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?!

How does you daughter feel about the fact that he would be effectively gifting the tenants at least 500k, whilst giving her less than that?

I haven't read the full thread but any young couple that can afford a £1m house is either holding some significant wealth or is earning incredibly good money. Doesn't exactly fit with the background sob story. PP have lots of other suggestions of how £500m could be more productively spent if he wants to help disadvantaged people!!

His sums don’t add up.

As he has never lived in the house he will need to pay Capital Gains Tax on the whole value.

Whole market value, not under value sale price.

If they can afford a £1m house at age 27 they are doing very well indeed for themselves. They have saved £100k in deposit.

They don’t need your DH’s sentiment driven charity. Wouldn’t his parents have preferred to see your own Dd and future grandchildren supported?

Er NO! Sell for Market value and give your daughter the bonus £500,000

Your husband is being a fool, albeit a generous one. Your daughter would never get over this.

I was going to say, I live in Zone 5 and £1.6 million would get you a 5 bed detached house. You can buy a 2 bed from £400k.

Is the house a 1930s end of terrace? Those outside London would be amazed at what people do to houses to get 5 beds.

Dh wants to give your tenants who earn 200k+ a year half a million as if they are some charity case.

That's what it comes down to. He's fucking lost his mind. If he wants to give his money away, at least give it to some people who actually need it.

@MrsLyndi Your reply says you haven’t read all the posts, and makes no ref to CGT.
YOU MUST READ THE POSTS ABOUT CAPITAL GAINS TAX.

On sale you will be responsible for CGT on the full market value of the house. If you sell at 2/3 of market value a huge proportion of the money will disappear in tax. The sums in your DH’s plan don’t add up.

No, don't do it. A 'lovely young couple' did this to my Grandparents and promptly flipped the house 6 months later and made a bomb.

My poor old Pa felt very silly.

My friend sold her late DM's house at below market value to a couple with young DCs who made the right noises about the lovely tall hedges with nesting birds and wildflower garden for the bees etc. It was going to be their forever home, the DC loved wildlife etc etc.

She discounted a higher offer from a BTL property company.

However, within 2 years, the worthy couple had razed the hedges, concreted over the gardens, whacked on an extension and the house was back on the market for massively over what it was sold for.

Fair enough. But my friend was essentially diddled because she allowed emotions to get the better of her.

Do not be her. If this couple can already afford a million pounds, then they are not hard done to. If your DH wants to do something nice, then donate the house to charity.

I think it's kind of your dh but I think he's blinded by sympathy about their background. They've obviously worked hard and done very well but if they can afford a first house up to 1mil then they don't need charity.

He sounds lovely but also a sentimental fool

my DH is exactly like this. It falls to me to be the hard nosed bitch

and just as well, as if I let DH have his generous sentimental ways, we’d be up shit creek now that he is long term unemployed and we have to care for sick DS and sick DF and can bare afford the bills on my salary

fortunes can change, and it is not sensible to gift friends half a million pounds unless you have literally millions and millions and no need for future money ever

They will sell and run. Unless they are very comfortably managing a huge mortgage. Too tempting to get the money and eg pay towards private school fees or something they otherwise do without.

No it’s a Victorian end of terrace, the living space isn’t great and it’s already been extended.
I just looked on right move and a house in a slightly nicer part of the same area but similar layout (In catchment for a “better” school, further from the busy main road etc.) but lacking the garden space, drive way and top floor room sizes of the one we own is sold STC for 1.1 mil. Maybe I’m actually overestimating the worth.
This is East Greenwich, walking distance to the park, half hour walk or a quick bus to North Greenwich for the tube and the mainline into London Bridge and beyond, so unless big changes in the last few years, it’s a nice area!

It's not is decision alone, you have a say as well.
Having said that - he has rosy visions of setting them up for life, being able to visit from time to time and everything being just lovely.
They could put it on the market the day after completion and take their hefty equity away somewhere further out of London and buy an absolutely amazing house.
This is money that should at some point benefit your daughter. Who knows what is in her future? He's being an idiot. I also wonder if they are playing him.

Your DH is mad. He's falling for their wants. They are not family, they would probably sell the house quickly, take the .5m and buy something outright with it.

You have a few options

• Put it on the market with a good agent
• Advertise through an agency and find a company that wants to rent it. You can include they redecorate etc in the contract ie you do the structural stuff they do the internal stuff. Im sure youll find many companies interested cos hotels and serviced apartments are so expensive.
• Airbnb it and find a local cleaner to look after the clean between let's. You can then block out time when you want to be there.

absolutely not. This is madness!

I could maybe understand 20-30k under market value given all you've said, but half a million? No way.

You don't know what the future holds. You might really need that money one day. Or, you could give more to your actual daughter.

They will be laughing all the way to the bank if you agree to this. It's incredibly kind of your husband to consider it, but a very bad idea nonetheless.

Ask your daughter how she feels about being given less than £500,000 while the nice tenants who are not your relatives are given more than that.

Ask your DH to think about whether his mother would have wanted her granddaughter to share her inheritance with some nice tenants that aren't family.

It's not fair on your daughter. She's only 29 at the moment but what if something were to happen to her, eg an illness or accident that meant she couldn't work, she would then need that money to live off. Also, her own children, if she has them, your grandchildren, will find it difficult to afford things like student loans for university and a house deposit. They might want to live in London but will have no chance of doing so with today's prices. Already students at London unis are having to live in towns outside and commute in because the capital is so unnafordable. I'm not sure why he wants to make such a large gift to people who are not family.

He'd be better saving the money for your daughter and your potential future grandchildren's needs. He's being very short term ist here, seeing only what is in front of him right now.

If he likes he could give the money to me so I can stop working and write my novel. There will always be deserving people you could give money to, but that's not what people do, they save it for their family's future.

They're not in need of a free 500k, both 6 figure earners. If he's feeling charitable there's plenty of homeless charities who could use that donation not these two!!

You are far better off keeping the house and renting it out, it's a regular income. You could always pay someone to manage it for you, so when you get older you don't even have to do anything

Giving away £500k is a ridiculous thing to do!

Well they wouldn’t be “running off with £500k” fgs 😂 they’d be selling the house they had legitimately purchased and making a profit on it, which they’re perfectly entitled to do 🤦🏻‍♀️

Whether you choose to sell at that price is entity up to you. It would be a kind gesture but not obligatory.

what if in 5 years they sell and run off with the £500,000+ profit

There was a house DH and I wanted to buy but the owner decided to sell it to her tenants as they’d been lovely tenants. Sold for slightly under market value. Tenants sold up the next year for £200k more having done nowt to it.

Your DH sounds like my dad, bless him, but as pp have said if he’s feeling charitable there are people in far more need.

That is a very good point about CGT

Not only would your dh be giving away 500k but he'd also be liable for CGT so could walk away with A LOT less than he planned

No way that's crazy, I'd rather sell for market value and give dd the extra 500k if you don't need it - I could understand if they are down and ours but they are lucky to be able to afford a million £ home

They can afford a £1m house as first time buyers?! They have clearly benefitted from the years of low rent.

One thing I have learnt over the years is to put my needs first. What would be best for me? It doesn't mean being unkind to others. It just means considering my needs first. I think if you don't then it is highly likely that this house will be on the market for £1.5m in six months. These two clearly aren't stupid.

I would show your DH this thead as well.