Dilemma: Money lent to relatives for a house deposit but…

Nybster

2019 my wife and I were beneficiaries in a friend’s will, not a massive amount but significant. 

At the same time a cousin and her family were looking to buy the house they were renting, next door to her mum & dad, but were struggling for the deposit. 

We decided that we should informally lend them the £15,000 they needed. They were overjoyed and said they would pay us back once they were moved in and settled. 

Then COVID hit. Their landlord (who was renting themselves elsewhere due to long term work) wanted to return back to her house and evicted my cousin via a section 21. 

They were forced to move back in with her parents. She was studying for a degree as a mature student. He was eventually made redundant (now both in full time work). 

Long story short, house prices in their area have rocketed. Cheapest 3 bed on the market locally is now £300,000 (they were originally purchasing for £200,000).
COVID restrictions hit us financially. Nothing overly drastic, but for example I’d just financed (HP) a new car as my work relied on travel and I had a generous car allowance. But COVID changed things and I now work from home and lost the travel allowance.  There is also the real possibility that, at 55, I might be facing redundancy in the new year.

So, here we are, 5 years later, they are no further in finding house and are unlikely to where they want due to huge rising house prices. My wife says to forget it, and in many ways I’m inclined to, but when I see them on multiple overseas holidays (we’ve only been able to afford 1 overseas holiday in 12 years) and fancy hair dos and days out I feel somewhat irked.

Am I right to?

Keep_pedalling

Time to ask for it back, they won’t be able to use it for a purchase anyway as mortgage providers will not accept loans only outright gifts.

born_again

I can see this getting messy. As what are the odds that it has already been spent, & they can't afford to repay it.

Wyndham

Did you have any kind of written agreement with them? If you did, you may get it back - though it's far from guaranteed.

They may have had issues if they had bought a house, as lenders don't like other loans on the property in addition to the mortgage. You would likely have been required to write a note at that point to say it was a gift and not a loan, and I don't think you would have wanted to do that.

Overall, the problem, I suspect, will be in proving it was a loan and not a gift. I suggest you have a read of the Loans board on this site where there are many such tales...

Mark_d

Your cousin and family are misusing the money you originally lent then. They are enjoying themselves with your money - when you're the one who should be benefitting from your money.

Regardless of whether these people end up buying a house, you lent money for a specific transaction and that has not materialised.  You may have been willing to support them in buying a house a few years ago...but now everyone's situation is different and you need to keep your money for your own security.

Pollycat

Nybster said:

2019 my wife and I were beneficiaries in a friend’s will, not a massive amount but significant. 

At the same time a cousin and her family were looking to buy the house they were renting, next door to her mum & dad, but were struggling for the deposit. 

We decided that we should informally lend them the £15,000 they needed. They were overjoyed and said they would pay us back once they were moved in and settled. 

Then COVID hit. Their landlord (who was renting themselves elsewhere due to long term work) wanted to return back to her house and evicted my cousin via a section 21. 

They were forced to move back in with her parents. She was studying for a degree as a mature student. He was eventually made redundant (now both in full time work). 

Long story short, house prices in their area have rocketed. Cheapest 3 bed on the market locally is now £300,000 (they were originally purchasing for £200,000).
COVID restrictions hit us financially. Nothing overly drastic, but for example I’d just financed (HP) a new car as my work relied on travel and I had a generous car allowance. But COVID changed things and I now work from home and lost the travel allowance.  There is also the real possibility that, at 55, I might be facing redundancy in the new year.

So, here we are, 5 years later, they are no further in finding house and are unlikely to where they want due to huge rising house prices. My wife says to forget it, and in many ways I’m inclined to, but when I see them on multiple overseas holidays (we’ve only been able to afford 1 overseas holiday in 12 years) and fancy hair dos and days out I feel somewhat irked.

Am I right to?

Oh dear.

What discussion did you have regarding repayment?
If they were struggling for the deposit, why did you and they think they'd pay you back once they'd moved in?

When they didn't buy the house they wanted (in 2020), what discussion did you have about them returning the money you loaned them?
Why did you allow them to keep it?
Why didn't they offer to give it back?

Why does your wife think you should forget a loan of £15K?
That's certainly not money-saving.

They are spending the money you loaned them to put towards a house deposit and taking the mick.

Given they've not mentioned the loan in 4 or 5 years, I doubt that it will be easy for you to get it back.

saajan_12

So to get facts straight: 
- PLAN: To loan them 15k to buy a house, which they repay post purchase
- REALITY: You loaned the money. They didn't buy the house or repay. 

They should have repaid / you should have asked for the money back as soon as it was obvious there was no imminent house purchase. At this stage, there's a risk that pushing for the money back will strain the relationship and still not get anything back. That wouldn't be entirely your fault but is a consideration. If you do want to ask for it back then we're nearing on the 6 year limit, so I'd get pushing. 

Reed_Richards

Why not ask them to pay it back in stages?  Say the cost of a years worth of overseas holidays and fancy hair-dos per year.

Nybster

So, this is where I think the differences between me and my wife lie. We had always just intended to give them the money towards their deposit. Their insistence, at the time, to pay it back is where my ‘Informal’ loan description comes from (my wife still insists it was a gift). My gripe is that, even if it was a gift, it was for a house purchase which hasn’t materialised…

oldernonethewiser

If it was a gift then the money becomes theirs and they can spend it on whatever they wish.

Bit annoying from your point of view.

If it was a loan then you can ask for it to be repaid.

Keep_pedalling

Gifts are absolute, what the receiver does with them is entirely up to them.