Buy Property or Remain on Housing List?!

[PurpleRayne89]

My uncle is moving back home. His property is worth £400k but said he’d sell it to me for £230k as long as he can remain in the property until he leaves which is around 10+ years. He said he’ll pay the mortgage until that time. He will also put down the deposit for me and my aunt will be a guarantor.

I’m living with my 2 children in a single room as we can’t afford to move. I’m on the housing list and bid each week. If I have a house in my name, I’ll be removed from the register. Then I’ll be stuck in this room. If I didn’t take the offer, I may not have another chance to own a home / have an asset. Can I have some advice please?

Background. We ended up in this room at a relatives house because I lost my job during COVID which was well paid. I’m working full time now but don’t earn enough. My ex husband pays child maintenance each month around £750.

Not just any gain
The difference between the low sale price and the price in 10 years time
So already starting with a massive bill.

Sounds very dodgy to me. I would stay on the housing list. Can he put it in trust for you? Definitely get some professional advice.

Weird to consider this if you're not even getting to move to the house, although it's a bit different now you've said your one room is at your parents. Still not ideal ofc but you do have the run of the whole house presumably you're not in some rental confined to one room.

As it's not a measure to get you out of your current situation, I wouldn't take it. He can leave you the house in his will if he wants to but the mortgage/renting stuff in the meantime doesn't sound worth all the risks and unforeseen stuff.

Think it's less likely he's out to scam you personally than thinking he might lose his house in future eg care home fees. So he's doing the dodgy depravation of assets thing putting it into your name but still effectively owning it/living there.

So when he leaves in 10 years, where is he going? Is this am attempt at avoiding care home fees?
You can’t live at your parents with two children in one room for 10 years. I don’t know how old they are now but with two teenagers it’s just not going to be possible.
None of it makes sense.

I don't think he's trying to scam you, but I do think that you're both being very naive to think this is going to work out over such a long period with so many questions unanswered. I think you may live to regret getting your financial affairs muddled up with his, which are obviously a bit chaotic and unrealistic for him even to suggest this.

As others have said, what happens if you fall out, he decides not to move, or he dies in the mean time? What about maintenance to the property or if he refuses to move out by the agreeed deadline. You'd need to get a watertight legal agreement covering all this and more; any decent solicitor will point out the many possible pitfalls and you will likely conclude it's too much hassle for something so far away.

Op so many things could change in 10 years. Is he thinking he won't last beyond 82? What if he makes it to 100?

Would you effectively be a live in carer?
What if you meet a partner and want to move in together but your tied to your uncle?

Would kids be happy living with your uncle?

This sounds very dodgy for all the reasons outlined by pp.
Don't do it. If you are living in one room, you'll be quite high on the list for housing.

OP what is your Uncle gaining from
this? Is it having the mortgage in your name? The mortgage but not the house?
Where the the ‘ten years period come from? The mortgage term will be longer than that? Does he think he and his wife won’t live longer than ten years?

Is it disingenuous to describe you and your children as living in one room when you are living with your parents? Maybe everyone on housing lists says this and if so of course you need to as well.

And if he doesn't pay the mortgage it's you they will chase for it. This sounds like a crazy idea don't do it

Let's think this through.

You are in severe housing need - currently living overcrowded in a spare room at your parent's house.

Your elderly uncle owns a house worth £400k and currently lives in that house.

Your uncle has offered to sell you this house for £230k as long as he is allowed to continue to live in the house for the next 10 years.

There are many many probems with this.

The gift - Your uncle will be gifting you the deposit of £170k, it's just the gift is in equity not cash. However this is a gift with reservation as he expects to continue to live in the property he is selling you.

The Mortgage - to get a mortgage of £230k you will need an income of at least £50k - do you have that. Also very few lenders will want to lend money to you where the person who is gifting the equity and is the vendor will become your tenant.

The 10 years your uncle has requested he stays in residence - you will become a a landlord with all of the legal and financial obligations that this entails. If you uncle proposes he continues to pay the mortgage you took out in the form of rent, if he needs help (eg claim benefits) as he is a close relative it could be deemed a "contrived tenancy" and therefore benefits will not be paid.

What happens in ten years time? Your uncle will be 82 in ten years time - what will he do then? Has he got plans to live elsewhere? If not do you have the stomach to evict an 82 year old man from his home?

I have no idea who this scheme is meant to help? You need a place to live - this will not deliver that for at least ten years, if not longer. Your uncle sounds like he needs to free up some cash - if he wants to use his home he can look in to equity release.

DO not touch this with a six foot barge pole.

Hold on he wants you to continue living with your parents?
While he lives in a £400k house alone?

How do your parents feel about you in their house forever?

Far to many questions I'd say a big fat no.

The capital gains tax you'd get round by moving in and it being your only property. But financially it would leave you in a complicated mess.

It's not really living in one room if you're living in your parents house and could afford private rented if you wanted to though (£750/ month in maintenance alone)

This is nonsense.
You would “own” the house but he as the previous owner lives there but rents off you?
No mortgage company would lend on this purchase and rent back. There are specific rules about this.

Further its a typical move to avoid care home fees as he is 72 already. The sale will probably be voided as deprivation of assets and taken by the council anyway

“If” ( it wont ) went ahead. You’d be a landlord. You’d have to get a gas safe certificate. An electric compliance cert to 2018 regulations ( usually costly upgrades to RCD breaker electrical box )
You’d have to register for rental income tax return and pay tax on the income.
Capital gains will begin to add up.

If you get or need Universal Credit in the future, the value of the equity YOU own, but do not live in will mean you will get ZERO UC as thats counted as savings.

All in all a crackers scheme Im afraid.

I can’t see how this is going to help you now or in the next 10 plus years.Are you going to live with your uncle? Keep on bidding on the HA if you own a property even if you don’t live in you will not be able at access UC or stay on the register for HA. You really need good advice.

I think this is him trying to get equity out of his house but he can’t get a Mtge.
him offering to pay the Mtge indicates this aswell.
you will not be eligible for s.housing and if in future you need social benefits they too will be effected.
Could you not move in with your uncle- that is the only way I would even consider this and him and his wife are then lodgers.

What do your parents think of it? Surely they would know their sibling well enough to give you advise.

My advice would be to run very fast in the opposite direction from your uncle and his insane financial schemes.

Your uncle benefits from this more than you. His motivation is most likely trying to avoid care home fees.

I would imagine a local authority wold see right through such an incompetant scheme very quickly. So he would end up on the hook for fees anyway and the OP will be out of pocket and still without a house.

Just say no, your priority is adequately housing your children NOW. How much are you paying your parents? How much are you saving? If hold out for a home of your own and then look at buying something you can live in.

Not owning your home isn't the end of the world and right now you're kids needs a proper home

I agree, the only way this scheme is worth considering is if you are able to move in with them from the start. Way too complex and risky otherwise.

As well as stamp duty and capital gains issues (the latter probably can be improved by the difference between 230k and 400k being recorded as a gift), you would probably need a buy to let mortgage with a higher interest rate than a homebuyer loan would carry.

You can’t live in a single room with 2 kids for 10 years.

In 10 years your life could be very different, with the opportunity to be thriving.

This sounds far too messy. Anything can happen in 10 years. I wouldn't entertain it tbh.

My niece and her dd are sleeping in the same room at my sister's house, having been forced to leave private rental due to increase in rent. They were paying £750, but that won't get them anything locally. Hence being on the housing list. If they had separate bedrooms, they'd be way down the list.

I think your better of staying on the list and your parents giving you a set date to move out so basically making you homeless it would help you get help quicker the council won’t be quick to help whilst you have a roof over your head