No claim to gifted equity and can't reside in property upon completion

Hellohello65

I got a question and any help would be appreciated. I am selling my house to my daughter and a condition is that I will not have any stake in the gifted equity or reside in the property post completion. Wondering if this approach would be taken by all lenders or only some?. 

If this is a common condition used by lenders, can anyone share what evidence will my daughter or I have to provide that we have actually moved out? Also any insight into why this is a part of mortgage condition would be helpful.

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Hoenir

Would impinge on the lenders ability to seek repossession of the property through the courts should the need arise. 

ACG

Some lenders may check after completion. I dont think its checked often, but I have been lead to believe some lenders do on occasions (maybe like a random sample) - I have no idea how true it is though. 

It is common lenders where the seller is declaring it as a gift for those stipulations to be applied. Is it a gift or is it a gift with strings attached? Because thats not really a gift. It is generally done so they can reposes if necessary without the donor (you in this case) not being party to the mortgage but stating you have a claim on the property. 

There are ways around it potentially... Either put the property in joint names with you as a 1% owner and your daughter as a 99% owner or find a lender who is ok with it being a gift with strings attached. 

On a side note, your age/circumstances could see this as potentially disposing of assets if you need care in the not too distant future or pass away. If that is the plan, it might be worth looking into that further as you do not want it to all come tumbling down on your daughter. 

user1977

Hellohello65 said:

If this is a common condition used by lenders, can anyone share what evidence will my daughter or I have to provide that we have actually moved out? 

Are you not actually moving out?

Hellohello65

@user1977. If my daughter can not find another lender, I will move out as I really won't have any other choice as I do want to help my child. 

@ACG. It is a gift with no strings attached. Thank you for your answer. 

Roger-D

There's always more to a story than at first meets the eye....

Why are you gifting the property to her if you're not in fact moving out? Is this an IHT issue?

You "want to help (your) child" but you're not saying how. Ard you tslking financially or,  to provide a roof over her head? Can she not live with you as it is? Can you release equity and gift that to buy her own place?

amnblog

Your Daughter is using the wrong Lender. Have her speak to a mortgage broker experienced in this area.

The majority of Lenders do not like it as it can cause issues if the mortgage is not subsequently paid.

Some Lenders are OK with it. We do these cases regularly.

chanz4

have to agree, not moving out passing to daughter all signs of IHT

ACG

Hellohello65 said:

@user1977. If my daughter can not find another lender, I will move out as I really won't have any other choice as I do want to help my child. 

@ACG. It is a gift with no strings attached. Thank you for your answer. 

So you do not intend to remain in the property? Because that is a gift with strings attached - ie you can have the gifted deposit but I also want to remain in the property. 
Im not having a dig btw, this kind of thing goes on a lot. Im not the moral police.

But you need to consider a few things:
1) Your daughter is going to Bluestone I am assuming (judging by your post on the bluestone thread), is your daughter bad with money or were the issues down to an isolated incident? This could impact you if it is not isolated. 
2) As this is a gift and it seems clear you do not have the money to go and purchase your own onward property, what happens if you fall out or she wants you to move out? You have no protection. 
3) Are you disposing of assets to try and avoid care home fees or IHT? Because that could come back to bite. 

As I said, this is not a place to have a dig. I think it is important to think about everything and make a decision with full knowledge. 

Hellohello65

@Roger-D. I am selling her the property but it will be with gifted equity as I will sell it to her below market value. Post completion, I thought I would have some time to move out and did not anticipate it to be done straight away. I was planning a trip but I suppose with a condition like this, moving out would become a priority. 

It would help my daughter because it would mean she is getting a house for her future. It is hard for her to get on the property ladder any other way due to her income/ credit history. I rather she is not ripped off by landlords to be honest. Right now, we are at early stages I was just surprised by the conditions attached. 

I have already told my daughter to shop around.

@amnblog. Understood, thank you for your reply.

@ACG - I understand you better now. I was unaware that me staying in the property would means that I am providing a gift with strings attached even though I am not expecting financial repayment. Moving out was going to be done a couple of months down the line as I was considering traveling to America to visit family. Daughter had issues with money in past which was isolated but I guess we will see how other lenders like her.
Her mortgage advisor has book a call to discuss another lender today.

 I am under sure what disposing of assets mean or relation to care home fees? The sale is not being done to avoid IHT. Just to help my kid. I have limited understanding of IHT but know there are many tax considerations in a situation like this. The house is valued well below 325k and I don't really have anything else to my name

Thank you for the reply by the way. Really appreciate the time.

ACG

Hellohello65 said:

@ACG - I understand you better now. I was unaware that me staying in the property would means that I am providing a gift with strings attached even though I am not expecting financial repayment. Moving out was going to be done a couple of months down the line as I was considering traveling to America to visit family. Daughter had issues with money in past which was isolated but I guess we will see how other lenders like her.
Her mortgage advisor has book a call to discuss another lender today.

 I am under sure what disposing of assets mean or relation to care home fees? The sale is not being done to avoid IHT. Just to help my kid. I have limited understanding of IHT but know there are many tax considerations in a situation like this. The house is valued well below 325k and I don't really have anything else to my name

Thank you for the reply by the way. Really appreciate the time.

I think (I could be wrong) IHT is only an issue for 7 years. 
Maybe the broker could discuss with the lender whether you are ok to remain for a few months until you go travelling. But it will probably come back to what are the long term plans... You may go travelling for 6-12 months but what about after that? 

There is the potential to own the property jointly. You can set up the deeds so that you own 1% and your daughter 99%. This also gives you more security in that your daughter can not just kick you out if you fall out.