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?!

I’d be pissed off too but I suppose would ultimately have to accept that it’s his asset to do with as he wishes.

Has he mentioned to his daughter that he is thinking of selling this house and giving a bigger share of the proceeds to this random couple the same age as her and earning 6 figure salaries than he is planning on giving to her, his own daughter?

That depends whose name the house is in. If it's in their joint names then it isn't his asset to do with as he wishes.

Tax:

If the unexpected strikes and your DH does not survive 7 years beyond the sale, the £500k will be considered a gift and your DH’s estate will be charged IHT on it.

If you sell for £500k under market value you will be charged approx £150k CTG on that £500k that you didn’t even receive in addition to the CTG on the £1m. Half your sale money will disappear to the Gvt. More if your DH does not survive 7 years.

Bright young Magic Circle things will know this. How lovely would they really be to accept such a deal? For a house they will immediately sell at full market value to buy in an ideal location if their choice.

Am I really the only one that finds this creepy, not kind?

It's not the house DH is 'sentimental' about, it's the young woman.

I agree. And OP´s child is still fairly young. A lot can happen in the next 30 year...

Accidents, life limiting illnesses, the birth of grandchildren with complex needs... "hope for the best, prepare for the worst" is good advice when making major financial decisions ime.

Or they could donate the additional money to a cause dear to their hearts.
Instead of making what one would best descibe as a charitable donation of 0.5 million to a young, healthy couple with (fairly) well-paying jobs.

OP and her DH were already incredibly generous to charge rent below market value. That is probably one of the reasons why this "lovely couple" has already managed to save for a deposit.

And how would OP´s DH feel if the couple decided to sell the house for what it´s actually worth / market value in a few years?

No, you're right, it's incredibly creepy.

And potentially very hurtful to his actual daughter.

If my dad did this I'd be thinking, "What the fuck? Are you giving half a million quid to this woman my age because you fancy her, or because she's the daughter you wish you'd had, instead of me?"

I wouldn’t worry too much about this as his well intentioned idea has an awful lot of tricky hurdles to get around. It is very difficult to sell or buy a house significantly under value, especially if a high street mortgage is required on the property.

When we were in our early 20’s we considered buying my DH’s late grandmother’s flat. It would have been sold to us undervalue in order to keep it in the family but it was just too complicated in the end despite everyone involved being very supportive.

Absolutely this. He's just thinking with his heart. He is thinking like, 'what a lovely couple, I will sell them a nice home with a third off its price (half a million!) and I'll still have a link to it etc.... ' But as this poster said, he probably thinks he's still going to be able to visit and potter around in the garden and be close to it. 100% certain they're not going to let him anywhere near the house when it's theirs.. OR the garden!

I'm pretty sure about (90%) that 2 or 3 years down the line they will sell it and pocket the half a million profit, and buy a nice big house outright further north in the country for £475K or so, and have another half a million in their pockets.. (So a million £££ altogether in 2 or 3 years in their pockets, plus a nice shiny big 4 or 5 bed detached in the midlands or the north.) It's utter batshittery at its finest to do what your husband is suggesting!

Who on earth is voting YABU?! And @MrsLyndi how does your daughter feel about this?! This is her inheritance!

Actually, I think it's all a bit of a tall tale. Sorry.
No-one would be that blase about having a creepy husband

He is nuts! Sorry, I wouldn't go for this. A few grand maybe but £500k, NFW!

I'd start by getting a couple of proper valuations. In my (very nice) bit of London, houses aren't selling like they used to and we have seen price reductions.
Based on the one that was listed for 1.1mil (and the agreed sale price may actually be below that) I'd be surprised if yours is worth 400-500k more.
If they earn 6 figures each and are paying below market rent, they might be able to save up a substantial amount in the next couple of years to buy your house without much of a discount at all (depending on valuation).

