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AIBU?

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Original poster

DH wants to sell house significantly below market value

503 replies

MrsLyndi · 09/11/2023 02:34

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?!

OP posts:
Thread gallery
7
grottyb · 09/11/2023 05:54

I also know someone who sold a rental property to a young couple with a hefty discount (not quite the example here though). Their own dc are already very well set up & will inherit plenty.

Knulp · 09/11/2023 05:55

If he does the deal with them and lends them the £500,000 with a secured charge on the house, they can pay him later, and pay interest on the loan to him, everyone is happy!

limefrog · 09/11/2023 05:58

This is a really interesting dilemma about privilege.

Assuming the couple won't inherit (we don't know this but I'm making this assumption especially given that one is a care leaver), then this is a couple who are hard working, and if they were born 20-30 years ago they would have been able to afford this house off their own back, through their hard work.

OP's husband has this money from his parents which he inherited, so basically privilege. His to do with as he wishes, but inherently unfair.

What OP's husband is proposing is something that slightly evens out this unfair advantage in life. I think it's a very generous thing to do and to be frank the world would be a better place if there were more people like your husband, OP!

Manif3st101 · 09/11/2023 06:02

If I was your daughter I would be devastated that he thought as much of some tenants as he did of me, you could give her more of the money!

100% they will sell the house for full value a few months later.

Plus out of that £1m sale, minus cgt (on £1.5m) and minus the £500k to your daughter I’ll be surprised if you get any real money from the sale - maybe £100k.

Hearmenow23 · 09/11/2023 06:05

Yeah, the 1.6 mil on Rightmove in 3 months should certainly hammer the point home.

CormorantStrikesBack · 09/11/2023 06:07

They can afford £1 million, they will be ok. They don’t need a five bed house. Your dh has already helped them by charging them below market rent.

adomizo · 09/11/2023 06:07

Cgt is going to decimate the potential 'profit' on this property. Better to continue to rent for proper market rent and leave to dd as inheritance. Unless there is a back story here she is being treated less favourably than tenants. They will flip the house and move on.

Beefcurtains79 · 09/11/2023 06:09

What does his sister think? Why was he gifted the family home over her? And now he wants to give it away to strangers?
It’s odd as fuck and I’d be devastated if I was your daughter, what if she has children, that money could be to help them get on the property ladder, not strangers.

I’m sorry, but he’s being played for a mug by the tenants. They certainly saw him coming.

limefrog · 09/11/2023 06:13

If I was your daughter I would be devastated that he thought as much of some tenants as he did of me, you could give her more of the money!

@Manif3st101 Only if you chose to see it that way.

It's OP/ OP's husband's money and house, not their daughter's. They already have a large gift planned for her to pay off her mortgage and presumably plan to see her alright in the future anyway.

Why shouldn't they be able to also decide to even out some privilege? - There's certainly enough of it in this country/ the world, and what goes around comes around. This is a wonderful gesture to make to a couple who simply have not had that same privilege in life, through no fault of their own.

SilentNightDancer · 09/11/2023 06:14

The tenants can afford to spend £1m on their first home in London.

The vast majority of Londoners can't afford that for their second or third homes, let alone their first home.

The couple may have had a rough start in life but they do not need this act of generosity now.

And yes, I expect many people would move somewhere else after the sale in order to significantly reduce their mortgage.

LateAF · 09/11/2023 06:17

limefrog · 09/11/2023 05:50

Why?

There are so many young couples like the one OP describes who will struggle to get a foot into the housing market these days, through absolutely no fault of their own.

They know that they are a lovely couple and just trying to make their way in life.

OP only has the money through privilege that they have not had.

Why not help them?

Show quote history

No one is entitled to a £1million first home. And no one is struggling through life financially if that is an option for them. Most starter homes for families in London are flats or tiny terraces worth £200-500k.

I live in London and can say they are privileged to even have a £1 million budget and the only people I know who had similar received significant contributions to their deposit from their parents. They’ve most likely had financial help too but want to live beyond their means.

MelsMoneyTree · 09/11/2023 06:17

The valuation sounds wrong for a 5 bed home in London.
But it's his family home, I'd let him take the lead. However both DH and I would have a similar approach to your DH - we believe in sharing good fortune and knowing when you have enough.

DisforDarkChocolate · 09/11/2023 06:17

That's insane, he's given them more than your daughter!

They have had years of discounted rent, that's enough.

Autiebibliophile · 09/11/2023 06:19

Its wonderful but too generous in my opinion. You and your dd deserve that money

limefrog · 09/11/2023 06:19

LateAF · 09/11/2023 06:17

No one is entitled to a £1million first home. And no one is struggling through life financially if that is an option for them. Most starter homes for families in London are flats or tiny terraces worth £200-500k.

I live in London and can say they are privileged to even have a £1 million budget and the only people I know who had similar received significant contributions to their deposit from their parents. They’ve most likely had financial help too but want to live beyond their means.

