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?!

If he wants to sell to this couple and they have 1million after 7 to 8 years then in 4 years they will have the 1.5 million... if he's invested in this couple and wishes to do so perhaps he could give a.discount in rent for 18 months to 2 years that way they will have the 1.5 themselves.
But he needs to understand that although the couple are friendly he is still their landlord and this friendship quite possibly will change if they owned the house themselves.

I worked in banking and finance for years and I haven't an ounce of sentimentality when it comes to money and being extremely practical when it comes to making wise financial decisions.

You are taking a lack of sentimentality as a pejorative, and it most certainly isn't in my view.

These are two highly educated, highly paid individuals whom have enjoyed a lovely well located home at a reduced rent for years.

Of course they have the cop on to recognise a good deal from a 100 metres.

Nothing wrong with that at all, as I have stated.

Not an ounce of sentimentality in a financial transaction, does not equal being "unfeeling shark" IMO.

That is supposition on your part😁.

What would you do with it? Maybe.....buy a £1.5m house...?

If you want to give £500k to charity, there are more sensible ways of doing it that would have a far greater reach

What does your daughter say about this?

This should be a family decision.

Yes, your husband can do what he likes with his own property, but this is effectively family money inherited from the older generation. Is your daughter ok with now giving her potential inheritance to strangers with good jobs?

That'd be a big fat no from me.

Sell it to them and it'll be on the market at full price within a couple of years at most.. they walk away with a big fat profit, money that could have been used to benefit your daughter or any children she might have or to ensure your financial security in retirement or if someone becomes ill etc.

I’m not sure and not clued up enough to understand. I will mention it to him when he gets home.

None of the people in this situation are in danger of 'going without' by the standards of the vast majority of people.
The chances of needing care are lower than not, and by far the majority of people sitting on inherited assets are not doing so to pay for their care. Quite the reverse. People typically leave no stone unturned in their quest to avoid care costs. Most will simply end up leaving their assets to their own children. If the OPs husband wants to benefit someone else with his money while he is alive rather than bequeath even more to his children, that's surely his own affair.

OP, I would ask him if there wasn’t a young red haired gleeful woman involved would he be so generous? Swap her for. 6’ 3” rugby player how would he feel then?
Seriously, you both need to get clued up financially, you’re in danger getting really screwed over if you don’t. Granted you’re in a better position than most but even so, those assets need protecting.

Yeah, but how would she feel about her inheritance being given to a couple of strangers? Have you mentioned this to her yet? Because that's what your DH (and her father!) is suggesting doing - giving half a million quid to a couple of strangers rather than passing that money to her if you and he don't spend it during your lifetimes. Think of the difference it could make to her life when you're gone! Think of how it might change the lives of your future GC. I'm willing to bet your DD would be devastated and feel completely betrayed if she knew of this plan.

I think maybe your DH doesn't see this as proper money, because the house was given to him, but I can assure you that it is and what he's proposing to do is no different than putting £500,000 in a suitcase and giving it to this couple, who, by the sounds of it, are playing him like a fiddle.

I would do what your husband is suggesting. The fact that he has this wealth is an accident of birth and he can obviously afford to take an easy come, easy go attitude to money. And it's not like he's giving everything away, if you sell for £1million then you can still pay off your daughter's mortgage and have almost £500K to add to your nest egg and you've benefited from rental income for a decade. That's far more inherited wealth than most people benefit from, and would be life changing for a care leaver trying to get established in London.

Sorry if this has been said already but it’s very unlikely that a bog-standard, neglected house in East Greenwich is worth anything like £1.5m. Just take a look on RightMove.

£1.1m-£1.2m may be a good price for it.

That said it’d still be a very bad idea to let this couple have it at below market value.

Better off giving them notice whenever you’re ready to sell, and then selling it empty.

Well what a lovely husband you have. Why not get the property valued and go from there.

Im sure you could be kind without being taken for fools. It’s his chance to make a difference and well why not?

You could also have a clause in saying when the house is sold you get 100k if it’s in the next twenty years?!

Now you have said it is in East Greenwich and not a true 5 bed, that changes things. £1.5 in this market might be unrealistic. I have close friends who live in this area.

The one below is going for less than 1 million, presumably due to the exact location. Station/Park is obviously still convenient. Secondary schools can be a challenge in this location.
Certain streets in that area command a premium, others do not. You need to speak to the local estate agents about the market. However, right now may be a bad time to sell. You also need tax advice, CGT and inheritance tax advice.

