DH wants to sell house significantly below market value

[MrsLyndi]

My DH and I are 59 and 61 respectively. We have one child, she is 29.
My DHs parents passed away 10 or so years ago. About 10 years before this they gifted us their 5 bedroom house in a lovely part of London. They wanted to move back to where they had grown up having inherited his mother’s aunts home, but weren’t ready to see the house go as they raised DH and his late sister there.
DH has been renting the house out ever since, it’s been a nice earner for us as it is mortgage free. We live in rurally a few hours from London and had no intention of moving back so it made the most sense.

About 8/9 years ago we took a risk and allowed some fresh uni grads to move in. They made an impression at the time and we haven’t regretted it. They were lovely tenants. They slowly started moving out and now it’s one of the originals and his fiancé.
They are 27/30, incredibly good tenants (the house is gorgeous, we’ve allowed them to decorate as they wish. They are never late with rent, and just lovely people.
DH goes down to London once a month, he likes to sort the garden out himself and enjoys seeing the couple. He has gotten to know them. They are both from the north, one of them had a rough childhood, was in the care system etc. They are now both very successful, make good money etc.
DH was down at the weekend to do a last clear of the garden before winter. As per he got chatting to the couple, they gave an invite for their wedding next year. They also mentioned that they are starting to look at buying somewhere, joked they wish they could afford the house but it would be way out of budget etc. (We’ve been charging below market rate rent for a while now as we don’t need the income, and they are hassle free tenants who let DH potter in the garden).
They told DH they wouldn’t be looking at more than 1mil or so.
The house is probably worth about 1.5mil now potentially a little more(5 bedrooms, good sized garden, drive way, well decorated, in the catchment area for a fantastic primary, near one of Londons big parks and good transport links!).
DH has been thinking of selling the house for a few years and decided when they eventually moved out that he would sell it. He wants to give our daughter a gift that will pay off her mortgage (less than £500,000). Then use the rest of the money to enjoy our retirement. We have good pensions so that is not a concern.
Now DH has a crazy idea … he wants to sell them the house for what they can afford, around the £950,000-1mil mark, so significantly less than what it is worth!!!

His reasonings are

• The girl reminds him of his mother, he’s always said this. Very cheery, fun person
• One of them has overcome all sorts to get to where they are
• He knows they will look after the house, they are planning to have a family etc.
• “It feels like the right thing to do”

In DHs mind, we don’t need the money, even selling for significantly less, we can take care of our daughter and have a nice retirement.

I’m more on the fence. While they seem like lovely people, what if in 5 years they sell and run off with the £500,000+ profit. How does this work with a mortgage and such? We don’t know them all that well but would be essentially giving them half a million pounds!!!!
DH is a very kind and loving man but often too kind!
AIBU to think this is a crazy idea and wonder how it’s even possible?!

My relatives did this. Sold below market value to people who would make it their family home, continue the memories etc etc.

They sold it on in less than a year for its actual market value.

It left very bad feeling amongst those in the family for whom the extra money would’ve made a huge difference to their lives and didn’t get it, just because the person in charge of the sale was feeling sentimental.

Also, you may have good pensions, but it always makes sense to have contingency. Would he leave them money in his will? If not, then he shouldn’t consider this at all. If he would, then he can sell for market value and put the extra to one side and leave it them if either of you don’t use it in retirement/care fees/come to senses and leave it to your own daughter/give it to charity that helps those in actual poverty.

He’s a very loving man, but to this extent? No not in character.

When he met the young woman a few years ago, he was left a bit unnerved. She looks like and has the demeanour of his mother (down to the shade of ginger hair!). I’ve met her and she does remind me of his mother (some sort of cheeky glee about her at all times, exactly as his mother was). He learnt about her past (one parent passed, the other on a super long prison sentence, no grandparents in the picture, abuse filled childhood) and ever since he’s cared for her more than I’d say is normal. I think the resemblance to his mother, awful past and how successful she has become makes him feel a combination of protectiveness and pride.
I know it’s more about her than her partner, but he’s definitely letting emotion dictate.

My relatives did this. Sold below market value to people who would make it their family home, continue the memories etc etc.

They sold it on in less than a year for its actual market value.

It left very bad feeling amongst those in the family for whom the extra money would’ve made a huge difference to their lives and didn’t get it, just because the person in charge of the sale was feeling sentimental.

