Buying property for father - multiple issues to consider

mither_2

Hi,

Apologies in advance if I've not explained this clearly or missed anything out.

Situation is as follows:

Father (75) is being evicted from his bungalow as landlord is selling (this move was trigerred by changes to section 21 and she got her notice in just in time to be ahead of the deadline).

He has c£100k in a private drawdown pension and his state pension. No other income.

There is little or nothing on the market and even less at that letting agents will consider him for (he doesn't meet their income criteria). As he has savings (his pension pot would be considered savings) he is way down the list to receive a council place and even if he does as a single man he could just be put into temporary accomodation, which may be very unpleasant.

He separated from his previous partner (his second wife, not my mother) c6 years ago and has had no contact from her. She came into the relationship with no money and took quite a lot from him which is partly why he is in such a predicament now.

He's stuck in limbo as he can't buy, can't rent privately (even with me as a guarantor) and can't get a countil place.

I saw a bungalow for sale at £230k. Its basic but it would be fine for him. I have the cash to buy it as I have savings and no mortgage on my family home.

My issues are)

a) I'd need to charge him rent and so would need a tenancy agreement.

b) the stamp duty cost of buying as this would be considered a second home and so very high (£13,600) and if I ever went to move house I would be stuck paying extra stamp duty. The house I may buy would be higher in value and this would be an ecven greater cost.

c) concerns over whether his ex wife on his death could emerge and try to claim a share of the house. Seems unlikley as the house will be in my name.

d) I didn't have a specific plan for that cash but wanted to use it for my young children. If he lives for another 10-15 years and doesn't leave before then I can't sell.

e) if he needs to go into a home I don't want the property getting caught up in any claim that the LA would have on how his home is paid for.

Possible options

If I could absorb all these costs then I could have him draw down £xk from his pension and pay me this up front as rent and this may also stop his ex wife claiming against him as he would have much less money and I would own the house.

It feels like its a non-starter (the extra stamp duty on buying the property and anything payable if I want to move my family later make it very tough) but such is the dire situation in the housing market I'm getting quite desparate for him.

Anyone have any ideas please?

user1977

if I ever went to move house I would be stuck paying extra stamp duty

On this point I think you misunderstand the rules - if you are replacing your own main residence (i.e. selling and buying simultaneously or thereabouts) then you just pay standard stamp duty on the purchase - any additional properties you already own are irrelevant.

Ms_Chocaholic

Have you considered Council sheltered housing? Depends on whereabouts in the UK you are but I know in our area there was lots of availability of sheltered housing.

Jude57

https://forums.moneysavingexpert.com/discussion/6670304/buying-property-for-father-multiple-issues-to-consider

First things first. Is the S21 notice legally valid? Knowledgeable posters here tell us that a significant number aren't. You can check here:

https://england.shelter.org.uk/professional_resources/legal/possession_and_eviction/section_21_validity_checker

Even if it IS valid, it's not an eviction order. It's notice that the landlady intends to seek possession and in order to do that if your Dad doesn't voluntarily move, she'll need to get a Judge to issue a possession order. To get a Court date for a hearing will take several months minimum so your Dad doesn't need to rush anything. He should just keep paying his rent in full as usual, report any repairs as usual and generally behave as the good tenant I'm sure he is.

Have you looked at Housing Associations who provide rented accommodation for the over 60s? There are some that specialise in affordable housing for older people and tenancies are as secure as Council ones. (I don't know what effect, if any, the new law has on social housing tenancies) The properties tend to have walk-in showers or wet rooms and modern kitchens and many have an on-site caretaker, though not all are there 24 hours a day, and they keep an eye on tenants which is reassuring. Of course maintenance and repairs are the responsibility of the HA. Turnover of such properties tends to be higher than for 'standard' properties, for obvious reasons and the more flexible your Dad is on location, the better his chances of finding somewhere.Try searching for 'over 60s rented accommodation in [town/city/area] and I'm sure you'll find several. One that comes to mind that has properties in many areas of England is Anchor Housing. See here:

https://www.anchor.org.uk/

Flugelhorn

yes you will pay extra stamp duty now but that is part of this purchase, not any future purchases if you move your main residence

the property won't come into consideration for care home fees.

silvercar

I don’t know if ‘joint borrower, single proprietor ’ mortgage would be an option. So you would be on the mortgage, enabling the mortgage to be seen as affordable, but the property would be in your father’s name. So no extra SDLT.

Albermarle

Retirement flats get a lot of bad publicity, as they can be difficult to sell and many plummet in value from the new build sale price. Also they have high service charges that continue to be charged even when the flat is empty.

So that is the negatives. On the positive side, you could probably pick up a bargain for a flat that was a few years old. Also low maintenance, and often a warden to keep an eye on everybody.

A possible alternative anyway.

elsien

https://forums.moneysavingexpert.com/discussion/comment/82016329#Comment_82016329

I would second this. Friend’s mum got a place really quickly where the ordinary waiting list was much longer. Has he actually applied and told that he savings will affect his options?
Some areas have a joint application system with the authority and the housing Association so that is something that you would need to check.

mta999

One thing you could consider is lending him the money as a mortgage for him to buy the property in his name

put a charge on the property at the land registry for the value you lent

If you need income (because obviously he wouldn't be paying you rent) then you can charge interest

When in the fullness of time he passes away you can sell the property and reclaim the mortgage

Regarding his ex-wife - even though he owned the property in his name it would be fully mortgaged and so there would be no assets there to claim against

martindow

https://forums.moneysavingexpert.com/discussion/comment/82016748#Comment_82016748

There would be an asset if the house goes up in value, wouldn't there - the difference between the value is some years time and the value now covered by the loan? No idea if the ex could have any claim on this.

Grumpy_chap

https://forums.moneysavingexpert.com/discussion/comment/82016479#Comment_82016479

Well, that would avoid the higher SDLT and potential CGT liabilities for the OP.

If, however, the OP's Father is the sole-proprietor of the property, then one has to assume that the value of the property might be assessed by LA as available to fund care needs if they arise. The property would also be in the OP's Father's Estate so may incur IHT and / or be left by the OP's Father in the Will to anyone that the OP's Father chooses, which might not be the OP.