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    • MooreC
    • By MooreC 8th Nov 18, 10:25 PM
    • 4Posts
    • 3Thanks
    MooreC
    Buying a house with a discount?
    • #1
    • 8th Nov 18, 10:25 PM
    Buying a house with a discount? 8th Nov 18 at 10:25 PM
    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.
Page 1
    • MHartley
    • By MHartley 8th Nov 18, 10:36 PM
    • 26 Posts
    • 37 Thanks
    MHartley
    • #2
    • 8th Nov 18, 10:36 PM
    • #2
    • 8th Nov 18, 10:36 PM
    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
    • By MooreC 8th Nov 18, 11:01 PM
    • 4 Posts
    • 3 Thanks
    MooreC
    • #3
    • 8th Nov 18, 11:01 PM
    • #3
    • 8th Nov 18, 11:01 PM
    This was the sort of thing coming back to bite that I meant. Hopefully someone will know more
    • davidmcn
    • By davidmcn 8th Nov 18, 11:02 PM
    • 9,075 Posts
    • 9,663 Thanks
    davidmcn
    • #4
    • 8th Nov 18, 11:02 PM
    • #4
    • 8th Nov 18, 11:02 PM
    It's legal from your point of view, yes, but do you need a mortgage?
    • hb2
    • By hb2 8th Nov 18, 11:13 PM
    • 114 Posts
    • 127 Thanks
    hb2
    • #5
    • 8th Nov 18, 11:13 PM
    • #5
    • 8th Nov 18, 11:13 PM
    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.
    • xylophone
    • By xylophone 8th Nov 18, 11:26 PM
    • 27,302 Posts
    • 16,330 Thanks
    xylophone
    • #6
    • 8th Nov 18, 11:26 PM
    • #6
    • 8th Nov 18, 11:26 PM
    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
    • By alfred64 8th Nov 18, 11:47 PM
    • 4,207 Posts
    • 4,888 Thanks
    alfred64
    • #7
    • 8th Nov 18, 11:47 PM
    • #7
    • 8th Nov 18, 11:47 PM
    But that would be the sellers problem , not the buyers.
    • Slithery
    • By Slithery 8th Nov 18, 11:51 PM
    • 975 Posts
    • 1,563 Thanks
    Slithery
    • #8
    • 8th Nov 18, 11:51 PM
    • #8
    • 8th Nov 18, 11:51 PM
    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.
    Originally posted by MooreC
    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.
    Last edited by Slithery; 09-11-2018 at 12:17 AM.
    • tlc678910
    • By tlc678910 9th Nov 18, 10:45 AM
    • 730 Posts
    • 1,143 Thanks
    tlc678910
    • #9
    • 9th Nov 18, 10:45 AM
    • #9
    • 9th Nov 18, 10:45 AM
    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
    • By ReadingTim 9th Nov 18, 10:47 AM
    • 3,104 Posts
    • 4,584 Thanks
    ReadingTim
    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
    • By MooreC 9th Nov 18, 7:04 PM
    • 4 Posts
    • 3 Thanks
    MooreC
    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.
    • tlc678910
    • By tlc678910 9th Nov 18, 7:49 PM
    • 730 Posts
    • 1,143 Thanks
    tlc678910
    One approach to do the best for her father if she needs to sell the house quickly could be looking into putting it into auction with a reserve of the amount you would be willing to pay (plus a little to cover auction fees). Properties will tend to reach a bit less at auction as the quick completion needed makes raising finance difficult. Your friend should check if there would be any fees payable if the house didn't sell.
    Tlc
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