Helping Parents to buy house

Aki123

Can anyone give me any advice please?

My 83-year-old parents are in ill-health so I want to look after them, so we've put in an offer on the house next door to me.
To fund it we will need to use all of the proceeds of my parents' house, plus my brother (who lives in Holland) and I will be adding approximately 40% between us to cover the shortfall.
I want to know how best to protect the money that I'm putting in the house. If I put my name on the deeds it will be classed as my 'second home' and will cost us an additional £9,000 in tax. As my brother is not a UK tax payer, I don't think this will apply to him.

Should we:
1) Put my brother on the deeds as a 40% shareholder of the house?
2) is there a way I can agree the money as a loan to my parents to be paid back to me after their deaths?
3) Put my (21-year-old) son on as a 20% shareholder?

I don't want to do anything illegal, it's just that I won't be making any profit at all and we have no cash to spare for an additional £9,000 cost. The moving costs will equate to at least £10,000, which my parents are using their savings for, so essentially we are losing money to do this. I don't care, I just need to be able to look after them, but I'm also worried that if I don't find a way to protect the money, it could all be used up in care home costs if we reach the stage where one dies and the other needs full-time residential care.

If anyone has any advice I'd really appreciate it.

getmore4less

If no mortgage needed

Easiest is probably interest free loan to the parent.
with charge on the property.

That protects the cash as long as the house sell for at least the loan value.

As soon as you have an equitable/beneficial interest even if not on the deeds the extra SDLT kicks in.

If you inherit anyway this just delays any returns on your loan if it does not get used up.

Make sure you have LPA for both parents.

Aki123

getmore4less wrote: »

If no mortgage needed

Easiest is probably interest free loan to the parent.
with charge on the property.

That protects the cash as long as the house sell for at least the loan value.

As soon as you have an equitable/beneficial interest even if not on the deeds the extra SDLT kicks in.

If you inherit anyway this just delays any returns on your loan if it does not get used up.

Make sure you have LPA for both parents.

That's a great idea, thanks. Yes, I do need to set up LPAs, have started the process ages ago and never got round to finishing it.

Thanks again.

gingercordial

Aki123 wrote: »

As my brother is not a UK tax payer, I don't think this will apply to him.

SDLT is payable by non-residents too if they are purchasing UK property. The solicitor will not put in the forms to the land registry without it. If he owns a home in the Netherlands (or anywhere else) the surcharge will apply. There has also been some discussions about an extra surcharge for non-residents buying UK homes, so take care...

Should we:

3) Put my (21-year-old) son on as a 20% shareholder?

Don't do this - he will lose all his own first time buyer perks and possibly have to pay the additional home SDLT if/when he buys his own place.

As has already been suggested, a charge on the property for the amounts you and your brother are lending should achieve what you want to do.

AnotherJoe

I've done your option 2 with my daughter. Second charge on the property as well as loan agreement drawn up by solicitor.

Aki123

Thanks gingercordial & AnotherJoe, I really appreciate your input.

So, definitely, the best way to deal with this is to make the contributions from us as interest-free loans, with a charge against the property. Just to confirm, this will definitely protect what we've put in if we have to sell the home, should one of them need to go into residential care?

Thanks again everyone - this is keeping me awake at night!!

paddyz

wouldn't it be easier to just buy a cheaper place locally?