Buy Grandparents' House, Feuding Kids?!

JSR21

Hi there,

First time poster – go easy!

New to all this and am wondering the course of action that works best for everyone.

Basically I own my home with my partner and children and we’re gradually experiencing the role reversal from my grandparents helping me all my life, to me returning the favour in their old age.  We’re gradually becoming carers for them and want to make sure we do the best job we can.

My grandparents’ home, owned by them, is falling into a state of disrepair and needs a new kitchen, new bathroom and new windows and doors.  They also need a new car.  They’re both in their 80s but despite this they’re in pretty good shape (I don’t worry about them driving etc. just yet, I want them to enjoy life whilst they can).  I’m a surveyor and know the structure is fine and the desirable area would make the property a sound investment.

I’m one of many grandchildren but I’m the only one with ‘that relationship’ with my grandparents and I also live closest to them, so naturally much of the care falls on our shoulders.  This is fine by me.  My grandparents had two children, one is my parent, the other my aunt/uncle (I’m leaving this vague to respect everyone’s privacy).

My grandparents today approached me and assumed that as I’m a busy, working parent ‘living in the now’ I was the font of all knowledge with these things, which clearly isn’t the case.  I’ve been asked to give them advice, so here I am!  The situation is this:

It transpires that there’s no will been made and recent health scares (now largely gotten over) have shaken them into getting their affairs in order.  As far as I know they both have ISAs in place for their funerals and enough cash to pay their bills, but that’s about it other than the equity in their house.

They’re considering equity release, for the car/kitchen/bathroom/windows and a generally more comfortable life.  They’ve heard of someone else using their children to buy their house as a better way of releasing the equity.

Neither of their children have the will and/or means to buy the house from them and they both hate each other.  My grandparents I don’t doubt are very fair though and I’ve no reason to believe they won’t split everything 50/50, regardless of either child’s ‘need’, and I think they rightly want to avoid the pain of their children having to deal with the sale of an inherited property when they're no longer with us.

As it happens we’re in the market for a second house (possible investment/buy to let) and their house would be a great investment.

Reading between the lines I think this is why my grandparents approached me for advice.  I think they think that I could buy the house, they’d have the cash, rent back from me, do the house up and split what’s left o rest of their cash 50/50 in the will between the kids and I’ve got a great investment (better me than some equity release firm, right?!).  Their children have nothing to argue over either.

What’s the prospect of this actually working?!

I’ve read they could lose council tax discounts, benefits etc.  I’d want to rent the house to them at cost, I want no profit whatsoever other than the possible capital gain on house sale but I also don’t want the risk.  Do I ask for power of attorney to make sure my rent gets paid in the event of my grandparents’ incapacitation?  Could I borrow more on the BTL mortgage to cover their rent and let them live rent free?  (all to prevent us getting caught in the crossfire between their kids) What else do I look out for?!  Is there a better way of doing all this?

Thanks!

 

74jax

JSR21 said:

Hi there,

First time poster – go easy!

New to all this and am wondering the course of action that works best for everyone.

Basically I own my home with my partner and children and we’re gradually experiencing the role reversal from my grandparents helping me all my life, to me returning the favour in their old age.  We’re gradually becoming carers for them and want to make sure we do the best job we can.

My grandparents’ home, owned by them, is falling into a state of disrepair and needs a new kitchen, new bathroom and new windows and doors.  They also need a new car.  They’re both in their 80s but despite this they’re in pretty good shape (I don’t worry about them driving etc. just yet, I want them to enjoy life whilst they can).  I’m a surveyor and know the structure is fine and the desirable area would make the property a sound investment.

I’m one of many grandchildren but I’m the only one with ‘that relationship’ with my grandparents and I also live closest to them, so naturally much of the care falls on our shoulders.  This is fine by me.  My grandparents had two children, one is my parent, the other my aunt/uncle (I’m leaving this vague to respect everyone’s privacy).

My grandparents today approached me and assumed that as I’m a busy, working parent ‘living in the now’ I was the font of all knowledge with these things, which clearly isn’t the case.  I’ve been asked to give them advice, so here I am!  The situation is this:

It transpires that there’s no will been made and recent health scares (now largely gotten over) have shaken them into getting their affairs in order.  As far as I know they both have ISAs in place for their funerals and enough cash to pay their bills, but that’s about it other than the equity in their house.

They’re considering equity release, for the car/kitchen/bathroom/windows and a generally more comfortable life.  They’ve heard of someone else using their children to buy their house as a better way of releasing the equity.

Neither of their children have the will and/or means to buy the house from them and they both hate each other.  My grandparents I don’t doubt are very fair though and I’ve no reason to believe they won’t split everything 50/50, regardless of either child’s ‘need’, and I think they rightly want to avoid the pain of their children having to deal with the sale of an inherited property when they're no longer with us.

As it happens we’re in the market for a second house (possible investment/buy to let) and their house would be a great investment.

Reading between the lines I think this is why my grandparents approached me for advice.  I think they think that I could buy the house, they’d have the cash, rent back from me, do the house up and split what’s left o rest of their cash 50/50 in the will between the kids and I’ve got a great investment (better me than some equity release firm, right?!).  Their children have nothing to argue over either.

What’s the prospect of this actually working?!

I’ve read they could lose council tax discounts, benefits etc.  I’d want to rent the house to them at cost, I want no profit whatsoever other than the possible capital gain on house sale but I also don’t want the risk.  Do I ask for power of attorney to make sure my rent gets paid in the event of my grandparents’ incapacitation?  Could I borrow more on the BTL mortgage to cover their rent and let them live rent free?  (all to prevent us getting caught in the crossfire between their kids) What else do I look out for?!  Is there a better way of doing all this?

