Advice Needed

Discussion in 'Finance, Property, Law' started by kjokkenjokken, Jul 17, 2008.

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  1. Hi guyss,

    I'm considering buying my fathers ex-council house and I need some advice please. My dad actually bought the house quite a few years back for £23,000, unfortunately he has remortgaged it a couple of times and now owes £70,000.

    The house is worth approx £165,000 however, he is willing to sell it to me and my brothers for the cost of the outstanding mortgage (£70,000). My old man is now 62 and he would need to work until he is 72 in order to complete his mortgage term so we want to ease the burden for him.

    I know this is a great deal (my dad would obviously live there rent free until the inevitable) But I'm just asking if there may be any legal issues with this. Can he sell the property for what he wants as long as the mortgage is paid?

    I also take it there are no legal issues concerning 4 people chipping in together to either get a loan or joint mortgage?

    All advice will be very much appreciated.

  2. I would imagine selling to you below true market value could be classed as tax evasion because if you bought at £78000 instead of £165000 the treasury would lose out on £1650 in stamp duty.

    AFAIK there aren't many lenders that will allow a four way mortgage so it reduces your options.

    Get professional advice from a solicitor.
  3. You also can't let him live there rent free - benefit in kind or some such. In essence he can't sell to you below market and then stay there without paying - it is evasion of some form or other. details are absent, but i tried something similar for my in-laws and found that the Chancellor isn't as dumb as he is haggis looking. Unfortunately.
  4. As always never take advice from an internet forum, but:

    From my own experience, mortgage aside, one way to 'get round' your old man living there for free is to have either yourself or one of your brothers registered as living there. Make sure whomever steps up for it is registered on the electoral roll and also has a bank account and a utility registered at the address in their name. Mobile contract is the best way to go as will only cost a few quid but will get regular bills even if you don’t use it.

    I’m sure there are ways around the buying/selling point.

    Believe it or not HMRC are not that smart when it comes to ‘one offs’ if you know what I mean?

    Forget about a solicitor. Speak to a decent accountant.
  5. Thanks for the advice guys, think I need to investigate further

  6. ive got some houses,
    what you need here is a private sale.
    Apply for a mortgage buy to let with birmingham midshires.
    tell them that the house is for sale for £82,500 and that you want to borrow 85% from them (£70k)
    keep it simple, just do it in your name.
    Go to the solicitors with your dad and use the same one as him.
    when the mortgage offer is in and the survey has been done you will be asked to go to the solicitors to complete.
    they will ask you for the remaining £12k
    tell them that you have paid it direct to your dad (and have him with you to vouch for it)

    completion cert signed. job done.
    sign up a tenancy agreement (i can email you one if you like) charge your dad five pounds a week rent)
    no laws broken, a white lie on the selling price but then the property is worth lots more than the 100% mortgage you actually got.
    case closed
  7. check PM's