ILs “gifting” home

I'd be wary of it long-term or if you're wanting a house of your own. Parents often 'help out' in their adult children's houses by doing unasked for DIY or gardening or decoration with varying success. I'd worry if would be that much worse in this scenario.

However, if your sister and her DH treat it like a rental and are prepared to move out quickly if needed and just do it for a year or two, it could help them save a lot for their own property that they actually own.

Absolutely not for many of the reasons already noted.

IHT planning
Repairing or non repairing lease to occupy
The op's sister's future security
The balance of power / reductiveness of the relationship for SIL
Potentially taxable vis no market rent

It needs to be properly gifted or a Trust needs to be set up.

What a shame that despite their money, the IL's have brought up a son unable to provide for himself and his partner. How very emasculating. If he supports this notion, I'd advise your sister to run for the hills.

Isnt that what you do when you rent anyway? In the current housing climate if I didn’t have my own home I’d jump at the chance! I’d just insure there was a watertight contract drawn up by a solicitor. They’d be paying no mortgage/rent which they could continue to save and if it didn’t work out they’d be in an even better position to buy their own place. It’s an absolute no brainer!

I'd think carefully before doing this. Yes, it's great to have no mortgage, but she also has no security. She could put a good chunk of her earnings into savings, so that she has money to fall back on if they split, but those savings would be considered an asset of the marriage and her DH could take half. There are some benefits here, but it would leave your sister in a very vulnerable position if they split.

The ILs should lend the cash to your sister and her husband and that loan should be secured against the property. This means that the ILs protect what they’ve parted with in the event of divorce but your sister owns the home and so gets any growth in value and any money she spends on it (e.g. new kitchen etc) isn’t money spent on someone else’s home.

I wouldn't even consider this unless I was otherwise at risk of homelessness:

• Your sister essentially loses the protection of marriage with this setup - her husband can kick her out when he wants
• She will feel like an outsider and a temporary presence in her own home (or where she lives)
• Every time the in laws visited I would feel conscious of their opinions on the house and its upkeep

I'd honestly rather pay a mortgage than enter into this, especially with children involved.

Tell her not to do this. The overload in terms of obligation going forward, expectations, lack of financial security....
It's a bonkers idea. Why on earth are you encouraging her? Look past the £££signs and seek the downside - surely it's onvious why this is wrong
Your sister sounds sensible, focussed and self-reliant. Those are excellent qualities.
Greediness and an easy life are not.

If I had the money, this is what I'd do, rather than give it as a gift. Otherwise my child's spouse would be able to walk away with half the value, and might do pretty damn quick, because it's easy money.

But it wouldn't be my house in any day to day sense. It would be theirs to maintain and do with what they will, and I'd have no more right to visit or stay than I do now.

My mum 'gave' my DH his home by adding him to the deeds of her rental property when the tenants moved out and she offered it for him to live in. She was a difficult person in many many ways, but she never interfered in the house. It was DB's and his wife's in every day to day sense.

Quite apart from all the other issues, would happen if they had to go into care ? Given that the the property would still be in their names it would surely be up for grabs to be used for fees ?

I also feel that it would give the ILs some kind of entitlement, and I'd fear them showing up whenever they want, or asking for "favours" your sister wouldn't feel she could refuse because of the "gift".

I wouldn't like this set up either, it would be a firm no from me and that would include an offer if it was my own parents.

Too many things can go wrong, what happens if the parents pass away and are in debt and the properties are used to pay off the debt before going into a inheritance pot, if there is one? You could become homeless.

Also even if they are not in debt and they have numerous properties dotted around, with everything paid in full. There could be inheritance tax implications which may not be affordable, forcing sale.

Much prefer to have the security of owning my own home, in my own name (with my partner) with our names on the deeds and not parents or in laws.

It’s a no from me. Nothing is free in this world.
I’d be concerned about the power they may feel they have over the house & my family.
I’d be dreading the IHT bill when they die, hence it’s not really a forever home even if it feels that way. Also if they gift it now it crystallises the value, vs if they leave it to DS in the will then the tax will be due on the value and at the rate at death.
Also, given they’re talking about divorce, if the marriage breaks down DH will be left with nothing on paper, and so DH can go after half her savings. So she could have less than nothing. There’s no security in this model. It’s a no from me.

I'm with your sister, here. The whole appeal of owning a home for me it's that it's mine. I hate owing money or anything to someone, so I'd be dead against this set up too.

In Ireland this would be considered a taxable benefit from her PIL as she is not paying market rent for the property. And then would have significant inheritance tax when the property is finally passed to them. Not a tax efficient set up.

OMG what an offer! Snap it up. It’s only bad if she doesn’t use the thousands saved sensibly. Get herself saving and setting up a good pension. Then if they split etc she trots off and buys somewhere of her own with the savings.

I read that you can sign a prenup so on divorce house goes to ex or in-laws.

I wouldn’t like this set up. I would feel beholden to in-laws.

This. She's should get all her questions answered and documented in writing, but it sounds like a good deal. I have a feeling my cousin has a similar set up, the house is in a trust. In the meantime they've lived in a free house in a nice area that they'd never be able to afford on their own.

I’d definitely have mixed feelings. It all depends on how controlling / interfering the in-laws are. Will it be held against them? Fact she is not wanting to do it gives us the answer.

It will never be her house.

She'd be a fool to spend even 1p of her money on paint, wallpaper or flooring, never mind a new kitchen, bathroom or replacement CH system or windows.

No Thanks.

Absolutely no way! Your sister is very wise to want nothing to do with this. ILs are literally concocting this plan to do her out of any settlement if they divorce, so it won’t end well. And that’s before all the tax consequences that would also have a negative impact.

A close friend of mine actually had this exact scenario except it was her parents who bought the house instead of her ILs. Ended up with the parents turfing friend, her DH and their young DC out of the house at short notice when a financial issue arose unexpectedly for the parents and they needed the cash relatively quickly. My friend and DH had been sensible and saved like mad in the 4ish years they’d lived there but she and her family ended up essentially homeless and had to live with her parents for a year while they looked for an appropriate property to buy in an area that worked for jobs and DC school and for the purchase to go through.

the worst bit was her parents weren’t at all apologetic and in fact expected friend and DH to be grateful for the time “allowed” in the house! No way for 2 grown adult professionals to live IMO and caused major issues in family relationships that are still ongoing 6 years later. The parents recently offered some more financial “assistance” but the couple sensibly said “no thanks” this time.

It’s to ensure she gets nothing if they divorce. That’s not a good set-up.

Makes note of posters username in order to avoid any possible future advice!

So currently your DSis and DBIL can’t afford to buy? In that case I’d smile sweetly, say nothing but thank you, take the rent free house, and save like mad for 3 or 4 years to get the a substantial deposit together to buy a home. They’ll save a fortune in rent and that can be used to build their future. Even if they split they should amass a tidy sum.

I'd move into it and save like mad, when we had enough between us to put a deposit on a house of our own I'd say thanks very much for the opportunity ILs and move out. Why wouldn't you, rather than pay rent??

My cousin had a similar set up. My aunt gifted them a house and it was transferred to the couple's names. They had an agreement that in the case of a divorce they had to return my aunt the market value of the house at the time of marriage, and the couple were only entitled to any increase in the house's value.

My cousin divorced recently and the agreement was honoured. They had no kids.