Buying a share in a relatives house

JG18291702

My parents own a house on a large plot of land, they are wanting to downsize and me and my husband would like to purchase the property for our young family. 

My parents have suggested that we buy a share in the house with our savings, so it's basically releasing some equity to enable them to build an annex on the land to live in themselves. Planning permission is in late stages and should be agreed in the next couple of weeks. 

We have gone down the route of looking to buy the whole property however it's just a little out of our reach (I still only work part time as our children are not in school and our savings are less than 10% of the property value). This is where the share idea has come about, with the idea that instead of paying a mortgage each month we pay my parents a 'rent' so to speak. Ideally this would then increase our share in the property over the years. 

Can anyone offer some advice on where to start with this and what kind of questions/help we should be seeking from a solicitor? Is this even possible? 

eddddy

If your parents have a mortgage, or you require a mortgage - that would be a stumbling block.

Beyond that, it's a case of how much you want to rely on trust, goodwill, etc - versus how much you want documented in enforceable legal agreements.

(Are you sure that everyone has a 100% mutual understanding? It's not the case that one person is making some assumptions, and another person is making different assumptions - without realising there's a difference.)




There'd be a very long list of issues to consider, a small subset might be...

• Who is responsible for insuring the buildings, repairing/updating the buildings?

• If you disagree about something (e.g. should the driveway be re-laid, repaired or left alone), how will you reach a decision?

• What happens if you can't afford to pay the rent? Or you decide to move out of the house - e.g. for a dream job, or because you've fallen out?

• What if you pay your parents for years - then they don't give you the percentage of the property that you think you are due?

• What if your parents separate / divorce and they want to divide their assets (or one dies)?

• What if you separate / divorce and you want to divide assets (or one of you dies)?

And do you want this formally recorded by land registry - by registering everyone as 4 joint owners of the property, or by somebody having a charge on the property? Or will you document it informally?

thegreenone

Bear in mind that being on the doorstep means you will be needed more and more as they get older. 

What happens if your parents need to go into care?  Can the Annex be completely separated (Land Registry) and sold?  Planning Permission should address this.

Albermarle

Fixing the correct rent could be tricky, if you want it to be in line with what mortgage payments would have been.
Mortgage payments are dependent on interest rates, length of mortgage, fixed/variable rates, size of deposit etc

Maybe being family they may be happy to for you to repay on an interest free basis, which would be simpler and save you a lot of money.

If it all worked would there be 4 owners of the current house, and 4 owners of the new annexe, as it is all on the same land ?

lincroft1710

Many planning permissions for annexes are only granted on the condition that the annex cannot be sold separately from the main house, so you may be owning more than you bargained for! 

NameUnavailable

The annex may be subject to council tax as a separate dwelling (I think this applies if you have access from outside rather than only via the main house).

Are there any other relatives that might stand to inherit a share of the property at some point in the future?

Bigmac1249Pollock

Would it to be legal for my son and family to live in my house  and pay the going rent. If he could my son would build an extension to the house for me to live in.