Thanks!

 

This has disaster written all over.
Could they move if they don't have the funds to maintain where they are?
If I were you I would loan them the money with them paying you back (drawn up by the solicitor). 
Yes someone should have PoA for them. 
Get Wills at the same time. 

kuratowski

My grandmother recently died in her 90s. One of the things she regretted was not having moved into smaller, more manageable accommodation while she was similarly "in good shape" in her 80s.  Adaptations can only go so far.

The other thing that would put me off the scheme proposed is that you effectively insert yourself into the feud between the siblings.  That on its own would have me running a mile.

xylophone

Would your grandparents not consider selling the property and buying one more suited to their needs?

Sea_Shell

You could lend them the money against a charge on the house, so you in effect become their Mortgagor.  You get paid back if/when sold.

Would have to been drawn up watertight, with full terms and conditions along with any repayments (interest free?) included.

Just like they'd have with a proper lender or ER firm.

Worth considering?

lisyloo

You'd need to be very careful because if one of them (or both of them) later needs long term care then this will scrutinized.
If you got a good deal (below market value) then it could be seen as a deprivation of assets to avoid care fees.
I'd suggest moving somewhere more suitable to their future anticipated needs e.g. consider things like bus stops, perhaps sheltered accommodation with a shared garden. Having been through it I'd say these things are better in place before you need them. Doesn't have to be Maccarthy and stone, it could (for example) be somewhere near you if you're happy to shoulder the bulk of the burden. You could be taking cooked food, visiting every day, driving one to visit the other in hospital/care home, rushing round when one falls over etc. (got the t-shirt). If you are anticipating that then it helps if they are close.

swingaloo2

Apologies if I have got this wrong but it reads to me that you want to buy your grandparents house as it is a good investment, then rent it back to them but letting them put in a new kitchen, bathroom and windows at thier expense. Is that correct?
Will you be paying the fair market price for the house? What do thier children, your parents and sibling think of the idea?
Why on earth would your grandparents who are in thier 80's want to start with such big renovations. Wht not sell and move somewhere more comfortable and suitable fot the needs they have.
I can see this plan ruffling a lot of feathers in the family, not to mention the consequences going forward should they need care.

Keep_pedalling

xylophone said:

Would your grandparents not consider selling the property and buying one more suited to their needs?

That would be the sensible thing to do, or look at sheltered housing. The current house sounds like an absolute money pit.

p00hsticks

JSR21 said:

Their children have nothing to argue over either.

I'd say that what you are proposing has the potential to give the children a LOT to argue over, cosidering that you are the decendant of one of those children and not the other, anmd you say that they hate each other....

JSR21

OK so some great comments, thanks so much.

Some clarity needed from me I think.

• Moving – absolutely 100% not an option.  They’ve been in the house 60 years and it’s their home.  We’re not prepared to convince them otherwise.  Their home is close enough to us and we’re OK with what’s to come, as hard as it’s going to be.

• Charge on the house – Good suggestion, and I don’t want to profit from my grandparents, but lending them the money interest free would prevent us investing it, so in effect it’s a hefty cost to us.  If I was really ruthless I could see it as me buying a kitchen and bathroom for their children, not them.  Doesn’t seem right somehow.

• Value of sale – Yes, market value, at least three independent, documented valuations etc.  I’m not looking for a tax scam.

• ‘Absolute money pit’ – Not sure from my vague description how that can be determined.  Whilst it is a bit of a ‘fixer upper’, it’s pretty sound.  Matter of opinion I guess.

• The kitchen, bathroom, windows etc – this is what set my grandparents off.  They’re absolutely adamant they don’t want to move.  The home was and still is a family hub, and the home improvements are what they want, not us or anyone else.  How that would fit in if we bought the house I don’t know.  Maybe the fair market price would be below average due to property condition, giving us wriggle room to invest in a bit of a refurb?  I’ve no idea, that’s partly why I’m here.

• Inserting ourselves between the feuding children – completely agree, it could cause problems.  However, I’ve always been in the middle of the feud so it’s nothing new.  Ultimately, if their children aren’t prepared/able to do the same, my grandparents will just do ER and everyone will lose out?  The will would be made to split the remaining cash between them, no property to fight over.  We either rent out or sell the property when they’re no longer with us.

My relationship with my grandparents is a direct result of my parents not being there for me – my grandparents brought me up beautifully and for that I owe them so much.  If this is a bad idea then fine – I’ll just invest in something else.  I’m just looking for the best option for them, not me.  Early days, my OP was our first thoughts on the matter and we’re open to alternatives.  There just has to be a better way for them than ER or moving.

The family politics are impossible to judge when you’re on the outside looking in.  Who I’m likely to fall out with is my problem I guess; I’m just looking for a mechanism that would work and is best for everyone, with as little risk as possible for me (something else I’d have to evaluate myself).  If this isn’t the answer, fine.  Open to further suggestions, though I'm starting to wonder if I'm asking the golden question - if it was that easy, everyone would do it.

Thanks again.

[Deleted User]

JSR21 said:

I’m just looking for the best option for them, not me....  

I’m just looking for a mechanism that would work and is best for everyone, with as little risk as possible for me ...

You'll need to choose between these two conflicting desires.

Equity release would seem by far the best solution for them, but perhaps not for you or others.