Buying % of Parents Property

GeneGenie87

Hi all, 

Looking for a little guidance. My parents are looking to "release the equity in their house", they currently own 100% of the property and are mortgage free but the equity options they are looking at either take a large portion of the property when they pass and/or pay pennies on the pound e.g. 20k cash for a 40k stake. 

Is there an alternate option where I could purchase a % of the property so they receive a fair value? Are there alternate options we could consider? 

AdrianC

Buying a share will incur SDLT, +3% if you already own your home.

Probably the most sensible option is for you to lend them the money, and put a charge against the property - just like a mortgage lender would do.

GeneGenie87

Thank you for the quick response. 

I assume a charge against the property can be discussed/set up with a solicitor? 

user1977

GeneGenie87 said:

I assume a charge against the property can be discussed/set up with a solicitor? 

Yes - or more properly, two solicitors, as you and your parents have opposing interests in it. Though it's not strictly necessary for both (or either) of you to be legally represented.

saajan_12

Do you have the cash available / can you borrow against your current property? 
If so, you could loan that money to parents, and record it as a charge against their property. 
*Avoids SDLT and CGT from purchasing and eventually selling part of their property
*You need to be sure you can do without the money until the agreed repayment date (may limit how much you can borrow in future)
*Need to be clear when the money is to be repaid - eg monthly payments? lump sum on only upon sale? lump sum upon death of one / both? 
* What happens if something goes wrong, eg they can't repay, they move house etc. 

However much you trust eachother, being clear avoids any potential issues later on when you or parents are under stress and this loan exacerbates it.