.


And no doubt, if the relative lied about the funds and they were found, they'd also be looking at perjury charges.

Computer_Beginner

OP,
If I was you, I wouldn't try and "talk your parents into" anything.
This really isn't any of your business.

Once you start getting mixed up financially it will just get more complicated.

You haven't mentioned your own personal circumstances.
Are you married?
What about your own home etc?

Your parents could live until 90 and you may well need that £60k in the future.

I would just say, "sorry, I don't want to get involved".

AnotherJoe

Computer_Beginner wrote: »

It wouldn't be seen as fraudulent.
But the council could just disregard the £60k "charge" you put on the house.

So if your parents needed a care home they could just say that your parents own a home worth £200k. (They'd just say the £60k loan was "contrived" and ignore it). So your parents would need to sell the house to pay for the care home. And you wouldn't get your £60k back.

Why would it be "contrived" when there would be a very clear paper trail showing the money being used to pay off the mortgage and a solicitors agreement showing the loan being documented and the solicitor paying the mortgage off?? Since there was a £60k mortgage and there's now a £60k loan, in what way is there anything contrived?


Dont you think routinely happens with equity release? Do you think they say those are "contrived" and refuse to give the ER company the money they are owed?

Computer_Beginner

AnotherJoe wrote: »

The council would spend some considerable time looking for the £200k, decide it had been hidden (if they couldn't find it but these days that would not be easy to hide) , and force a sale through the courts.


And no doubt, if the relative lied about the funds and they were found, they'd also be looking at perjury charges.

Or maybe the council would just say "that house worth £200k is yours Old Man. We don't believe your son gave you £200k. And even if he did, you shouldn't have spent it. So that LR "charge" means nothing to us and we're not going to pay for your care home. If you don't like it, sue us"

Or words to that effect?

Computer_Beginner

AnotherJoe wrote: »

Why would it be "contrived" when there would be a very clear paper trail showing the money being used to pay off the mortgage and a solicitors agreement showing the loan being documented and the solicitor paying the mortgage off?? Since there was a £60k mortgage and there's now a £60k loan, in what way is there anything contrived?


Dont you think routinely happens with equity release? Do you think they say those are "contrived" and refuse to give the ER company the money they are owed?

So what's to stop everyone taking "equity release" loans to avoid care home fees?

Mojisola

Computer_Beginner wrote: »

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

Minus the value of the loan.

bazzabear

Computer_Beginner wrote: »

OP,
If I was you, I wouldn't try and "talk your parents into" anything.
This really isn't any of your business.

Once you start getting mixed up financially it will just get more complicated.

You haven't mentioned your own personal circumstances.
Are you married?
What about your own home etc?

Your parents could live until 90 and you may well need that £60k in the future.

I would just say, "sorry, I don't want to get involved".

I certainly see your point, but it seems a bit heartless.

In an ideal world I wouldn't get mixed up in their finances. But I don't want them to lose their house while I sit comfortably telling them it's not a good financial decision for me to help.