Inheriting right to buy property brought last year

Biostu

My dad died recently and we are waiting for probate. I have 2 siblings who each rent property from the council one works the other on benefits. I own my house and work. Theres no will so we will inherit the estate a third each. The entire state is worth under 325k. Theres about 50k cash and a house worth 160k.

However dad brought the house from the council at a massive discount last summer (about 56k). So if sold within 5 years we have to pay a large proportion (104k) back to council.

I want to buy my siblings out. But currently we would have to pay back 100% of his discount. So to buy them out we want to offer them each a third of the amount that would be refunded but theres not enough in the inherited money to do this we would need to top it up.

We cant "buy" the house or we lose the discount. It has to be transferred to us to benefit or the discount is clawed back.

Can we just top them up to have monetary value of what we would get if sold? (i.e. Approx £18.6k each one third of the amount we would get after paying back discount to council).

Is this deprivation of assets?

Can we just pay them for their share? Without the house being sold?

Many thanks for any advice.

elsien

Why do you want to buy them out if you already have a house?

silvercar

Generally, a death would end the discount payback. So your Dad died and the discount payback disappears. Check there isn't a special clause, but normally you would inherit without the need to payback the discount.

This means you would have to offer around £53k to each of them to buy out your siblings. The sibling on benefit would have to look carefully whether this impacts their benefits - in fact inheriting cash and a share of a house may already cause them benefit problems.

itsthelittlethings

https://forums.moneysavingexpert.com/discussion/comment/81977152#Comment_81977152

To avoid the sibling who receives benefits losing them for a start. Personally I think you should just sell it. It's already free money.

elsien

https://forums.moneysavingexpert.com/discussion/comment/81977183#Comment_81977183

Buying the sibling out and giving them a wodge of cash is also going to impact on benefits.

however, I was more wondering why they need two houses.

Biostu

https://forums.moneysavingexpert.com/discussion/comment/81977152#Comment_81977152

Because they cant have a house and their current properties. They also cant both live there and neither of them want it. (it needs some serious work doing).

Im the only one one in a position to invest in the renovations needed.

My children are teenagers and will one day need somwhere to live in the mean time we can renovate and rent out for a small income.

Biostu

Yeah it causes one of them a nightmare the other pays rent but its very low and he doesnt want the house. Its a shame to let it go he lived there 35 years.

I will contact the council. I believe we lose all the discount if we sell within the year after he purchased it and some of the discount if sold within 5 years.

Thank you.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81977255#Comment_81977255

You could certainly delay the sale past the Summer, so reducing the pay back required.

HillStreetBlues

For income related benefits their share of the house would be the current value.
Your figure is correct £18.6k selling fees can be deducted. Added to the share of £50k they would lose any income related benefits if under pension age.

silvercar

https://forums.moneysavingexpert.com/discussion/comment/81977529#Comment_81977529

Could you do a deed of variation to give the siblings more cash and you the property? That would avoid buying off the siblings which could trigger the pay back of discount. Then if you own it all, one option would be to let it out until the 5 years is up.

sheramber

https://forums.moneysavingexpert.com/discussion/comment/81978322#Comment_81978322

First post says there is £50k in cash and the house.

OP Woukd need to check if renting the house out during the discretionary period is allowed. He may need permission to do so.