Can I buy part of my parents house?

penguinpal1

Hi all, just looking for some general advice. Recently discovered my parents are quite badly in debt - £100k+

Mum is 70 and severely disabled, she’s got £70k+ credit card debt. Dad nearly 80 and still technically a sole trader running a family business but my bro is actually running it for him but not making a penny, literally just fire fighting, any money made gets absorbed by business fees, so they’re living on PIP and state pension.

Parents own their house outright and it’s worth about £350k. I already have a mortgage with my husband but wondering if I were to buy say a third of their property on a mortgage so they could use the money to pay off their debts, fully retire and then pay me rent to cover the mortgage? Is that feasible? I have today filled in a strange account for my mum but a lot of the bills come out of their joint account so not sure if she’ll qualify for individual help as she shares the account with a business owner.

penguinpal1

*filled in a StepChange account! Not a strange account! Apologies, autocorrect.

voluted

You could do that, in theory. You'd just place a charge on the property and happy days, per se.

The flip side is that you'd realistically never be able to evict them and you may have questions to answer if they snuff it within the next 7 years.

Brie

voluted said:

You could do that, in theory. You'd just place a charge on the property and happy days, per se.

The flip side is that you'd realistically never be able to evict them and you may have questions to answer if they snuff it within the next 7 years.

I'm trying to think what questions would asked. I get the 7 years for IHT but this is clearing a large chunk of debt.  I don't think the council would be bothered if they need to help with care, again because of clearing the debt it actually puts mom & dad in a better position than before.  

Yes - not being able to evict them.  The other side of owning the place, even with a mortgage, is should the OP go through a relationship split a portion of the property would be considered as part of the OP's assets.  But if a spouse is willing to provide back up for getting the mortgage to help out then I can't imagine them being the sort that would themselves try to evict a elderly, frail couple.  There's also considerations of capital gains tax eventually.  And are there any other siblings that might object for some anticipated inheritance reason.  

Keep_pedalling

Frankly this sounds like a terrible idea for you especially if you don’t have a pile of spare cash to put into this. What is going to stop her building up another pile of debt once clearing this lot?

Other options would be to downside or to take out equity release. 

Brie

The other way to look at this is what's the worst that would happen if mom & dad stopped paying these debts?  They are non priority ones - assuming they are credit cards, personal loans and the like.  They aren't going to want to get a mortgage any day soon.  So maybe just stop paying.  Let the creditors chase, get nasty, but with help with someone like StepChange they could have a debt management plan set up and pay £1 a month to each creditor.  

Their other alternative if they do feel they should pay the debts is to look into equity release.  Basically does the same as you taking a portion of the house but there's no problem with you having any ownership issues etc.  Parents would need to take proper advice on this but if you (& any siblings) weren't particularly counting on inheriting (which none of us should count on really) it will obviously affect what you might get eventually.

MWT

StepChange can also help with the advice required for equity release.

It is a different part of their organisation, but if it makes sense I imagine they can refer it to them...

elsien

Yes, I was wondering what your mother had run 70K of debt up on, and what would stop her doing the same again.
With the usual caveats about being a part in a second property if you divorce or become unwell, or lose your job and need to claim means tested benefits. For example. 

theoretica

I don't understand why the business can't be wound up now?  Is it also in debt?  Business debtline may be able to advise, if so.

penguinpal1

Thanks all for the comments! I think I know deep down that it is a terrible idea but needed hear someone else say it. I was trying to think of the easiest way to help my parents and thought that would be better than equity release as it stays in the family, no fees etc. I did make the mistake of mentioning this to my sibling lastnight and he got extremely excited and thought it was a brilliant idea.

The business is also in debt but my dad is unwilling to talk to me about anything to do with that, he only wants me to help my mum so that’s why I’m going through StepChange with her as an individual, as when I spoke to National Debt Line the moment I mentioned she lives with my dad and he’s a sole trader they instantly said they have to be treated together under Business Debtline. 

It’s all very stressful and I feel I have a lot on my plate to be honest. The recommended options on StepChange was to speak to the Homeowner team, so I will speak to them tomorrow and see what they say. 

MWT

Do either or both of your parents have a power of attorney in place? (EPA or LPA)

I'm sure you've already realized this, but with the house presumably in joint names it is not going to be possible to just 'help your mother' as the house seems to be the only significant asset they have to work with...