To not sell a potentially £million plus property for £200,000?

[InheritanceDilema]

Got a really sticky situation and need some advice.

FIL has died and Dh and BIL have inherited his house and small holding. We are not local and do not wish to live there. It's BILs dream to live there and he wants to buy us out and will happily pay us half of the £400,000 valuation of the small holding inc the house.

There are eight acres of land and I genuinely believe that planning permission could be got. The fields are in the middle of a village, so surrounded by built up areas/houses on all sides. Obviously if planning permission was gained the value of the land would be a lot more.

Bil has no interest in planning permission or making any money. He wants to live in his childhood home surrounded by goats, chickens and gooseberry bushes living a River Cottage dream. Dh doesn't want to rock the boat and doesn't know what to do.

I know if we did sell it we could put a thing on the sale saying if BIL did in the future get planning permission we would be entitled to more money. But I know BIL wouldn't ever seek planning permission. He won't even consider only having some of the land and planning permission for the rest of it. He wants a couple of ponies and says he needs all the land. I don't want to kiss goodbye to a considerable amount of money just to keep the peace.....we're not that well off. BIL owns 4 houses and already has a fantastic pension as well as rental income and his current house is worth half a million. We're in a terrace with no other houses and while £200,000 is a lot of money i don't think it's fair that BIL expects us to let him have his own way.

My DH's family has a property that has a lot of sentimental value for him. It comes up every so often that ILs might like to sell, but he wants to keep it. This means us sometimes contributing to costs, which we can afford. I feel really strongly that if it has sentimental meaning to him, that should trump my practical calculations. (If it were up to me, I would say just sell the place.)

BUT when faced with a decision like you are, I would absolutely insist that we got the best advice. You can always still choose to be generous with BIL after you do your homework. At the very least you need to prevent adverse, unforeseen tax consequences.

He owns 4 other property's so he is very savy when it comes to property
After what one poster said about tax and future development I would say BIL knows exactly what he is doing and is trying to fleece his brother. You DH needs to get a backbone and put his family first

I used the word savvy about the brothet too, like Dolly mixture, in an earlier post and he certainly is that. I don't fall for the country line with the chickens and ponies at all. He can do that anyway as the owner of 4 properties, so why doesn't he? He also has 200k readily available to buy you out.

What I hadnt realised was that the valuation was only the brothers? 400k for a property with 8 acres seems cheap wherever it is.

So yes get a few valuations although you'll probably end up putting a clause in to give you a share if the bro develops or gets planning, remember to add anothet clause saying that if he sells the house in future whether developed or not that your husband will receive half of the profits. If he really wants to live the country life he'll agree.

I do think though, that others ideas to give the house a large garden and sell or develop the land separately are very good. The reason I think that is that the brother clearly has a very good income and may well just live in the house that could have given your family a standard of living similar to your BIL.

Please don't feel grabby or greedy - you're not being any more grabby or greedy than his brother. He's just in a financial position that means he can screw you quietly.

Good luck and I'd love to hear an update on this month's from now - I really hope you do that :)

It's definitely NOT grabby to safeguard against large tax bills later.
Not grabby to check you aren't gifting BIL much of your DC's inheritance.
Your BIL's bucolic dream - if sincere - doesn't trump their dreams for their whole future.

BIL clearly knows how to use his elbows and is savvy about buying property; it's why he has a portfolio of 4 properties already. A successful BTL landlord is not usually a dreamer.

If you get another valuation, you may indeed find planning permission would be very unlikely and that the valuation is fair. If so, you would have peace of mind wrt HMRC and also avoid years of worrying that you let your DC down.

OR planning permission might be very possible:
in that case, he probably plans to live in the property a few years so it counts as his main residence, to avoid Capital Gains Tax on profit.
Plenty of time to do it up, get planning permission and make a shedload of money.

You and your OH should prioritise the interests of your DC over possible family embarassment and your BILs - possible - dream.

Later on, your children would accept that BIL is a wealthy businessman with maybe a property empire by then. What they wouldn't understand is why

oops, iPad
They would find it tough to accept you had a major asset and let it go for a fraction of its value

Agricultural land for horses in small fields and paddocks is worth about £20k per acre round where I live and that is in a very cheap part of the country.

Even though we are in a very cheap part of the country 8 acres with a house would be worth a lot more than £400k. Even splitting the plot in half and putting another house on it the land is worth £1 million.

With planning permission for say 20 houses its worth at least £0.5 million per acre (i.e. £4 million) and twice that in the South East of England.

Where I live there are a lot of large houses with house suddenly being built n the garden. Getting planning for this Is now much much easier with new planning laws.

The BIL has 4 houses already and he knows exactly what the potential is for development.

I would just insist on it being sold to someone else and clause put in to say if that person sells the house for development you get a piece of the uplift. That way neither the BIL or you do not get the house, it will no longer be a source of contention and you both share the money equally plus any upside. As long as the BIL owns the house it will always be a sore point.

