Buying house for Son

sammyjammy

mcn99 said:

Definately not going to put it in my name, the stamp duty makes it unfeasible.

I was going to do a zero intrest loan, any gains if house sold would be his.

For the first few years, i will be paying all the bills, until he gets a job, thats part of the deal with him. Otherwise the property will be sold, and money paid back

I am planning on talking to a solicitor next month, and see what they suggest, that would protect both parties.

As im still under 60, i dont believe deprivation of assets is a serious issue.

Famous last words, bad things happen to people every day, if your age is the only reason you are saying deprivation of assets isn't an issue I suggest you rethink, tomorrow is a different day.

steampowered

mcn99 said:

Definately not going to put it in my name, the stamp duty makes it unfeasible.

I was going to do a zero intrest loan, any gains if house sold would be his.

For the first few years, i will be paying all the bills, until he gets a job, thats part of the deal with him. Otherwise the property will be sold, and money paid back

I am planning on talking to a solicitor next month, and see what they suggest, that would protect both parties.

As im still under 60, i dont believe deprivation of assets is a serious issue.

To me, this has disaster written all over it.

You want to put the property in his name to avoid paying higher rate stamp duty. But doing this will use up your son's first time buyer stamp duty relief (plus his ability to use other first time buyer support schemes like Lifetime ISAs) - which will cost him just as many money down the line as think you are saving on the SDLT. 

If the property is in his name, he gets decide what to sell it. Not you. You can't make a deal which says "Otherwise the property will be sold". A lender does not decide when the property is sold!!! Theoretically you could make the loan repayable on demand; secure it with a charge; and then call in the loan if the son doesn't meet your conditions .... but are you realistically going to bring legal proceedings for an unpaid loan? And then spend tens of thousands of pounds and a year plus through the courts going for a repossession order? 

If you want to encourage your son to get a job and start becoming independent, putting him in a property rent free doesn't help. Doesn't that just encourage him to delay getting a job? And encourage him to take the easiest, cushiest low paid job he can find - as you have told him that "a job - any job" is enough? Surely you want to push him to find something better, which he will only do if he needs to find his own way. 

Question: Why do you want to buy a property for him now while he is still a student? Why not wait a few years until your son has graduated, has a full time job, knows where he wants to live and has proven you can trust him? 

mcn99

I am not intentially reducing my assets to avoid care costs. I dont believe any council could argue, that in 20 years time i deliberatly tried to avoid care costs.

Snookie12cat

It kind of seems like you want your son to move out of your house. 
Are you doing this for him? Does he actually want to move out while he's not set up in a job etc? 

Flugelhorn

not putting it in your name just to avoid the SDLT is  a false economy. I have bought a house which one of offspring lives in, it is in my name, I paid the extra SDLT, the offspring pays no rent. It will become a gift at a later stage

easy

mcn99 said:

I am not intentially reducing my assets to avoid care costs. I dont believe any council could argue, that in 20 years time i deliberatly tried to avoid care costs.

The problem is that it might not be 20 years time.  You could have an accident that leaves you needing care at any point in the next 7 years,  people have utterly unforseen health catastrophes (stroke,  developing MND, early onset dementia)  which suddenly put them in the position of needing care  before they reach proper old age.  
It doesn't matter whether you gave this money to your son to deliberately avoid care costs -  the point would be that you gave it to him (bought the house for him),  the council could claw it back.

mcn99

I'm sorry i'm not interested in arguing asset deprivation.

I'm more concerned with the process of basically protecting what is essentially a gift with strings,  i dont really expect the money to be paid back, but i want to make sure that he doesnt squander it.

I do want him out of the house, he eally needs to get out of the family house.

I should point out, the house will be in scotland,  SDLT is more expensive, this is why i wont buy it in my name, I have no intention of becoming a landlord, and its not my investment. It may just end up with me paying his rent for a few years before i can trust him, and just give a decent lump sum to help him buy something.

 

canaldumidi

As I said earlier, placing a Charge on the property ied to the loan means he cannot sell without repaying the loan.

A lender does not decide when the property is sold!!!

True, but a lender does make it impossible to sell unless the loan is paid off at the same time from the sale proceeds....

Rosa_Damascena

mcn99 said:

I'm sorry i'm not interested in arguing asset deprivation.

I'm more concerned with the process of basically protecting what is essentially a gift with strings,  i dont really expect the money to be paid back, but i want to make sure that he doesnt squander it.

I do want him out of the house, he eally needs to get out of the family house.

I should point out, the house will be in scotland,  SDLT is more expensive, this is why i wont buy it in my name, I have no intention of becoming a landlord, and its not my investment. It may just end up with me paying his rent for a few years before i can trust him, and just give a decent lump sum to help him buy something.

 

HMRC had you in a bind here, as it's a scenario that's been anticipated. You can try to explore tax avoidance route through a clever accountant. It won't be illegal but it will be morally objectionable....

Having said that, the doomsday scenarios presented earlier may never happen and your son may hurt find his own two feet.

Mojisola

mcn99 said:

I was going to do a zero intrest loan

As im still under 60, i dont believe deprivation of assets is a serious issue.

There's no deprivation in loaning money - it still belongs to you.
If you were ever to need care, the value of the loan would be included in your assets in the financial assessment but it doesn't sound as if you would be entitled to council financial support anyway.