Also, you may have good pensions, but it always makes sense to have contingency. Would he leave them money in his will? If not, then he shouldn’t consider this at all. If he would, then he can sell for market value and put the extra to one side and leave it them if either of you don’t use it in retirement/care fees/come to senses and leave it to your own daughter/give it to charity that helps those in actual poverty.

Please get your husband to get proper professional advice , quite apart from the fact that this couple are clearly already well off and not remotely needy , this is a CGT and IHT nightmare waiting to happen . Even in a best case scenario you would be paying significant amounts of tax out of your own funds

DH needs to take the emotion out of it, the woman isn’t a reincarnation of his mother. Once they become homeowners they won’t be so accommodating to his monthly visits, it suits them at the moment, they pay a lower rent and they get a free gardener.
His tenants financial problems aren’t his concern, his priorities should lie with his own family and their financial future.
He is in very fortunate position, however no one knows what the future will bring: one or other of you could suffer an illness requiring lifelong care and that could soon burn a big hole in your finances.
DH needs to take financial advice and soon.

Madness to gift half a million pounds to people who can afford a million pound home! There are many more worthy causes! Put it on the market and sell to a family if he wants a family to live there.

OP, you are both still young! ( at least by my standards) You have probably twenty years of life left, and leaving aside the later part when you may ( or almost certainly) need paid assistance to live comfortable lives, you can have a great time in your sixties and still have enough money to support yourself and to help out your daughter and any possible GC should they need it.

When we were a bit younger than you, we were able to use our accumulated capital to do the really interesting things we couldn’t do when we were working. We were lucky, as well, that we inherited a house in England (although it wasn’t worth anything like the one in question , and we actually downsized into it). When my surviving parent needed care, the funds were there, and so was the willingness on my part to advocate and administrate for them. If my parents had given a considerable slug of the family money (because that’s what this house is, it’s Family capital) to unrelated people with whom they had had a successful business relationship, things might been not just financially but emotionally more stressed.

Go to the wedding, give them a generous present, let them move to their own house. If this is a real relationship, they will keep in touch. Then DH can leave these long term friends something in his will.

Your husband sounds like an incredibly kind man.

But I do think this is OTT in its generosity.

I think the next step would be to get some actual valuations done, then offer it to the tenants at market value and see if they could afford it - essentially give them first refusal on it. That way you get what the house is worth without the downside of the people you effectively gifted a massive amount of money to potentially cashing in on your husbands good nature and leaving you feeling ripped off.

is this your husband OP?

So agree with this.

He is being undoubtedly humoured, the old fool.

Perhaps I am bad minded,🤷🏻‍♀️ but of course they are very pleasant on a reduced rent for years and a maintenance man doing the garden.

Now having discussed how soft he really is, an aware he's soft on her, they are going in for the kill, ......a cut price house.

Finance and law?

Not an ounce of sentimentality between them regarding the house, just a property killing possibly within reach.

I wouldn't blame them, but I wouldn't be tolerating this from my husband for a minute.

This is absolute lunacy. He considers these tenants to be worthy of the same amount as his own daughter. So he wants to basically hand them over £500k just because this woman is similar to his mother? I think your DH needs to go see a medical professional and get his head examined. If that young couple are sold that house, they will be putting it up for sale shortly after to cash in on the profit. If they work in law/finance, then they are not stupid people - they will know what makes a good financial decision so they'll sell up and walk off with £500k profit. Your DH is a bloody fool and as his wife, you need to put your foot down and tell him no - he doesn't get to piss away family money like that. This decision affects you and his daughter as well so tell him no. Don't let it up to him.

These tenants have already been gifted money informally over all these years by you - they are paying rent below market rates which mean they are in a position to now buy a £1m house. You have already helped them out. He is considering giving them a third off the price of the house! If you do this, those tenants will be laughing all the way to the bank.

What about if your daughter has children, 500k could be a very nice trust fund for them when they turn 18. While the tenants may be lovely, I believe their joke was partly serious because they think they are on to a winner. Remember they are not family and could just sell up instantly to pocket the cash!

To add - you mention you "don't need the money". Unless you are billionaires, then you could need the money. And even a billionaire wouldn't throw away £500k like this.

@MrsLyndi ive not RTFT but have read your posts.

