A house as a gift

khanom_2

Not sure if this is the right place to post this, but I have a few questions.
Can a child receive a mortgage free house as a gift? If so, will it be the childs or the parents name on the deeds etc? Will the parents have rights to sell this property? If the parents decide to live in this property do they have to pay rent? i.e. put into the childs saving account or something?
Any info appreciated. Thanks.

david29dpo

How old is the child?

takoo

Hi Khanom
Points to raise with the child's solicitor..?

1 In English law I think that the property would be held in trust in some way for the benefit of the child.

2 The donor's wishes would need to be taken into account by the trustees.

3 There is an official body in London - Official Guardian (???)that may be involved and help with initial information.

4 If the child's parents rent there may be tax implications if the donor is a parent.

Takoo

kunekune

Make sure that whoever is on the deeds as the legal owner is actually the person intended to be the owner. If this isn't possible, get a separate document stating that the legal owner is holding it on trust. If one person pays for a house, and then it is registered in another person's name, there is still a presumption that there was no gift, and the person who is on the title holds it on trust for the person who paid for it (this applies too where one person pays part of the price). The presumption can be overridden, and if it is a parent/child relationship, it may well be, but if there is a dispute it might be messy and bad for relationships.

Bear in mind that if this really is a gift to the child, regardless of how the paperwork is done, it is their house not the parents. The trustees would expect rent to be paid, etc, and there would be obligations to look after the house that might be greater than if it was the parents' own house. If this is a tax reduction scheme, I would suggest that there might be better ways to do it and with lower set-up costs. Why not just set up a good-sized trust fund? The chances are that property isn't a particularly good short-term investment right now, anyway.

khanom_2

Thank you all for your replies.
My daughter is 3 yrs. Her Uncle wants to give her the house, because he cannot be bothered with it anymore. He has got a great new job and moved away. The house has just been sitting there for the past 6months doing nothing. The uncle inherited the house so there is no mortgage. It is currently worth not much more than 60k and not in a very desirable estate. So just wondering what is the best thing to do. I am not sure of what set up costs there are or anything, or what responsibilities I would have as the parent.

kunekune

Well, obviously your daughter would not be living in it, it would have to be owned by trustees who would then administer it for her benefit. You might be appointed as one of the trustees, but don't have to be. However, professional trustees (ie, those who take the work of your hands) cost money. There wouldn't be high costs in the transfer to trustees since it is below the stamp duty threshold, and there's no mortgage, but unless the house is making money, then that's the trust out of pocket from the beginning. It would be advisable to have a properly drawn up trust deed too (can't do it orally, it has to be evidenced in writing as it is land).

But seriously, if he 'can't be bothered with it' , that is probably because he can't sell it and can't get decent tenants. You would end up with responsibility for insurance, running the tenancy, and the profit may be pretty small with a lot of hassle attached. Doesn't sound like much of a gift, tbh, it's really for his benefit not your daughter's.

takoo

Hi Khanom

Kunekune has made a good point. Check the gift horse in the mouth so to speak.

In addition to cost of trust etc consider:

• cost, quality and time neeeded to get the house in a lettable / saleable condition
• likelyhood of letting it (or sale) - talk to local letting agents / estate agents about rents and terms / sale price estimates
• contract arrangements for renovation etc.

Takoo

CLAPTON

would it be better for him to sell it and give the money to your daughter?

epz_2

just thinking about when the kid grows up, would it really be a good idea for a teenager to have their own part pad, sounds like a potentail problem.

khanom_2

Thanks again for your replies.Given me a lot to go on.
The house is in an ok state at the moment so it could be let out straight away if tenants were found. I was thinking, judging by the current market trend, perhaps it could be rented out for the time being and then later sold when people were ready to buy. I am confused about the legality of it all.

• So if the house was transferred to my daughter does that mean it will be her name on the deeds? Therefore her name with the land registry?
• Will a separate trust deed need to be drawn up, to give me the authority to rent or sell this house on my daughters’ behalf?
• The income from this house, I know will belong to my daughter. So what about tax issues etc?
• Will it affect my entitlement of the working tax credit?

Do not know if I am thinking along the right or wrong lines at the moment, so all information is and will be greatly appreciated. I will make an appointment with the estate agents though.

beautifulgorgeous_2

What happens if you have any other children, do they get a house as well or just the eldest?