MargotBamborough · Today 10:04

MrsSkylerWhite · Today 09:58

I’d be pissed off too but I suppose would ultimately have to accept that it’s his asset to do with as he wishes.
**
That depends whose name the house is in. If it's in their joint names then it isn't his asset to do with as he wishes”

That wouldn’t matter to me. If my in laws had left their house to their son, then it would be his decision. Same, vice versa. Sadly, neither have a £1.5 m house so not a problem we’ll ever have 😁

Oh God no. Don't do it. You have no guarantee they won't flip it within a few months and make an enormous mark up at your expense. My grandparents did something similar and 6 months later were devastated to find out the couple had redecorated and sold for nearly double the asking price of their lovely family home. Better to sell for a fair asking price and give the couple a generous wedding gift if you must! But as others say... they are just tenants and you lucked out with a good set. It could have been very different.

I'm not a lawyer but I've heard of charges being held against property like this - may be possible?

Why not give the house to your daughter? Especially if it holds sentimental value.

I do love your husband though for having such a kind heart.

I'm just flabbergasted that there is such a thing as a Magic Circle Lawyer!

My imagination is in overdrive . . .

"The Great Supemo has stolen my rabbit. It took me years to train Bunty"

"Those were my spangled tights! They disappeared from my washing line, but I would know them anywhere"

(I know, I know - the sort of tricks people like Derren Brown and Paul Daniels develop are worth a small fortune, but leave me my dreams, won't you?)

"

Selling the house below market value is clearly foolish.

And I do agree that it´s very easy to be "lovely" when one lives in a lovely house with reduced rent and a gardening service. People´s true nature is usually exposed under less than ideal circumstances.

But I do find that comment rather unreasonable (and unkind).

Finance and law?

Not an ounce of sentimentality between them regarding the house, just a property killing possibly within reach.
I happen to be a lawyer (primarily focused real estate law / property development etc). And I assure you that we aren´t "unfeeling sharks" without an "ounce of sentimentality". Goodness, the stereotyping.

I think it's odd that he goes round one a month to tidy up the garden, this isn't normal landlord behaviour. No doubt he gets chatting to them as well, pops in for a cup of tea...

It seems like he is overly attached to this couple (the woman) and the house and by selling it to them he (thinks) he'll be able to continue visiting and being part of their lives.

In reality they may well cut him off once they have the house and / or sell it on for a profit and buy somewhere else pocking the difference. And who could blame them?

No way. Gift house to your daughter if anything

I have to admit that this went through my mind, too.

Then I thought, "Viper - don't judge everyone through a suspicion-tinted lens"

Your husband is thinking with his heart it is lovely to hear this story that are still people out there who are not materialistic, the two of you sound comfortably off and it would be great if you help your daughter too, I would sell to the couple.
Don't forget when you agree a price to take in to account how much they have helped you over the last few years by paying their rent on time and being good tenants. The house was free of a mortgage so their rent was extra income for you. To the people who say they will flip it and make a profit so what if they do ?
It's the chance you take. YANBU to think it's a crazy idea. The question for you is do you take a chance that 5 years down the line you see them with a family enjoying their large home with huge advantage of a smaller mortgage or do you see them selling it at big profit and benefitting financially from your husbands kindness could you live with that?

If they're on over £100k each they may be able to get a £1.5m mortgage. They might only want to spend a million on a new house, but they too are emotionally invested in the current house. Did a quick mortgage calculator and if they're on £120k they can get £1,140,000.

He needs to talk to them and negotiate rather than sell on their opening 'offer'.

I think your best bet is to bring him to the brink.

You must have an old cheque book lurking around. Sit him down and ask him to put their names on it and fill it out for £50,000, as their wedding gift.

I don’t think he will be willing to sign it. That starts your conversation.

@Emotionalsupportviper

google is your friend, eh?
it means she works for a magic circle law firm, ie one of handful city law firms which do most sophisticated and prestigious private legal work. Which in turn means they are very hard to get into, pay very well and work their lawyers very hard too (think of all nighters in the office especially for junior staff).
if she’s from disadvantaged background it means she did incredibly well, it’s a great achievement

So even if you had the power to stop your husband doing his own family out of half a million quid, you wouldn't??