Buying a house with Granny flat with joint parent and personal income. Implications?

mikeholland

Hi,

Hopefully this is the right place for this query. My father passed away recently, leaving my Mum. I'm their only child. Mum is almost 80, in good health but struggling with his loss. She lives in the family home which has a good chunk of equity. I currently live abroad with my wife and young child.

I have some savings but not the large deposit currently needed to buy a family place around London, where my area of work is concentrated. However, if Mum sells up and we combine our cash I could get a place with a granny flat, a workable mortgage and enough space for everyone. She can have some independence but we'll be right there for her and hopefully she can see her Grandaughter grow up.

My worry is that if Mum's health deteriorates, would we be forced to sell the home if we need extra care for her? Buying the new home won't leave much cash. The plan is to look after her ourselves but obviously, we can't tell exactly what the future will hold for her health wise and I suppose it's possible she might need a care home or extra help in our home and I have no idea how much that's likely to cost down the line. I want to make sure that she's taken care of properly but I don't want to risk my little girl being uprooted either.

I'm not sure if this falls into the 7 year 'gift' rules for tax because she would be living with us or if it's a different situation altogether. Perhaps we would effectively become her carers and that might change things. Any advise appreciated.

gettingtheresometime

Thinking worse case scenarios here :


1. You get divorced - what happens to mum then?


2. You die - what happens to mum then?


3. You need to move to another area - what happens to mum then?


4. Mum needs professional care - who pays?


5. You fall out - what happens then?

mikeholland

I think with regards to 1, 3 and 5, those are manageable. I would continue to look after Mum in those circumstances and I would expect some agreement to be reached with my other half. For 2, If I died, I don't know, is the honest answer but I imagine I can put a provision in my will to try and cover it. 4 is the big question. We will cover what we can, but without a crystal ball I can't tell what our situation will be if and when that occurs.

Either way, I don't think leaving Mum to live on her own is a viable option either, despite the fact that makes everything rather more black and white.

pmlindyloo

The only possible problem with this idea might be if your mu goes into a care home and whether they would consider that your mum has deliberately deprived herself of assets in order not to pay care home fees.

It is extremely difficult to give an answer to this as each case would be considered individually.

Not knowing the sums involved makes it more difficult.

Do you intend your mum to 'gift' you the money for your new house with granny flat? If she did so, would you expect her to pay 'rent' from her income?

Or, do you intend to put the new house in both your names, perhaps with a percentage each as tenants in common.

The latter may be the better scenario as there could not be a question of deprivation of assets as her share of the house would be clearly demonstrated. It would then be difficult for her share to be released without your selling up. Whether they could force you to sell up would be question no one could answer. From a layman's point of view as it would be your family home then this would seem harsh but of course you may wish to sell up and release your mum's share so that she could find a better care home.

As you can see there are no easy answers.

It might be worth giving AgeUK a call - https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/

It also might be worth speaking to a solicitor or an independent financial advisor.

Not everyone ends up going into a care home so the risk may be small and you could go ahead with your plan and your mum gift you the money and perhaps live there rent free. If she did have to go into a care home then you could reconsider your plans and perhaps downsize and release money if the council decided there was deprivation of your mum's capital.

We were also in this position and fortunately mum did not have to go into a care home except for a very short time before she passed away which was paid for privately. So it can be done.

The other factor to consider is the likelihood of getting a house with a granny flat - few and far between, as we found out. We had to convert to get what we wanted. also the timing of mum selling and us buying was fraught and mum had to go into a hotel for a while. All in all not an easy move!

Perhaps another scenario is to find cheaper property outside London - yes, it might mean a commute so you would have to weigh up the pros but mum then may be able to retain some of her equity and then pay you rent to help towards the mortgage.

Hope this helps a bit!

Pixie5740

I think you will have an issue obtaining a mortgage where a large part of the deposit is coming from someone who will be living in the property but not party to the mortgage. Most lenders won't entertain it although I think HSBC offer a mortgage where there can be more legal owners named on the deeds than borrowers named on the mortgage. A Deed of Trust drawn up should protect each party in the event of a relationship break down, your mother requiring residential care, etc.

mikeholland

I think the money would have to be a 'gift' because I don't think she would be allowed on any mortgage as she only receives the state pension and a small amount from private pensions.

As for finding a place with a Granny flat, I know they're not easy to find. We're definitely going to be looking outside of London and commuting in. My Mum's lovely big home would barely cover a shoebox flat in the capital itself. No point doing that.

As for deprivation of assets, this worries me a lot of course. She's fine, for now, but she's elderly and her memory does concern me because that may well get worse and she might need more care than we can provide eventually I imagine councils are pretty bloodthirsty in these situations, perhaps rightly so.

Mojisola

mikeholland wrote: »

However, if Mum sells up and we combine our cash I could get a place with a granny flat, a workable mortgage and enough space for everyone. She can have some independence but we'll be right there for her and hopefully she can see her Grandaughter grow up.

It can work very well - consider all the 'what ifs' and get everything in writing so that everyone understands how it's all going to work.

I've seen very successful multi-generational households and some utter failures - the failures were usually down to poor planning or people changing things that had been agreed once the joint household was running and it was too late for the unhappy person to move out.

Pixie5740

mikeholland wrote: »

I think the money would have to be a 'gift' because I don't think she would be allowed on any mortgage as she only receives the state pension and a small amount from private pensions.

As for finding a place with a Granny flat, I know they're not easy to find. We're definitely going to be looking outside of London and commuting in. My Mum's lovely big home would barely cover a shoebox flat in the capital itself. No point doing that.

As for deprivation of assets, this worries me a lot of course. She's fine, for now, but she's elderly and her memory does concern me because that may well get worse and she might need more care than we can provide eventually I imagine councils are pretty bloodthirsty in these situations, perhaps rightly so.

You mother's money wouldn't be a gift though.

Robin9

What does your mum want ?

My MIL now 97 is adamant she wants to stay in her own home. Now bedridden she is still there, existing in a bedroom, supported by Social Services and a 4 visit a day care package.

mikeholland

What would it be categorised as then?

mikeholland

Mum ideally wants to live with us but be independent as much as possible, thus the granny flat. If not possible she wants to be near us in a little place. The main issue, as it often is, is cash. We currently can't afford the deposit for a family home and renting will put us on the back foot. Another year or so abroad we'd be there but that is looking like it's going to be too long for her to be alone. Catch 22.