Radical suggestion

• get 3 valuations
• decide the price the house is worth - average of the 3 figures
• get legal advice on whether you can do your own shared ownership scheme. It may need them to find a lender who will lend in these circumstances.

Say house is worth £1.4m and they can afford 1 million. They buy (with a mortgage) 70% and you retain 30%. You own the house as tenants in common with a deed of trust showing the split as 70:30. They pay rent, if your feeling generous it could be peppercorn, on the 30%. You are responsible for 30% of repairs etc.

If they decide to sell you get 30%, if they eventually can afford it they can buy the remaining %.

The other option is a private mortgage - they pay you the deposit and make monthly repayments to you rather than another lender. Again this needs a legal agreement secured against the property so either way your money/investment is safe. You need to think where to put the monthly payments so you don’t end up spending £1m with nothing to show for it.

These both balance getting a fair price with helping a couple your husband has a connection with.

Don't do this, there are potential Inheritance tax issues and capital gain tax issues. Seek professional advice, selling an assett below market value could be costly for you and your family.

Get an estate agent in to value the property. Know what kind of money you are actually talking about. If the estate agent says £1.2 then it might be worth considering. If they say £1.6 then no.

also they won’t be telling your husband how much they are able to spend, it’s still a negotiation- so you can probably think there’s a bit more money there.

the fact they have a million quid to spend without equity in an existing property means they are definitely not the hard up charity cases your husband thinks.

depending on your daughter I’d probably ask her to deal with this on the basis “your fathers a bit addled when it comes to the young lady, can you speak the the estate agent and the tenants” you might find the tenants back off when they see another family member involved. If the estate agent values the property at 1.2 and you squeeze them up to 1.1 you might consider it worth it for an easy transaction- but I’d let someone a bit more objective make the call

This is a very foolish idea indeed. If he wants to gift away 500k there are far more worthy causes.

Aside from this, think how much extra half a million would buy of decent retirement living/operations or healthcare that might be needed that you both could have privately etc. You don't know what the future will bring.

It's never a good idea to sell an asset to someone because you want them to use it in a way that suits your emotional attachment.

This would essentially be him giving 500k to some people he's fond of. Nothing wrong in that in itself, if you were both happy with it. I wouldn't be, but it's not an inherently illogical thing if that's what you want to do. But if he wouldn't be willing to give them 500k cash, then it's a stupid idea to give them 500k in property that they could then do whatever they wanted with. If he wants strings attached, he needs to look at other options.

They're great tenants. He wants to help, which he already has.
He has generously not charged them market rent in probably years and he seems like the sort who would deal with problems as they arise. He has done enough, because the reduced rent is probably helping them significantly on their way to home ownership.

In the case that he needed to offload the house, and was saying, I need to evict you, or you buy because i can't keep the house, a reduction in cost would maybe be a thing, but still not 33%. In this situation it's just crazy.

I'd be considering what might happen to DDs inheritance if you go first. He's likely to give it all away to the kindly Barista at Costa with such kind eyes.

Reframe it as he wants to give away £500k, why are this couple more deserving than anyone else or a specific charity. He's already helped them and they're in a very fortunate position already - why should he give them more?

You are going to have to pay capital gains tax on this house. It would be far better if you move in for 2 years or your daughter does and then sell it. Did his parents’ estate not already pay a huge whack of inheritance tax on it?
Your daughter should always come first. You may soon have grandchildren? Think of them.

I’ve not read full thread but could you jointly own it. They buy a share so it be 2/3rds at 1million and you still own 1/3 the half million

This is the kind of thing my dad would want to do. It’s a lovely, generous thought but not very well considered given the tax implications and the fact you have a daughter. Your H would be better off getting it valued and offering them first refusal on a sale. With two high-flying careers they will be fine. If he doesn’t need the cash post-sale then choose a few charities to support – it would be a much better use of the money.

The tax implications would make me never even think about this. Remember the tax man will always get his cut. You will be liable for cgt on the value of the house, not the same as what you sell it for. And at these numbers, that will be quite a lot out of the money you get for it.

It would be a no from me, it's all well and good being such a nice person, until it adversely effects your own family. If it was definitely going to be sold, then get the best price for it and give some away. Whether to this couple, a charity, somewhere else. But get advice on the tax implications first.