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

Scotbot

Deprivation of assets means that if you sell the flat to your son for 30% under value and you require a care home at sone point your son will be made to pay the council that 30% if your assets don't  cover the care home fees. It doesn't matter if your son has subsequently sold the house he is still liable. There is no time limit. Care home fees start at 60k per year so this is entirely possible.

So yes you can sell your house under market value to your son but he may have to pay full market value at some point. Your choice

To sell the house you need a solicitor to do the conveyancing.  If it becomes apparent you are selling under market value your solicitor has to point this out. As there is no EA involved expect them to ask how it was valued.

mtah321

potentially would therefore no longer be eligible for means tested benefits.

and if this is the case, I would be told that it definitely applies to my situation long before I actually go through with anything.

I really do appreciate the initial warnings that this could be an issue, but getting worked up over me "potentially" committing benefit fraud is counterproductive. Since there's a risk, I will bring it up with the correct people, and work through it with them.

I do not intend to commit benefit fraud. I intend to look into it further with people that know every detail about my financial situation. If I am told I cannot do this without committing benefit fraud, I won't. But told by somebody that knows for absolute certain and has considered my exact situation.

And just as a point, benefit fraud in general, while illegal and morally wrong, it isn't as large of an issue as the media makes it out to be. It isn't a great evil that plagues our country. It's a pothole at best.

mtah321

Deprivation of assets means that if you sell the flat to your son for 30% under value and you require a care home at sone point your son will be made to pay the council that 30% if your assets don't  cover the care home fees. It doesn't matter if your son has subsequently sold the house he is still liable. There is no time limit. Care home fees start at 60k per year so this is entirely possible.

So yes you can sell your house under market value to your son but he may have to pay full market value at some point. Your choice

Thank you, this is good to know. My son has said in the past he would be willing to help me with this as much as he is able to (safely, of course), so I don't believe this would necessarily be an issue with us in the future. He would be able to buy the flat for full market value in a few years anyway, I just didn't want him wasting his time renting (or buying a small studio) until then, when we could just do this instead.

mtah321

To clarify my earlier post, not necessarily my flat at full market value, just a flat for that much.

Lunchbox

mtah321 said:

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.

This is what is suggestive of benefit fraud.

mtah321

This is what is suggestive of benefit fraud.

I understand, and I already clarified that it was an offhand comment about why I want to sell it at a discount to my son. It is a small reason, among others.

But to explain further, I meant that I have no use for a lump sum of money just sitting around in my account. I'm sorry if that suggested I was explicitly doing this to get more benefits. Also, honestly, it wouldn't reduce my benefits by that much.

Scotbot

mtah321 said:

Deprivation of assets means that if you sell the flat to your son for 30% under value and you require a care home at sone point your son will be made to pay the council that 30% if your assets don't  cover the care home fees. It doesn't matter if your son has subsequently sold the house he is still liable. There is no time limit. Care home fees start at 60k per year so this is entirely possible.

So yes you can sell your house under market value to your son but he may have to pay full market value at some point. Your choice

Thank you, this is good to know. My son has said in the past he would be willing to help me with this as much as he is able to (safely, of course), so I don't believe this would necessarily be an issue with us in the future. He would be able to buy the flat for full market value in a few years anyway, I just didn't want him wasting his time renting (or buying a small studio) until then, when we could just do this instead.

It's  a gamble, no one knows what the future holds for you. You may require years of care in a care home and build up significant debts in which case your son becomes liable for the 30% under market value  that he did not pay. You could drop down dead next week in which case your son inherits the flat at full value.

I checked house prices in my area this morning, one house was clearly sold for way under market value do it happens.

mtah321

It's  a gamble, no one knows what the future holds for you. You may require years of care in a care home and build up significant debts in which case your son becomes liable for the 30% under market value  that he did not pay.

I completely understand where you're coming from, and I completely understand that in this case, he would be liable for that extra 30%. But we have a good relationship, and I believe that he would "pay me back" the 30% if I absolutely needed it even for any other reason.

Of course, I don't know if he absolutely would do this when the time comes up because we can't know anything for certain. I trust him enough to know he would at least help to the best of his ability.

You are saying he would be legally liable for that 30% in this case, so as long as he thoroughly considers and accepts that risk, we should be fine on that end?

Scotbot

mtah321 said:

It's  a gamble, no one knows what the future holds for you. You may require years of care in a care home and build up significant debts in which case your son becomes liable for the 30% under market value  that he did not pay.

I completely understand where you're coming from, and I completely understand that in this case, he would be liable for that extra 30%. But we have a good relationship, and I believe that he would "pay me back" the 30% if I absolutely needed it even for any other reason.

Of course, I don't know if he absolutely would do this when the time comes up because we can't know anything for certain. I trust him enough to know he would at least help to the best of his ability.

You are saying he would be legally liable for that 30% in this case, so as long as he thoroughly considers and accepts that risk, we should be fine on that end?

Yes I believe so however what I don't know ( and would love to as I have considered buying my mother's house if she goes into care because I like it)  is how market value is determined. Of course you can get EA valuations but asking price is often higher than selling price.  If you got a formal valuation from a surveyor that comes  with the caveat that it is +/-   5%. So when the local authority does the financial assessment what figure do they use?  A 5% difference in value on my mum's house is 20k. So if it was valued at £400k and I paid £380k  (95%)would I be up for 0, 20 or 40 k?

And of course all the regulations could  change in the future.

What I would say is if you decide to do it make sure you have a solid paper trail about the house value.

As for how all this affects your benefits and any consequences I have no idea so make no comment. 

AdrianC

mtah321 said:

I am only being snippy because I wanted to know how the process of selling a flat differs when it's at a discounted price and to a family member

I answered that in quite literally the very first reply to your original post.

AdrianC said:

mtah321 said:

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.