Advice please - sibling wants to buy family home

Bowties

I'll try my best and explain things. this is not my area of expertise and i am very good at getting ripped off, so if anyone can offer me any help or advice here, I would be very grateful!

In about 2002 my dad bought a London house for £180,000

In about 2016 he then inherited a property in Norfolk with his brother, so took out a £350,000 mortgage on the London property to buy his brother out of the Norfolk place.

My dad now wants to sell the London place, so he can gift both my sister and I an early inheritance for our own place (neither of us own a property), pay off the remaining mortgage and go on and retire and focus on making the Norfolk place his home.

However, my sister expressed an interest in buying the London home, which was valued in October 2021 at £575,000. Problem is, she cannot afford it but has set her heart on it.

We have a family meeting tomorrow night to discuss the way forward. Myself, my dad, my sister, and her husband.

I’m not sure what the outcome will be, but my sister does not have enough for the deposit or the mortgage meaning I will have to concede somewhere for her to purchase the London place.

Obviously, I want it sold on the open market to the highest bidder because I want as much out of it as I can. My sister needs it to be sold to her as cheaply as possible so she can afford it.

My sister is very persuasive, and my dad finds it very difficult to say ‘no’ to her. I normally stay quiet and so miss out. I’m not very good at standing up for myself. My dad has assured me that he will not agree to anything unless it is fair to all.

Can anyone help and let me know what I need to do (or say) to ensure everyone comes out of this happy? Questions i need to ask, research i need to do? Thank you. 

locationx3

The only fair split is 50:50 of best market value. Nothing else can be acceptable. Just keep saying no until that is the only option left.

Mojisola

Bowties said:

However, my sister expressed an interest in buying the London home, which was valued in October 2021 at £575,000. Problem is, she cannot afford it but has set her heart on it.

My dad has assured me that he will not agree to anything unless it is fair to all.

If he sticks to his word, then he will sell it and split the money 50/50.

sourpuss2021

£180k to £575k between 2002 and 2021 is actually a surprisingly small increase in value for a London property during that period.   500% increases are more typical!

Are you sure the house isn't worth more? 

Choirgrl

From what you describe, your sister may not need to find any deposit. The amount of equity that your dad gives to her would essentially be the deposit (assuming it’s a high enough percentage of the total house value). She’d have to be able to get a mortgage for the remainder - which would be the amount not yet paid off on the mortgage and your half of the equity. Is it likely that she’ll be able to do that? If it isn’t, then it sounds like this is a non starter, and she needs to be pursued to accept that and use your dad’s gift as a deposit for something mor in her price range.

On getting a fair valuation, you could get estimates from a number of EAs and see if there is consensus from them, but that won’t allow for the possibility of competing bidders pushing the final offer price up. Or you could offer on the open market, and if your sister wants to buy she has to match the best offer.

It worries me a bit that both you sister and her husband will be part of the conversation, while you’ll be alone, especially given what you say about the behaviour dynamics of you, your sister and your dad. I’d suggest that you start out tomorrow by agreeing that you’ll all discuss what to do, but not make a final decision until you’ve had time to think, reflect, and do any further research necessary.

diystarter7

Tell him if she can't afford the deposit it is highly unlikely she'd manage a mortgage, bills, council tax and maintenance.
So lets sell the house and she can buy something more manageable and then step up when she is ready.

Btw, it's you dads decision who to give, who not to give to and what to do but what I posted above may help.

Tell dad and sis, you'd love her to have it but would hate seeing her struggle, go into debt possibly get depressed and then lose all of it so easy does it for now.

diystarter7

Choirgrl said:

It worries me a bit that both you sister and her husband will be part of the conversation, while you’ll be alone, especially given what you say about the behaviour dynamics of you, your sister and your dad. 

It's dad's choice.

FreeBear

Choirgrl said: On getting a fair valuation, you could get estimates from a number of EAs and see if there is consensus from them, but that won’t allow for the possibility of competing bidders pushing the final offer price up. Or you could offer on the open market, and if your sister wants to buy she has to match the best offer.

An estate agent will give a valuation based on what they think they can sell it for. If you want something a bit more solid, you need to get a RICS surveyor to do a proper valuation - This is what a mortgage provider would do, rather than relying on fanciful figures from an EA.

Megaross

Being it's early inheritance if she was to take a stake in the property larger than an equal split you could ask whether your inheritance in the will might be made larger to make up for it?

It's a very sensitive topic family and money. But money is an important thing and does need to be talked about.

No real way to advise you how to navigate your family and ultimately how your dad wishes to divide his estate is his call.

Ath_Wat

There's 225K equity, assuming the mortgage is still around 350K, so you need about £110K out of it.  

Any proposal  that promises you this money somewhere down the line is no good to you as you will need it now to buy a house.

Set those facts out first and get them agreed as being fair.  Then whatever weird schemes are proposed, just point out that they don't meet those basic criteria and therefore don't work.  (I can't imagine anything will meet them as I can't see anything that will).

Mojisola

Megaross said:

Being it's early inheritance if she was to take a stake in the property larger than an equal split you could ask whether your inheritance in the will might be made larger to make up for it?

This can lead to problems - I know two sisters - one was given the family home when the mother downsized with the promise that the other one would receive a fair share when mother died.

Mother ended up in care for several years and, by the time she died, had very little left so sister No 2 had practically nothing.