PIL want us to buy their house

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Anyone have any advice or experience with the following situation
My PIL are in their early 70s and in good health, they are struggling with cost of living increase and although mortgage free have ran up some debts and just not managing to live on their income well. Their only source of income is the state pension.

Their home is worth approx 220k. They want to either do an equity release or for us to buy their home and they pay the mortgage on it. We have reservations about the second option encase they spent all the money and couldn’t pay the mortgage.

Does anyone have any experience with this?

Thanks

Would it not be more beneficial to give them a financial health check.
Draw up a list of their outgoings and income and see if any payments can be reduced by switching providers or cutting out certain expenditure and items altogether.
Many utilities, media services and insurance payments can be reduced my shopping around.
Are they shopping economically?
Personally I would think that purchasing the house is not the best option since they will require funding for 15-20 more years.
Living within their means with maybe a few subsides from you would be a better long term option.

You are completely correct. They don't want to move out of their house because they want to maintain their image of themselves as people who are wealthy enough to live in a house.
They ought to cut their cloth according to their means and move into a cheap flat for retirees, but this would involve a loss of status.
Cheap flats for retirees are for poor people, not people like them.
They are hoping that the op will provide them with a way that they can live in the manner to which they want to be accustomed.

Can you afford to help them?
is your DH the only child?
we had a similar problem and the only option I was willing to entertain was in laws giving us the house, we would work out what it would cost us in legal fees, tax and stamp duty and all that. We deduct that from the value of the house and pay them that back as a monthly amount to live on and top up their pension. When they die we’d hopefully get our money back in the value of the house (and if they died before we’d paid back the full amount we’d have paid out the difference to each child)
Problem was they would have to stay there forever because I was not footing the bill for them moving. It was also considerable risk and sacrifice for us but no body appeared to recognise that and actually accused us of trying to profit from it.
DH is one of 4 so it was just too complicated to get everyone on board and none of the others could afford to help.
they did equity release, spent it all. Back to square one but now out of options.

so my advice would be steer clear of mixing family and money!

I have read somewhere about his and what they did was took a mortgage out for slightly more that was needed, took out something like 10 years of payments and put it away. The rest of the money went to the parents to help pay off debts and do whatever they wanted.
The parents then paid the mortgage and when they struggled the daughter was able to access the money that was put away to help to pay the mortgage.

When it was time that the parents needed to go into care they sold the house and the mortgage was paid off.

However in saying all of this there are rules about selling off a house to avoid tax and you would have to prove that they were paying the appropriate rent for that property.

I don't know enough, but I know its possible.

I think they need to downsize and live within their means, they will need a reserve of money for care costs in years to come

Thing is they can do equity release op. Which will basically scupper your inheritance, not sure if that matters or not. However if you buy it, then it becomes a second home and you pay capital gains if you sell it. To be honest, both are bad ideas.

They can buy cheaper home if they cannot afford to live in their house.
Or they can rent out one of the rooms.

MIL downsized to a flat and is now relocating to a cheaper area to give herself more disposable income.
Would either of these options work?

Nope! If they can’t manage on what they pay now, the potential debts that will then fall on you would be insane! They need to downsize, or at the very least take in a lodger

Equity release or downsize.

Only options! The alternative won't work!

my brother did this with PIL.

They purchased the house from them, PIL continued living there. It has worked very well. It keeps the money in the family rather than going on fees etc.

The local authority (with their very experienced highly trained lawyers) will have no chance whatsoever when they want to pursue them for deprivation of assets!

I own my in laws house. We did a house swap 12 years ago - we bought their house and they moved into ours.

Buying a house and renting to family is not easy. You cannot get a buy to let mortgages as you cannot let to family. Getting one would put you in breach of your mortgage and lead to them withdrawing the mortgage at short notice. We didn’t have this exact problem as we were honest with our first lenders who gave us consent to let. However they then withdrew it a couple of years later with only 1 months notice to find a new company. It was so stressful as no one would touch us as we had family living in the property.

