Best way to help sons buy flat together?

Alikay wrote: »

What would be the best way to do this? It can't be a gift as we have other children and would want outright gifts to be equal. We don't need the money for the forseeable future, nor do we need the interest on it (though want to be fair to all our children, an interest free, repayment-deferred loan isn't ideal - particularly if property prices increase and one child benefits when others have paid market-rate interest to banks).

No reason amount "repayable" cant be dependent upon house prices, eg if the house has increased by 20% they would need to repay £60k + 20% = £75k.


And they wouldnt necessarily have to repay as such, if the family/you are content to wait until your death, you can subtract that amount from the son(s) before apportioning the rest in whatever way you see fit. That's what Ive done in a similar situation. The child that didnt need the loan gets more out of the will.



No need for names on deeds.



As said, it does restrict the lenders.

You could have a charge over the property which is expressed as a % of the house value, rather than as a loan + interest. It's very common in situations where a couple are divorcing with one staying in the house. You are lending them (or one of them) the money but your security is different. It doesn't make you a beneficial owner so no extra SDLT but you will, I think, have a liability for CGT when you are paid back, although if the loan is from both you and your spouse then you will each have a CGT allowance you can use.

It is possible to have a charge for a debt owed by one of the joint owners, so if you want, you could lend £60K to son 2, which would then be secured by way of a charge. The charge would be repaid from his share of the sale proceeds.

If they go ahead with this, it would also be essential that the two of them have a proper declaration of trust drawn up which should not only deal with their shares in the property but also a mechanism for how either of them can get their share out - e.g. a provision that the house will be sold if either them gives the other x months notice that they wish to sell, and possibly also provisions for the other to have the right to buy them out t open market value if that happens.

You will need to get advice to have your charge drawn up appropriately to include provision for you to be able t demand repayment if necessary.

You say your sons are paying roughly £2,000 of rent a month between them.

In London that sort of amount rents a property worth something like £650k.

But your figures suggest you are considering helping them to buy a flat worth roughly £360k - i.e. they will have to move into a much cheaper property.

This does suggest that renting a cheaper property together could be another option if they wish to save a bit more for a deposit.

Leaving that aside, if you want to help each child equally, it could be a nice idea to decide on an amount you are prepared to gift each of your children for a deposit. DS1 and DS2 could get that now, and for the others, the money could be held in a separate savings account or investment account until they are ready to buy.

Another option would be to do a loan to each other brother, perhaps charging a similar rate as the mortgage. Mortgage rates are very low at the moment. Many lenders won't accept a loaned deposit, so the sons should speak to a mortgage broker about this.

A local solicitor should be able to help you with setting up the loan, as well as doing the conveyancing, and setting up a deed of trust between the two brothers. Don't use a conveyancing factory type place.

There are lots of people here who suggest wait until DS2 has a better job. I do not think this is a safe option. A quick google search suggest that the median average salary for people working in inner London is £34,473 - so at £35k DS2 is already about average. Depending on his job there is no guarantee that he will be able to earn more in the near future!

AnotherJoe wrote: »

I don't see why. They do not own the property, they have a loan. And if the loan is eventually nullified via an inheritance the loan is being written off rather than repaid so there's no capital gain.

An amount repayable based on the resale value of the property sounds very much like beneficial ownership to me. Happy to be corrected by case-law/legislation.