CGT is currently 28% for higher rate and 18% for basic rate tax payers. If you own it 50% each you pay according to your tax bracket. You need to establish the original deemed price. Look at what it was listed at in the probate https://www.homesellingexpert.co.uk/guides/capital-gains-tax-on-inherited-property

So get the right tax advice if you sell and make sure you include the right deductions and declare at the right time by filling in the applicable tax forms.

https://www.rightmove.co.uk/properties/140866820#/?channel=RES_BUY

The couple have a combined income of over 200k!

They are not a charity case. They can afford a £1million house. They are, by any reasonable measure, already fucking loaded.

If the DH wants to give his money away, at least give it to people in actual need of it.

Is there a reason why you couldn't give the house to your daughter?

I think in situations like this it’s good to think of other things you could do with that money. A big one is grandkids - by giving these people £500k he is taking that way from his future grandchildren, maybe one day they will have a business that needs funding to get off the ground and that 500k could be life changing.

The other aspect is, if your DH is set on being charitable he should actually give the 500k to charity - tax deductible and he could make a better impact.

Or alternatively if he wants to help out people in need he could give 5 couples or 5 single parents a £100k deposit for a house.

Or rather than sell he could give this couple more time to save up / get pay rises so that they can afford. You mention they’re successful, so in 5 years they might be able to buy it for market value!

Just good to think about the opportunity cost of an action rather than the action in isolation.

The couple are already on salaries north of £120,000 pa each and can afford a property of £1m , I hardly think they are on the poverty line . If he was really concerned about young people there are plenty of charities who help people . The truth is this is all about his belief that this woman is some sort of reincarnation of his mother .

To be honest, I see where he's coming from - they've been good tenants (rare in this day and age), and there's been a relationship there for a long time. Sometimes, folk just want to do a nice thing for other people, and if there was more of that in the world...

The obvious solution is to sell at that price, but also to make a condition of the sale - legally-enforced with a contract - which says that if they decide to sell in the next 5-10 years, they have to give DH first refusal at a discount proportional to the one they're getting.

Given that you'd probably have to pool your resources to buy it back, that actually means that OP gains an interest in the house (not that it really matters at this point, I'm guessing).

I have no idea if it's possible for individuals to do this, but local authorities do it with Right to Buy all the time.

“The couple have a combined income of over 200k!

They are not a charity case. They can afford a £1million house. They are, by any reasonable measure, already fucking loaded.”

Partners in magic circle law firms can end up earning 2 million pounds a year eventually. They are young and will likely earn far more in the future. They do not need any additional windfall.

My parents did something similar to me, they gifted a portion of a house they had inherited to someone else (portion worth around 400k) seeing as it’s unlikely my parents would have spent this money on themselves, they were basically just giving my inheritance to someone else. I didn’t pressure them either way but after they did it they started to really regret it - and I did mildly point out how they could have paid for future DCS schooling or any number of things. They bitterly regret their haste and decision to be randomly super generous to someone and they’re actually quite cross with me that I let them do it without pointing out the obvious inheritance issue (I didn’t want to seem grabby at the time).

That’s why I advise OP and husband to think long and hard about what that 500k could do elsewhere. As I agree with PP that right now it probably doesn’t feel like “real money” so it’s easy to gift it, thinking about what else it could do and what you would therefore have to give up, makes it feel real.

I would assume they have no nephews or nieces who might benefit from a student loan pay off or house deposit etc?

This couple are able to afford a 1 million pound house on their own - they aren’t a charity case and are already benefiting from a low rent and stable home from which to save up for their future.

Madness - your daughter, or grandchildren could use the money even if you won't. Or a proper charity should get it. In effect, giving hundreds of thousands of pounds to strangers is just plain bonkers.

Get a proper evaluation from several estate agents and then discuss. Don't forget the possibility of expensive nursing care in your futures either. Think about your needs in your 80's, not now when you're fit.

Rich people giving other rich people money is not doing good.

And nobody in their right mind would buy a house with that sort of condition attached.

This is bonkers and the people who think it’s a good idea almost certainly haven’t gifted half a million pounds away themselves!

Honestly with your update I find it both disturbing and creepy, to basically want to give this woman half a million, I guess to impress her , is appalling, half of a million of family money , of his child’s inheritance . That’s an obsession too far.