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?!

Have the house valued and see what the actual value is . I would be really putting your foot down about this ridiculous plan , if your husband is wanting to give money away pick a charity .

I think your DH is a lovely kind man.

Get it valued and go from there.

That is a more changing amount of money for many people.

I would very definitely not want DH to do this in these circumstances. I also make decisions on an emotional rather than common sense basis at times so I can see where his thoughts are coming from.

However, he is going to be absolutely heart broken & betrayed when the couple inevitably sell up and move on. On those incomes & with a huge amount of equity (gifted by DH) no doubt they will want more living space when DCs arrive.

Op he will have to pay up to 28 percent of the gain in tax. The gain will be the difference between the value when he inherited it and the value when he sells it. It’s a lot of money gone just in tax. He shouldn’t be giving away a penny to strangers (who are playing him).

No fool like an old fool, sounds like your husband is keen to keep them around and continue to 'pop down to potter in the garden'. Am I the only one who thinks this is absolute madness and a way over familiar on your husband's side . All because she supposedly reminds him of his mother , pull the other one

If your DH wants to make them a kind offer but he could offer to sell it to them without involving an estate agent, and knock off from the price the 1.5% he’d have paid to the estate agent if he sold it in the normal way.

(he can still get an EA or two in to value it first, those valuations are given with no strings attached).

This way he’s not sold it for less than he could get elsewhere, but the tenants do get a slightly better deal than just paying market price. If they can afford market price minus 1.5% of course.

Your daughter should be benefiting from the £500K he wants to give to good tennants.
Shocking how strangers are more thought of than your own child.

Whether you need the money or not is not relevant. Do not let him sell under the value price.

They aren’t struggling though, are they? They have a budget of a million pounds!

Get it valued. Fine to offer them a small discount for private sale (no agent fees). Fine to give them an opportunity to get the money together. But any more than a 10% discount from a realistic selling price and you will feel really bitter when it goes on the market 2 weeks later.

wow, your husband is incredibly generous.

your daughter is very privileged indeed, to have her mortgage paid off for her, before she’s even 30!

To me, it sounds like this couple will be absolutely fine with their city jobs and thriving careers. They don’t NEED the discount, but it sounds like they’re being really nice and working on your husband and his generosity. I’ve seen that happen before, a few times. Of course they want a leg up. I’d be surprised if your London property is worth just £1.5m, it’s likely more.

if I were you, if I didn’t need the money, I would use some of the proceeds of the sale to help the genuinely needy out there. Those who don’t have parents who can sort their today out for them, let alone their future, for example.

A million pounds sounds like a lot, but it's really not when you are looking at a family home in London.

Of course they're not 'struggling', they're in good careers etc., but they don't have anywhere near the quality of life that their grandparents or even parents would have had in equivalent careers. There is still an inherent unfairness there.

Same applies to the OP's own daughter.

Children aren't automatically entitled to their parents' money, and she's already getting a huge gift to pay off her mortgage. She's not going without.

I live in London myself, in an expensive area (Dulwich) and a million pound budget as FTBs in their 20s with no children is an extremely healthy budget. It will get you a three bedroom period house in most parts of London. OP would not be “helping struggling FTBs” by giving them an extra £500k - they can easily get on the property ladder any time they want to.

There will be actual struggling FTBs with children who are trying to get the deposit together for a two bedroom shared ownership flat in Lewisham, if OP wants to help the needy as a charitable act. This couple are in no way a charity case, and it is frankly bizarre that you are claiming that they are just because they are under 40.

@Saschka Why are you bringing charities into it though?

OP's husband isn't talking about charities. He was never going to give money to a charity. Yeah, he could, but so could we all? It's kind of irrelevant.

He's not just saying 'I want to use this money to make a difference in the world', he's saying 'I've met this lovely young couple and I want to pay forward some of my privilege to help them'.

But again, why are a couple earning £250k per year more in need of a £500k handout from virtual strangers than the strangers’ own child?

I take it you’re not familiar with East Greenwich! It has a major road out of the city, so constant heavy traffic and a lot
of shabby houses around Trafalgar Road.

Also there’s no tube so it’s very inconvenient for getting into the West End, the City, or anywhere in Zone 1.

Unless we’re talking about a detached villa / mansion it’s very unlikely to be worth £1.5m. Probably more in the region of this which is £900k:

https://www.rightmove.co.uk/properties/141173075#/?channel=RES_BUY

By letting them rent for below market value you have already given them thousands of pounds-they hopefully have saved that to buy somewhere.

am sure your DH’s mother would want her own granddaughter to benefit rather than some strangers your DH quite likes. He is BU.

You need to get the house valued first-and make sure you go down for that valuation-am sure it will surprise you and will be more than £1.5mill

She has a far better entitlement to it than some random woman that the OP's husband has a bizarre crush on.

Picture this.

10 or 20 years from now, the OP and/or her husband need care. It turns out that they aren't as comfortable in their retirement as they thought they would be, the money they have left doesn't stretch to cover the care they need, and the local authority are - to put it mildly - unimpressed to learn that the OP's husband just gave away half a million quid.

Who is going to have to bail them out?

This random couple?

Or their daughter?

It won’t be worth anything like £1.5m! Not in East Greenwich!

Jesus Christ, I was not ready to see that kitchen at this time of the morning.

@MongoFrogman you don’t know the valuation-that’s why I said get it valued.

Anyway this couple don’t need a leg up-they are already privileged with six figure salaries and a budget of a million.

Id certainly be talking to someone who understands the tax implications, and would then deduct that and see what’s left-sounds like what he wants to gift this couple is possibly equivalent to the tax leaving you with much less left over.

Anyone that can afford a million pound house doesn’t need charity or help to buy a house, he’s is hoping they will let him continue to do the garden. They might be playing him along and either sell or change as soon as it’s their house. Ffs they got free gardening every month that’s a gift in itself.

Obviously like the other posters I think this is a bad idea, for all the reasons people have suggested.

Is he also thinking that once he sold the house to them, he would still have a link there? - that they'd still be happy for him to come and potter in the garden etc and chat with him? - because they absolutely would not. I think you're going to have to keep nudging him to accept that time moves in, things change, of course it's natural we feel a strong connection to house we lived in as children but time moves on.