I can't understand why its been valued so low. What if BiL takes ownership, gains planning permission and disappears off into the middle distance with the squillions of pounds he has made from the sale (or donates it to the local cats home)?? (I know you say he won't, but money does odd things to people.....)

Offer to accept with an overage clause at 50% of any uplift for the next 40 years.

If he is genuine about chickens he won't be phased... If the is any hesitation hs is on the make....

I think the logical solution is to get your solicitor to ensure that there are some really robust provisions on there so that if the land is developed /plannjng permission obtained you get half the uplift in value.

It will nicely call his bluff as well, if he genuinely doesn't plan to develop then he won't object to the overage provisions (because they will never be needed). If he does plan to, well he can hardly object either.

X post professor

So op

What have you and dh decided

Hopefully to get more valuations on house as a start

Tho I don't think you can then claim for more money if bil sells home a few years on and makes money - any more then if he sells and then worth 300 (on his friends recommendation) and then says you owe me £50k as house has lost value

Land is Seperate

"Tho I don't think you can then claim for more money if bil sells home a few years on and makes money - any more then if he sells and then worth 300 (on his friends recommendation) and then says you owe me £50k as house has lost value "

well you can if you put a restrictive covenant on it, specifically saying this,

Personally - i would get the planning permission if possible and then sell on the open market at which point the BIL can buy it if they want to

For those calling the OP grabby as its not her money, would you say the same if it was your DM and her DB? no you wouldnt, you would encourage the OP to make sure that her DM was looked after.

Shes not grabby, shes talking about it to get the best information for her DH

Surely if land and house are sold separate then it's just a house that bil owns

Houses go and down in value. I don't think it's fair for op dh to get more after being given 50% of worth now and bil owning it - to then get another £100k if sells it in 5yrs for £600k - so 50% of the extra £200k

The land is not worth lots unless if can get pp. that could have a note on it if gets sold

Hence better to get house value minus 8 acres and both op dh and bil have 4 acres each and dh can rent his 4 acres to brother if he wats

Strikes me that little red has summed it up in a nutshell. See if you can get planning permission, have the property valued with pp and BIL can have first refusal - of the market value. I can't see how anyone could think that was unfair. If BIL does, he's effectively asking your DH to subsidise a lifestyle he wants to follow. Absolutely not fair.

Anyone can apply for PP. No need to be the owner.

Apply for PP now, and the value of the property will increase. Someone may correct me, but unless HMRC argue that the property was always worth the higher amount (with PP), in which case the probate value is far higher and the estate has to pay more tax (that's for the executors to sort out), the increase in value will be a capital gain of the estate, and again that is for the executors to sort out.

I'm presuming here that the property remains registered in the name of the father-in-law.

Whatever the result of the PP application may be, it makes sense to apply now. If granted, then at least all parties know on what basis it must be fairly valued. If refused, at least OP can rest assured that her husband won't be treated unfairly.

Where is the op?

BigChoc and ABeta - more excellent posts.

She probably got sick of being called money grabbing for wanting to protect the interests of her family.

The first few posts calling her a money grabber was enough to put her off mumsnet for life I should think.

It's really a shame if so, because there's a lot of support and good advice later on. As has been said, the early bandwagon-jumping was pretty appalling. I hope she comes back and sees that not everyone thinks she's a bad woman for caring about her family's best interests.

Any reference to inheritance always brings out the 'grabby' brigade on mumsnet. Apparently you aren't allowed to discuss it at all. I once posted how cross I was about my in laws' announcement that they were leaving everything split 4 ways amongst DH and our 3 dcs. I was cross because, at the time, dcs were early teens and in laws were already well into their 80s. The thought of a teenager/young adult inheriting in the region of £150k doesn't bear thinking about imo. But the grabby brigade came out in force accusing me of wanting it all for DH/me. Nice.

What is the problem with inheritance exactly? Perhaps one of the "grabby" lot could explain to me please?

Many people, especially boomers who did well on property and investments, work towards leaving something to their children. I know that its very important to my parents that my sister and I get a decent inheritance. So what exactly is the problem with a) making the most of what they are leaving and b) wanting all siblings to be treated fairly and equally?

I agree with big choc excellent post!

Stonecircle yes I completely agree! A poster upthread accused me of being grabby about inheritance because I was bemoaning my DM's poor financial decisions 20 years ago which have left her and DDad struggling more in retirement than they should be. I had said literally nothing about inheritance - I am sad for them because they could be living the life of riley now but instead have to look at their dwindling savings and count the pennies. People read what they want to read and project their own issues onto others. There's a dose of the 'you get what you're given and don't get uppity' attitude to life thrown in too. Effectively it is a deeply conservative philosophy which effectively says 'stay where you are, peasant, don't start actually challenging anything about the world or the people in it, you're just a greedy bitch getting ideas above your station.' I've said it before, but some mumsnetters would have had pitchforks in their hands in generations gone by, chasing off the witches and foreign folk.