We saw a mortgage advisor who couldn’t help us but did suggest virgin money. At the time they were the only provider who would allow us to buy a house with a residential mortgage but have family live in it. We have basically borrowed the max we can and split it between 2 properties. We had to price we could afford both mortgages and bills on our salaries.

Even though we don’t make a penny on the mortgage, we have to pay tax as it’s counted as an income. This is approximately £1200 a year for a £500 mortgage. My in-laws give me the money for this. This also impacts on our child benefit.

Unfortunately, our house is too small for us now and we can’t buy a bigger house due to the other house. It’s a pain but on the flip side, the other house has increased in value and we will make a lot of money when we sell.

The point of equity release is they receive a payment now and the loan is repaid after death. So the PIL literally would not live to regret it but the children have no inheritance

If either pil needs care it will count as asset deprivation unless the PIL have invested what they got for the house in which case they won't get financial support if they need to go into care.

You don't become unable to give money or property away just because you've reached retirement age!

Yes the council can go back as long as it likes, but they can't call a perfectly a perfectly healthy 70 year old's gifts, deprivation of assets.
If that 70 year old had been to the doctor with confusion when they were 69 and then promptly given away half their savings, yes, the council could refuse to pay for their care when they're 75, or 80. But if they had no issues, they can give what they like.

Believe me, I've been through all this with my mother's care and the council, and I've taken professional advice on it for myself, as I'm in my late 60s. That's why I'm helping my kids now, because health can change on the throw of a dice at my age.

We were the same, but it was with a life rent trust. The council tried very very hard but at that time it was absolutely watertight

Do you think the council will have since 'upped their game'?
After all they have a pretty big incentive, huge amounts of capital are tied up in property owned by elderly folk and councils are very short of money.

I'm sure that councils are now being much more assiduous about researching the finances of those they now have to pay for. They can't afford not to be. But they can still only do so within the rules.

So as long as you get advice (Age UK is a good source and you can make an appointment at one of their offices) and you don't have any conditions or symptoms that make care in the future almost a forgone conclusion, you should be okay.

I had to quote this one, I didn’t get past word 1….

How rude 😂😂

I have no idea, but possibly…however given that of my father’s £34k income on which he paid a lot of tax, he was allowed to keep a whole £34 a week, I’m glad he did the trust. He had mixed dementia, which hit 10 years after the trust was set up

yup. I KNOW this. As Council funding has become tighter they are trying all ways to make it go further and to the right people. As stewards of public funds, they have a legal requirement to do this. Yes if the person reasonably had zero expectation of needing care then they can do what they like without worrying about it.

No no and no.
Family and finances don't mix and don't end well.
They need a massive overhaul of their finances and make sure they are claiming everything they can.
Sell what's not needed and cut back on non essentials can't see downsizing being an option as £220k doesn't get much these days but it's worth a look.
Could you trust them to pay regularly or would they default on payments.

They won’t ‘live’ to regret it. It’s literally payable after their death when the house is sold normally.
I’d let them do that to be honest if they are struggling.
After my mum died tragically, my dad released equity in his house (50K) 5 years ago, he sadly died 9 months ago. From the sale of his house we owe £57000 back on that 50K equity release.
That 50K, 5 years ago, gave my dad his absolute BEST life! No regrets that he did that but do choose a great company. My dad’s was with Aviva. I’d also say they have been amazing throughout the last 9 months. No hassle from them at all - they checked in at 6 months and they’ll be paid back when house sale completes. 7K interest over 5 years is what we are paying back from the estate (and I’m so glad dad got to enjoy the money he released).

Where can they buy a cheaper house than £220,000? You couldn't buy a flat for that much here! If they sell the house and rent, assuming one of them lives another 15 years, the money will run out and they will have no equity. On just a state pension this is a real problem.