Implications of parent moving in

Annisele

If you and your mum pool your resources, will you have enough money to buy this potential property + annexe outright? That is, will you need a mortgage?

I ask because lenders can often be twitchy about annexes. There might also be difficulties with your mum being named on the mortgage (because of her age) as well as difficulties with not naming her on the mortgage (because she'd have contributed some of the purchase price). But if you'll be buying outright those concerns drop away.

Bowey123

You really need to speak to a solicitor about structuring this purchase correctly.
There are some things to consider which the solicitor would talk to you about when considering this.
1.  What happens if you die?  Your husband will co own the property with your mother and he may want to remarry.  You need to get solicitors advice about this.
2.  She may remarry.
3.  You may divorce.
A good STEP solicitor will advise you on the way the purchase is structured to avoid problems in this area.
You have two main choices.
1.  You could purchase the property jointly.
2.  She could gift or loan you the money so it is in your name.
In terms of Inheritance Tax, there is little to choose from between the two.  If she gifts or loans you the money, the property will remain in her estate as she continues to benefit from the property.
In terms of if she needs long term means tested care the options will differ.
If you purchase the property jointly or she loans you the money then it remains hers for means testing.
If she gifts you the money to buy the property then it becomes more complicated.
If you give away your assets purely to avoid means testing it is if it never happened. You are assessed as owning the asset.
If she gifts it to you because she wants you to look after her then it becomes too much for you, then she hasn’t made the gift purely to avoid means testing so it should fall out of the calculation.
However, if she does this, then the asset is yours and your husbands with the complications that may bring if you die, or you divorce.

am123

Annisele said:

If you and your mum pool your resources, will you have enough money to buy this potential property + annexe outright? That is, will you need a mortgage?

I ask because lenders can often be twitchy about annexes. There might also be difficulties with your mum being named on the mortgage (because of her age) as well as difficulties with not naming her on the mortgage (because she'd have contributed some of the purchase price). But if you'll be buying outright those concerns drop away.

Thank you. So we were looking at buying a house with our own money that had a more accessible garden, then my parents were going to use their savings to build an annexe and then sell their house and live off that money. Our current garden is large but there is no access other than through the house, and it’s high up unfortunately, plus we are short on driveway space as it is. We looked at the cabins you can get but from what I understand, you’re on dodgy ground if they’re being lived in as a permanent residence. 

am123

Bowey123 said:

You really need to speak to a solicitor about structuring this purchase correctly.
There are some things to consider which the solicitor would talk to you about when considering this.
1.  What happens if you die?  Your husband will co own the property with your mother and he may want to remarry.  You need to get solicitors advice about this.
2.  She may remarry.
3.  You may divorce.
A good STEP solicitor will advise you on the way the purchase is structured to avoid problems in this area.
You have two main choices.
1.  You could purchase the property jointly.
2.  She could gift or loan you the money so it is in your name.
In terms of Inheritance Tax, there is little to choose from between the two.  If she gifts or loans you the money, the property will remain in her estate as she continues to benefit from the property.
In terms of if she needs long term means tested care the options will differ.
If you purchase the property jointly or she loans you the money then it remains hers for means testing.
If she gifts you the money to buy the property then it becomes more complicated.
If you give away your assets purely to avoid means testing it is if it never happened. You are assessed as owning the asset.
If she gifts it to you because she wants you to look after her then it becomes too much for you, then she hasn’t made the gift purely to avoid means testing so it should fall out of the calculation.
However, if she does this, then the asset is yours and your husbands with the complications that may bring if you die, or you divorce.

Thank you, that’s exactly the sort of advice I was looking for! 

elsien

She does also need to consider deliberate deprivation of assets if she gifts you the money,  which is a different issue to that of tax.
In the circumstances- she’s healthy, not in imminent need of care, and would be using the money towards somewhere to live - it’s unlikely to be an issue but it does need to be on her radar just in case. 

Gifting also removes her security. 

theartfullodger

Understand your motives but this sounds like an almost ideal way to ruin relationships: Probably both parties blaming the other being a fault. 

Annisele

am123 said:

So we were looking at buying a house with our own money that had a more accessible garden, then my parents were going to use their savings to build an annexe and then sell their house and live off that money.

Any particular reason not to buy somewhere that already has an annexe, to avoid the costs and risks of a build?

What will you do if you buy somewhere and then don't get planning permission to build the annexe?

am123

Annisele said:

am123 said:

So we were looking at buying a house with our own money that had a more accessible garden, then my parents were going to use their savings to build an annexe and then sell their house and live off that money.

Any particular reason not to buy somewhere that already has an annexe, to avoid the costs and risks of a build?

What will you do if you buy somewhere and then don't get planning permission to build the annexe?

If we could find one with an annexe, that would be perfect, sadly they appear to be very few and far between in our area. I think I’ve seen two for sale in the last three years of looking and both were a little too far outside our search area. There’s always a risk of being refused pp, but I’ve been looking at areas where other houses in the street have big extensions/annexes etc. so at least we could say others have done similar.  We’re also looking at houses that could be sectioned off into two - several houses around here have converted the ground floor of the main house into annexes/apartments (Georgian buildings), or bungalows with rooms on one side that could easily provide more ‘self contained’ living. 
Obviously if we come across a one bed bungalow or something reasonably close that is in price range for just her, she would happily consider that as well, it’s just very hard to find anything that doesn’t cost more than her recently renovated 2 bed house with a fair bit of land is worth. It’s staggering the difference 30 miles can make to house prices. 

am123

theartfullodger said:

Understand your motives but this sounds like an almost ideal way to ruin relationships: Probably both parties blaming the other being a fault. 

Fair enough. 

So what solution would you suggest instead? 

Annisele

am123 said:

Obviously if we come across a one bed bungalow or something reasonably close that is in price range for just her, she would happily consider that as well, it’s just very hard to find anything that doesn’t cost more than her recently renovated 2 bed house with a fair bit of land is worth. It’s staggering the difference 30 miles can make to house prices. 

It sounds as though the annexe plan is with everybody's money combined, but the "one bed bungalow" plan involves only your Mum's money. Would it work for you to lend her some additional funds so she could buy a one bed near you, and not have to faff around with annexes?