I want to sell my flat to my son at a discount.

mtah321

Hello,

I want to downsize from my current flat, but I can't get a mortgage at my age. I also don't want to sell my current flat to a stranger.

My son is able to afford (with a mortgage) the flats that I am looking at. We have agreed that he will buy a new flat for me in exchange for this one.

This means me "selling" my flat at a discount, as I don't want or need the extra money and he would have inherited it eventually anyway.

I don't want to complicate things by him owning where I live and me owning where he lives, or for him to get a mortgage for a flat to immediately swap it with me.

Ideally, I would sell my flat at a discount to him for the price of the new flat (and legal fees), he would get a mortgage to buy my flat off me, and I would use that to buy a new flat in cash.

Does anybody know the right way to go about doing this?

What's the process of selling property to a family member instead of through an agency?

Thank you in advance.

AdrianC

mtah321 said:

I want to downsize from my current flat, but I can't get a mortgage at my age.

If the new flat is less expensive than the old one, you wouldn't need to.

I also don't want to sell my current flat to a stranger.

Why on earth not?

My son is able to afford (with a mortgage) the flats that I am looking at. We have agreed that he will buy a new flat for me in exchange for this one.

This means me "selling" my flat at a discount

Such is your prerogative. The difference will be viewed as a gift for IHT, deprivation of assets, means-testing, etc.

How much below market value are we talking about?

as I don't want or need the extra money

You have sufficient funds to see you to the end of your days, without recourse to benefits or to local authority funds for residential care should it be needed?

May we ask a rough ballpark for the sum total of your wealth?

and he would have inherited it eventually anyway.

You simply cannot say that, unless you are very wealth. (In which case, I would presume the mortgage issue would not be relevant...)

An inheritance is what's left of your estate AFTER you're dead.

If ever you need residential care, your flat would almost certainly need to be sold to pay for it - after all, you aren't living there any more...

What's the process of selling property to a family member instead of through an agency?

There's no complication.
Many things will be easier. He only needs the bare minimum of searches, survey etc to satisfy his lender.

SDLT_Geek

My thing is SDLT, as the name suggests.  Depending on:
(a) the value and price to be paid for your flat, and 
(b) on whether your son's purchase of your flat completes within the SDLT holiday
the type of mortgage your son gets might make a difference to the SDLT your son pays.  

Some lenders insist that the flat be bought at full market value (with you making a notional cash gift), others are content for the sale to be at a genuine under market value.  The issues are explored here: https://www.blakemorgan.co.uk/bank-of-mum-and-dad-concessionary-purchases/

No doubt others will go into other issues.

mtah321

How much below market value are we talking about?

Around 30-40% below market value.

You have sufficient funds to see you to the end of your days, without recourse to benefits or to local authority funds for residential care should it be needed?

I'm already on benefits and have a decent pension and my family takes care of me. If I need the money later in life my son will help me. Having a large pool of money in my name would actually hurt how much I currently get from the government. Not to mention how I have no use for that money now, I've lived my life.

and he would have inherited it eventually anyway.

You simply cannot say that, unless you are very wealth. (In which case, I would presume the mortgage issue would not be relevant...)

I can say that because most people inherit property. I don't see any situation where I will get into such massive debts over the next 20-30 years that I will have to sell my family home. Healthcare is free here, you know.

If ever you need residential care, your flat would almost certainly need to be sold to pay for it - after all, you aren't living there any more...

I don't see the problem here. If I need residential care, and the flat I'm living in is sold for it, then I can simply sell the new flat. Even so, my family will take care of me as well as they can.

Many thanks for your reply.

davidmcn

mtah321 said:

most people inherit property

Would love to see the working for this. A huge proportion of people who formerly owned property no longer do by the time they die, becuse they've no longer had the desire and/or funds to continue owning it. And lots of people don't own property anyway.

lookstraightahead

If you get rid of your assets so that the government pay for your care, that can be seen as deprivation of assets should you need care. 
You might need care - none of us can rely on anyone else as circumstances change.
would your new flat cover the cost of residential care?

mtah321

If you get rid of your assets so that the government pay for your care, that can be seen as deprivation of assets should you need care.

I understand, but the government is already paying for my care. I've been on benefits for the last 20 years, and if need be I am willing to sell the new flat for residential care.

I also want to reiterate that I have family that would take care of me for longer than English children are expected to.

Would love to see the working for this. A huge proportion of people who formerly owned property no longer do by the time they die, becuse they've no longer had the desire and/or funds to continue owning it. And lots of people don't own property anyway.

I understand that if we go on, as usual, my son will probably have to sell the flat to settle any outstanding debts or IHT or funeral expenses. I understand that I may suddenly need round the clock care. I've weighed the risks. I am not asking for retirement advice.

davilown

mtah321 said:

I'm already on benefits and have a decent pension and my family takes care of me. If I need the money later in life my son will help me. Having a large pool of money in my name would actually hurt how much I currently get from the government. Not to mention how I have no use for that money now, I've lived my 

Many thanks for your reply.

mtah321 said:

» show previous quotes

I'm already on benefits and have a decent pension and my family takes care of me. If I need the money later in life my son will help me. Having a large pool of money in my name would actually hurt how much I currently get from the government. Not to mention how I have no use for that money now, I've lived my 

Many thanks for your reply. 

This would be my issue with what you are trying to do - almost tantamount to defrauding the British tax payer. Sell the flat, buy a cheaper one and reduce the benefits you are receiving from the government by using any left over cash to subsidise your living rather than making us pay for it....

mtah321

This would be my issue with what you are trying to do - almost tantamount to defrauding the British tax payer. Sell the flat, buy a cheaper one and reduce the benefits you are receiving from the government by using any left over cash to subsidise your living rather than making us pay for it....

Yes, saving the British taxpayer £0.000028 a year is the highest priority for me. Rather than helping my son out in a way that lets me preserve our family home of 40 years.

MalMonroe

Exactly how old are you that you wouldn't be able to get a mortgage? I'm interested as have just turned 71 and am about to start looking at 10 year and 15 year mortgages.

Why can't your son just buy the new flat and then you swap with him? Nothing to do with anyone else who lives where. That'd be the cheapest option, as far as I can see. It's something I'd do with my daughter, who will hopefully outlive me so both properties will be hers in the end. She could then decide whether to rent out either property or sell one or do whatever she likes. I don't see a problem. 

Especially as you have family who will ensure your wellbeing, whatever may happen.

I have to say that you saying, "I've lived my life" makes me feel really sad. I don't know how old you are but for me at 71, I'm looking forward to living much more of mine. 

davilown

mtah321 said:

This would be my issue with what you are trying to do - almost tantamount to defrauding the British tax payer. Sell the flat, buy a cheaper one and reduce the benefits you are receiving from the government by using any left over cash to subsidise your living rather than making us pay for it....

Yes, saving the British taxpayer £0.000028 a year is the highest priority for me. Rather than helping my son out in a way that lets me preserve our family home of 40 years.

But you’ve stated it would hurt you. £0.000028 would not hurt you so does that mean you’re not in means tested benefits?
Apologies if you are but you did clearly state it would hurt you which would indicate you are in means tested benefits.

If you were, and you tried to sell you home to your son at a discount and had to give him a gift declared through the solicitor, this sum would have to be declared to DWP and any benefits reduced accordingly.