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Buying a house with a discount?

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MooreC
MooreC Posts: 4 Newbie
in House buying, renting & selling
Hi,
So basically I want to buy a house but I can't borrow much (divorce destroyed my credit)
A friend who is in the process of becoming deputy for their fathers finances (he no longer has capacity) needs to sell their fathers house in order to pay off his debts & fund his care.
They want a quick sale & said they want to see it go to someone who will care about it so have offered me the property at below market value. Houses on this road go for £120,000-£146,000 ive based this on sales from last two years, I have been offered it at £70,000. The only thing I know that warrants a lower asking price is that the property has no central heating.
Is it legal for me to buy the house at this discount? I'll be a first time buyer, the cost even at full price won't affect stamp duty so it's not a tax dodge or anything. I just don't want to find out later that something will come back to haunt me & I can only find info on properties being sold to relatives with discounts to compare.
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Comments

  • MHartley
    MHartley Posts: 27 Forumite
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    I do not know the answer to your question, but one thing to consider would be if your friend's father needs funding for his care in the future. Selling his property to a friend at significantly below market value may be deemed to be deprivation of capital. Hopefully someone more knowledgeable will be able to give you a more definitive answer.
  • MooreC
    MooreC Posts: 4 Newbie
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    This was the sort of thing coming back to bite that I meant. Hopefully someone will know more
  • davidmcn
    davidmcn Posts: 23,596 Forumite
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    It's legal from your point of view, yes, but do you need a mortgage?
  • hb2
    hb2 Posts: 1,398 Forumite
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    Yes, this would be considered 'deprivation of capital' if/when the father is assessed to pay for care. The friend also has a duty to get as much for the property as they realistically can under the terms of their deputyship.
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  • xylophone
    xylophone Posts: 44,550 Forumite
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    As his father's deputy, it is your friend's duty to act in his best interests.

    To protect his own and his father's position, it would be wise to obtain a valuation of the property from a RICS qualified surveyor.

    If the father's resources are depleted to the point where he needs to claim means tested help with his care home fees, the LA would count an undervalue sale as deprivation of assets.
  • alfred64
    alfred64 Posts: 4,991 Forumite
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    But that would be the sellers problem , not the buyers.
  • Slithery
    Slithery Posts: 6,046 Forumite
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    edited 9 November 2018 at 1:17AM
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    MooreC wrote: »
    They want a quick sale & said they want to see it go to someone who will care about it so have offered me the property at below market value.
    That's a very bad idea your friend has. As their fathers deputy your friend has a legal responsibility to act in their fathers best interests, which means getting the maximum amount possible for the property.

    If your friend sells below market value then they'll be in breach of trust and open to legal action against them.

    But if none of that bothers you then it's a perfectly legal purchase from your point of view.
  • tlc678910
    tlc678910 Posts: 982 Forumite
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    Hi,
    Your friend does not have the authority to sell the house under value. As her father now lacks capacity he cannot authorise this so your friend must act in his best interests - which is not to give away equity in his property.

    As your friend is acting as deputy it is quite possible that her solicitor or the mortgage company could put a hold on this as suspicious to be selling a relatives asset significantly undervalue. They could report to the social worker/ police or the Court of Protection if they think it is financial abuse of a vulnerable person and your friend would be removed as deputy (as a minimum).

    On an ethical level you should not collude with this. Would your friend be as quick to give away massive chunks of house equity if it were her property? Your lack of funds really isn’t your friends dad’s problem is it?

    If you want first refusal on the house your friend should get it valued in writing by a RICS surveyor (as suggested by xylophone) and you can see if you would like to buy at this amount. Your friend should keep this paperwork carefully as someone might still complain she has not got the best value for her father’s asset by not putting it on the open market.

    I appreciate you thought this was dubious and that’s why you are posting here but to put it bluntly - don’t attempt to get on the housing ladder by ripping off an old man.

    Tlc
  • ReadingTim
    ReadingTim Posts: 3,970 Forumite
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    Legally, it won't directly come back to bite you, but it could bite your friend, who might decide to blame you for all or part of this "plan", and try and recoup the "discount" you received. They're unlikely to succeed, but it'll be the end of the friendship.

    And obviously, if you need a mortgage, you'll need to have the income/savings to be able to borrow the £70k in the first place - no lender will relax their lending criteria on the basis of any claimed "discount" to the market value.
  • MooreC
    MooreC Posts: 4 Newbie
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    Thanks for your replies. I'm definitely not trying to rip off her father I never suggested any price & have an agreement in principle for £110,000 so would be able/happy to pay more but if someone makes you an offer like that it's going to turn your head, it was only after I looked into it that i noticed how much less it was (I was thinking it was closer to £20,000 less which could maybe be normal for a house that needs some work eg the heating?) I don't think she is trying to rip him off either & it's a case of a fast sale because his debts are loans using the house as collateral & she doesn't want to lose the house to them and leave her dad with nothing. I am definitely going to speak with her about it & suggest she gets a valuation & if it's valued at something I can afford then great if not I don't want her getting in trouble so I'll be turning down the offer.
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