brother offering to buy the remaining shares of our shared ownership house for us

Bevn

My brother and sister in law have come into a substantial amount of money. They have no debts or mortgage and have said that they'd like myself and my husband to have the security of owning our house outright. We are 58 and 74 so cannot have a mortgage even though our income is pretty healthy. (4000 a month) We currently own 25% of our house with no mortgage and pay rent of £680 on the remaining 75%. My brother and SIL have suggested that they give us give us the money to buy the remaining shares and then we give them the rent payment as extra income for them. I am keen as I hate not owning our house outright and we will always have to pay rent anyway so would rather give them the money than the housing association. The other benefit is then we own the freehold as while we only own 25% it is leasehold. My question is - is this do able? What do we need to do legally? We want to ensure its safe for us all. We are the legal owners of our share and don;t get any help from the housing association for upkeep/repairs etc. 

Bevn

My keen as I dont brother and sister in law have come into a substantial amount of money. They have no debts or mortgage and have said that they'd like myself and my husband to have the security of owning our house outright. We are 58 and 74 so cannot have a mortgage even though our income is pretty healthy. (4000 a month) We currently own 25% of our house with no mortgage and pay rent of £680 on the remaining 75%. My brother and SIL have suggested that they give us give us the money to buy the remaining shares and then we give them the rent payment as extra income for them. I am keen as I hate not owning our house outright and we will always have to pay rent anyway so would rather give them the money than the housing association. The other benefit is then we own the freehold as while we only own 25% it is leasehold. My question is - is this do able? What do we need to do legally? We want to ensure its safe for us all. We are the legal owners of our share and don;t get any help from the housing association for upkeep/repairs etc. 

Bevn

sorry can't edit but first line should read...my brother and SIL have come into a substantial amount of money

Brie

My first thought is that you need to know from the HA what the actual cost to buy them out would be.  Next you would need to have a solicitor and I suspect they will say that brother needs his own solicitor to ensure there's separate impartial advice being given.  

One thing will need to be sorted is the transfer of money.  So there will need to be an agreement of the grounds of transferring this and likely what is it being used for.  Then your payments will need to be scheduled with an agreement as to how long they will be made, will they increase with inflation or something, and what happens if you stop making payments.  

Presumably brother has taken the rent payments into account for tax purposes.  There may be some suggested way to make payments without them being labelled as rent (repayment of loan?) so that they aren't considered income.  

Good luck working it out.  It sounds like it would be a big relief to you.

Brie

I've merged your 2 posts.

Sam_666

This is such bad idea on so many issues and levels.

Keep_pedalling

Giving you the money to buy out the portion of the house you don’t currently own is fine, but you don’t pay rent on a gift. This seems more like a lone which you will be repaying. If you are paying interest then that will be subject to income tax.

How much are we talking about here?

Nasqueron

You might not get a joint mortgage with a huge term but not sure why you believe you can't get one at all, unless the 74 year old has all the income - have you tried?

If you have that much disposable cash, where is it e.g. in savings and could this not be used?

_Penny_Dreadful

https://forums.moneysavingexpert.com/discussion/6649719/brother-offering-to-buy-the-remaining-shares-of-our-shared-ownership-house-for-us

Your brother and SIL wouldn't be giving you the money, they'd be lending you the money from what you are describing.

With the money you would end up owning 100% of the leasehold so your brother and SIL can't change you rent as if you are their tenants because you wouldn't be. What they would essentially be doing is a private mortgage which they could secure with a charge against the leasehold title. If this is an interest free loan then there are no tax implications for them. However, if they are charging interest the interest would need to be declared to HMRC.

silvercar

Is it a gift or a loan. Even if interest free, a loan is a loan.

You all have to consider what would happen if you could no longer afford to repay the loan, would they have a charge on the property, so could force a sale? Or would they allow you to remain in the property and pay the loan back out of your estate?

You also need to think of inheritance tax, if any of the 4 of you pass away what would happen?