ILs “gifting” home

No I wouldn’t be happy with this arrangement. I wouldn’t settle in a house that wasn’t my own. I also find it quite offensive that the in laws won’t put the house in their name in case of divorce.

When the in laws die it will form part of their estate for IHT/probate purposes. If they require care the houses might need to be sold to pay for it. There’s no security for your sister there and the constant feeling that the in laws have this control over her.

Your SIL should use her savings to buy an investment house but in her own name only; not jointly with her husband.
Caveat… I’m not a family lawyer, but surely otherwise if they were to divorce, she would have no right to the “marital” home and only 50% of the investment house

I would hate this offer and it'd be a firm no. I agree with others, it's very controlling. Why do the inlaws feel they need to do this? If they cared that much they'd put the house in the couples name? They'd happily see the mother of their grandchildren not get anything if they were to divorce? No equity they would have built up start again? Weird.

I'm with your sister. It's horribly controlling of the ILS and do they have a key to pop round when they want as it's their house? No crack on sister and aim for your own marital owned place. If they want to gift something/anything it should come with no strings attached else it's not really a gift. This is their vision not your sister's. It may be in their name but it will go to their son no doubt when they pass. It's purely to stop your sister benefitting in the event of a split and all the implications of that.

This is a fair point actually.

when i look at our friends the ones with rich parents who get "help" with house deposits and have parents paying for GC childcare and private schools do IMO piss money up the wall like its going out fashion vs me and my DH (who earn similar or more).
Like happily buying 3 x £250 shirts on a whim 🥴 summer hols are 15k 😵‍💫

one husband doesnt have ANY pension, not even minimum matched contributions. He opted out of all his company ones because "he won't need it".

On reflection I do think there are complexities/dependancies...
the DH, plans for children and especially the in laws, if they are tricky characters it might be challenging.

In which case she would be no worse off living in a rent free house.

From the OP:

Sister has been saving for a house deposit for the best part of a decade

It doesn't say if he's been saving too.

Well they clearly don’t have much motivation to save now anyway since they have no money of their own!

What happens when the in-laws die? With multiple homes in their names they are likely to be well over an inheritance tax threasholds - they would need to save for that as a minimum

I would do it. And whatever I normally pay in rent or save for deposit I would continue to save on my own. Or buy investment property as ILs suggest.

If after moving in the ILs are too annoying/controlling then move out. I would be happy to try it though.

I’d be tempted particularly if it’s working ok for others. They are not very optimistic for their children’s choices in partners! I’d do it save my mortgage payments in a separate account so I have exit strategy if needed

The DH would have no incentive to save. He gets a free house to live in and presumably a big inheritance coming later on, I predict he would not want to move out and would prefer to splash the extra money on luxuries and holidays.

If it's in their name and they've done the same for his siblings then unless they have a huge amount of savings as well they will likely lose the home to inheritance tax when the parents die.

Absolutely not a chance would I give anyone else complete control over such an important decision with terms attached. Buying a home is a very personal choice and to have no free will with it wouldn’t feel right at all. I agree with some PPs that this feels very controlling!

If OP's sister does this and then divorces, her ex-DH would be entitled to 50% of her property, and because the family home is actually owned by the PILs, OP would get nothing from that. I would assume that after the divorce, the OP's PILs would then put the house in their son's name. So he would have 1.5 properties and OP's sister would have 0.5 properties. That doesn't sound like a great deal for OP's sister.

Well of course it does! He has a house, he may have no motivation to become a landlord, because he knows he's looked after by his family. If that wasn't the case, he may feel differently.

Would they instead buy them an investment property in the ILs name but let them manage it and keep any income? I agree with your sister wanting to buy her own house with her husband and not feel like a tenant of her ILs.

I wouldn’t do it. Even if you were to live there short term and save up, DH might not want to move out. He might not bother saving and just spend the extra money on luxuries. In laws could kick you out at any point. They could be really opinionated on any decor you choose, make you anxious about any wear and tear. There are too many reasons to list why it is a bad idea.

When someone wants to make you their puppet, there are always strings attached.

I’m really not sure point you are making. If she’s the only one saving they have issues either way and it has nothing to do with the inlaw’s house.
If they divorce now she gets basically nothing because they have nothing.
Half the savings they accumulate from not having to pay rent is a hell of a lot more than she has right now.

To me the price isn't worth the potential cost - not even if my in-laws were the best people in the world.

There are too many conditions attached, too much being done on their sole terms, and too much possibility for the souring of relationships.

So in her position I would buy my own little home to live in first so I would benefit from no stamp duty and teh government help if she has a LISA etc, then move out into the big house that's been bought and rent out my little home.
Little home will always be good income and somewhere to live in place of divorce.
I wouldn't spend more money on upkeep than I would on a rental property

I’d say yes but I would want an investment property in just my name with paperwork drawn up so my spouse had no claim to it if we divorced. I would then rent it out and overpay as much as possible so I owned it outright.

Sounds like a very weird set up. Why would they want to exclude their sons/daughters in law? If she does go ahead, she should invest the money she is not spending on a mortgage for herself so she doesn't find herself high and dry one day.

I think your sister should trust her own instincts on this one. There is much potential for this arrangement to go tits up!

No from me.