Show quote history

Do you know what privilege means?

Their money hasn't come through privilege, it has come through hard work. They haven't had 'significant contributions to the deposit from their parents', so what OP's husband is doing actually evens up the very thing you are complaining about.

From what I read from OP's post, they haven't had financial help. One of them is a care leaver.

Not saying that OP/ OP's husband haven't worked hard, but this house has come to them through privilege.

Onewildandpreciouslife · 09/11/2023 06:20

I think your DH is wanting to do a lovely and generous thing. You say you don’t need the money for your retirement, and the money you do get will be more than enough to pay off your daughter’s mortgage.

I agree you should get proper advice on the tax, and you could as a previous poster said provide that if they sell (say) in the next 5 years they split the profit with you 50:50.

But a real life fairy godfather? Priceless

LateAF · 09/11/2023 06:20

limefrog · 09/11/2023 05:58

This is a really interesting dilemma about privilege.

Assuming the couple won't inherit (we don't know this but I'm making this assumption especially given that one is a care leaver), then this is a couple who are hard working, and if they were born 20-30 years ago they would have been able to afford this house off their own back, through their hard work.

OP's husband has this money from his parents which he inherited, so basically privilege. His to do with as he wishes, but inherently unfair.

What OP's husband is proposing is something that slightly evens out this unfair advantage in life. I think it's a very generous thing to do and to be frank the world would be a better place if there were more people like your husband, OP!

The only young couples with this couple’s sort of budget for a first home are those who have had a significant deposit from their parents. This couple are also privileged and could find a similar home outside of London on the budget they do have which is nearly £1m. Please save your pity for people who actually need it!

AnneValentine · 09/11/2023 06:21

I love your husband.

You were gifted the house. You didn’t buy it. You’ve been benefiting from it for years. You also luckily for you didn’t pay inheritance tax. Pay it forward.

garlictwist · 09/11/2023 06:22

I think if this couple weren't well off and otherwise couldn't afford to buy a house, and your house were a lot cheaper and you could knock a few grand off to make it affordable for them, it would be a lovely idea.

But the couple seem to have a massive budget for a house anyway and the amount you'd be giving them is mental. So I wouldn't.

limefrog · 09/11/2023 06:23

LateAF · 09/11/2023 06:20

The only young couples with this couple’s sort of budget for a first home are those who have had a significant deposit from their parents. This couple are also privileged and could find a similar home outside of London on the budget they do have which is nearly £1m. Please save your pity for people who actually need it!

Show quote history

It's not pity at all.

Obviously they are not struggling and will be OK.

But what OP's husband wants to do is a wonderful gesture for a couple who have not had the same advantages in life that he has had.

People always complain that in this country you can only buy a house if you've had a significant advantage in life. OP's husband has had a very significant advantage by inheriting a massive house in London - he wants to share that with a couple who haven't had the same.

That is a wonderful thing and if more people had the same sort of generosity of spirit, we might not be in the mess we are now in as a country.

PickledPurplePickle · 09/11/2023 06:23

That’s is madness

also he will have to pay capital gains tax based on the actual valuation if he has sold below market value. This will be significant on that value

KristaK · 09/11/2023 06:24

I am with your husband - I suspect the couple would stay in the house for years and I also think that the point about privilege is much more nuanced than many acknowledge. Just being born in or before the early 70s (as I was) is a huge privilege in terms of property ownership, and something none of us ‘earned’.

Velvian · 09/11/2023 06:24

@MrsLyndi , is DH's sister alive? If so, what about her?

LoneFemaleTraveller · 09/11/2023 06:26

GameOverBoys · 09/11/2023 05:28

It may also cause resentment from your daughter

This. This was her grandparents house that would be creating a gift of half a million pounds for a random couple.

the money would be better with your daughter.

LateAF · 09/11/2023 06:27

limefrog · 09/11/2023 06:19

Do you know what privilege means?

Their money hasn't come through privilege, it has come through hard work. They haven't had 'significant contributions to the deposit from their parents', so what OP's husband is doing actually evens up the very thing you are complaining about.

From what I read from OP's post, they haven't had financial help. One of them is a care leaver.

Not saying that OP/ OP's husband haven't worked hard, but this house has come to them through privilege.

Edited
Show quote history

How do we know the other partner hasn’t had financial help? Just because they are northern doesn’t mean they have poor parents.

Unless they are both bankers or startup founders - there is no way anyone can save enough of a deposit for a £1m house in London as their first home (without an inheritance or other financial contribution from family of some kind). But imagining they actually managed to save £400,000 in a few years while renting and paying London living costs, they would need to be on incredibly good salaries to get a £600k mortgage - and anyone that qualifies for a £600k mortgage right of the bat is earning pretty well and doesn’t need the financial help as much as others. There are people actually struggling so it’s frustrating to watch posters on this thread deny this couple’s privilege.