inheritance

melaniesteer

I have just received some inheritance when my mum died in January of Covid.  It is 60K.  I live in a council house and have a 19 year old daughter wanting to get on the property ladder I was wondering if I could buy a small flat using the inheritance and get a mortgage for the rest and she could pay me rent not a lot which would pay for the mortgage and then when she get her own place do it up sell it (flip it) get the profit and then see if I could then see if I could afford my own place and get out of council house, can I do this is this morally okey do I need to tell the council, if I leave the money in a isa or savings get nothing in interest at mo, what to get out of council and wondered if this is the way to do it

Savvy_Sue

Are you (or your daughter) currently claiming any means tested benefits?

That's the first question ...

Robin9

@melaniester  Is there an estate of your mum's to settle first - perhaps a property to be sold ?   If so it will be many month's before this actually appears in your bank account.

Savvy_Sue's question is very relevant - you may be better using a Deed of Variation and passing the majority of the inheritance to your daughter.

Savvy_Sue

Robin9 said:

Savvy_Sue's question is very relevant - you may be better using a Deed of Variation and passing the majority of the inheritance to your daughter.

Please note that an inheritance of this size will affect means-tested benefits, and passing it on won't change that!

But until we know if that's relevant no more to add.

tacpot12

Assuming you and your daughter are not receiving any means-tested benefits, then what you suggest is feasible, and you don't need to tell the council about it. However, it might not be the very best option. For one thing, you will need to have enough income to justify the mortgage you take out.

Having her pay rent to you informally could present a problem in future if she ever needs to claim means tested benefits as they will not regard her as being legally obliged to pay rent.

Another option is that you put down the deposit on the flat, and your daughter takes out a mortgage for the remaining amount needed to purchase it. This might be easier to achieve if she has more income that you do, she is also younger, although 19 is very young to have a mortgage. You could buy as joint tenants which would mean that if you died, your investment in the property would pass automatically to her without needing to be mentioned in your Will, or you could buy as Tenants-in-Common which means your investment can be left in your Will (or will pass under the Rules of Intestacy if you don't make a Will). I would advise you to think carefully about this if your daughter has siblings who already have their own property or are not old enough to buy yet - siblings can be very sensitive to any sense that a parent is helping one sibling more than another. 

Another option is that you loan her the money and put a second charge on the property she buys, and she gets a mortgage. The mortgage company would have the first charge on the property which just means they get their money before you do.  You can get a solicitor to make the loan legally binding, and if she needs to claim means-tested benefits, you can suspend loan repayments, but roll the interest up on the loan so that when she is able to start repayments again, or the house is sold you get everything back that you should have. 

marycanary

Do you have experience of property investing or have the building trade skills to renovate a flat? Could you call on additional funds if the flat requires additional unforeseen repairs?  It is an extremely high risk strategy. At the moment some owners are facing massive bills for unsafe cladding. While this is an extreme situation it points to the issues which can occur.
mary

Wicked_Lady

Wouldn't her paying you rent make you her Landlord? 
It might be better to ask on the Housing Board regarding this as Landlords have legal obligations.

tacpot12

Wicked_Lady said:

Wouldn't her paying you rent make you her Landlord? 
It might be better to ask on the Housing Board regarding this as Landlords have legal obligations.

This is another reason why loaning her the money might be a better option.  

Retireinten

If you are a long standing council tenant yourself how much would it cost to buy your property from the council?  Discounts can be as much as 50%, so it would make sense to secure your own home first.  This all depends on your financial circumstances obviously but as has been mentioned already, whatever you do, any means tested benefits will be affected. 

My knowledge of right to buy is limited/rusty but I think you will have to live in your property for a couple of years before you can sell it and move on.  It's worth considering depending on your financial circumstances. But this has the potential to increase your own net wealth and give you the funds to help your daughter.