Giving house to step-daughter?

[IsMadl]

Hi all, I have one step-daughter, no biological children (could never have any). My step-daughter is 27, she got married last summer, and is expecting her first baby. Her dad and I got together when she was 10 (her mum passed away when she was 7), we married when she was 16 and have been together happily since.

Before her dad and I married I had a 3 bed semi, we live in the North but it recently got valued at £300,000. We have been renting it out since I moved in here 12 years ago. The money has funded mostly my pension and odds and ends here. I'm a primary teacher though so have a good pension as it is.

SD and her husband have been saving really hard for a house, they earn well, she in the civil service and he in finance, but they work in London and obviously it is expensive. She had about £150,000 from her mum (-uni costs, wedding costs etc.) and they are saving.
Currently the house I had is to be split between my niece and nephew when I die, the house I live in now will go to step-daughter when both dad and I pass.

To me my step-daughter is my own, I was never able to have children of my own and I think she is incredible, so smart, beautiful, funny and caring. I hate seeing her struggle to build the deposit for a nice house, in a nice area with a garden which is all she really wants. I've been thinking maybe it is time I sell the house and give her the profit, obviously it would up there deposit massively. I wouldn't do it if I didn't think she and her DH had earned it but they are lovely, kind, hardworking people.

I told my husband and he said that it would be a lovely thing to do but no pressure as it is mine. My mum and dad think it would be a horrendous idea.

AIBU to consider this?

"In my area that’s £2 million plus."

But in other areas of London it certainly isn't. For example, a 4 bed detached in Wandsworth for £900k

https://www.rightmove.co.uk/properties/147779285#/?channel=RES_BUY

or a 5 bed semi with a 100 ft garden in Hendon also for £900k:

https://www.rightmove.co.uk/properties/149392364#/?channel=RES_BUY

Entirely depends where they want to live and how much they have.

I mean off topic now as its a lovely thing the OP wants to do. But your point about investing £150k into someone's life through a second wage and nice clothes/holidays/food on the table or whatever else, definitely does not equal £150k cash in the bank. My kids have cost me a fortune over the years if I worked it out, but its not £150k cash in their bank, certainly not while I'm still living anyway. But it's probably £150k and way more on things I've bought, places we have gone etc etc. You can't turn those things into a house deposit though.

Well OP it depends on what their definition of things like 'good school' is , and things they're willing to compromise on, like distance.

Good school - filled with other ambitious parents, lots of activities, etc? Or just providing the basics like a calm learning environment which in 2024 UK sadly isn't common? I mean you're a teacher so you know what I'm talking about.

A lot of 'high-achieving' parents can't afford private school in 2024 but they can buy up houses in areas around excellent schools making it somewhat private by stealth. Of course houses here will be much more expensive let alone one of the size you desire.

And then, distance. The couple are in the office 3 days a week. They can't move very far to get much cheaper housing unlike people who are in 2 days/once every 2 weeks/fully remote.

You don't need to listen to MN in this though
Surely your SD and her husband have a budget in mind?

If they cannot get what they want they'll just have to adjust their expectations.

If your parents think you have given the money to SD they may adjust their inheritance in favour of your niece and nephew (assuming you outlive your parents the DN will receive this sooner).

I think what I would do is tell your parents you have taken financial advice to sell and invest the money. Gift your SD whatever you like and no need to mention anything to your parents

It depends whereabouts in London they want to buy - it's that old "location, location, location" thing.

I mentioned in another comment about some areas like Hendon or Edgware to the north. Getting the tube from these places into central London is about 30 minutes.

Some examples of houses:

Four bed semi-detached with nice garden near Oakwood Park for £900k

https://www.rightmove.co.uk/properties/137077151#/?channel=RES_BUY

Four bed terrace with nice garden in Wanstead for £900k

https://www.rightmove.co.uk/properties/148823129#/?channel=RES_BUY

Five bed semi with 100 ft garden in Hendon also £900k, needs some updating

https://www.rightmove.co.uk/properties/149392364#/?channel=RES_BUY

These are just three picked totally at random in two minutes on Rightmove, there are many more.

Those who are saying that you need a lot more are likely talking about the more prestigious areas of London.

But it is your money and a teacher's salary won't increase and nor will health bills be paid for sick kids or anyone else, but if you support a specific charity, local hospice, animal rescue etc this amount would make a massive difference. If I have a few pounds spare I have a selection of animal rescue charities I give to.

£40K is a fantastic amount to put into a trust fund for your grandchild and would go a long way to pay uni bills etc when the time comes. Or even a world cruise for you and your husband while you are young and fit enough to enjoy it, but spend it wisely and don't let someone else waste it on your behalf.

You have paid and continue to pay plenty of tax on your salaries and other income. You would have paid tax on your earnings when you were paying the mortgage on the house, you will be paying council tax on it now and tax on the income you get from renting it out. How many more taxes do you want to pay on one house?

If you knew that any more would be spent sensibly by the Govt. then fair enough, but they chuck tax-payers' money around like its going out of fashion. Not a day goes by when some MP or minister isn't being reported for dodgy expenses claims, tax evasion/avoidance or giving their mates lucrative Govt. contracts. How many millions were squandered during COVID? They are using taxpayers' money to pay compensation to the SPM in the Post Office Horizon scandal. That money should be paid by Fujitsu who caused it, but the Govt is just giving them more contracts!!!!!!!!!! God knows how many more similar scandals are brewing.

@VeryHappyBunny

I get your point, but I don't want to give my money to charity, go on a world cruise etc.
I want to help set my lovely stepdaughter up in a nice home she can raise her family in. If I need to pay 40k in tax to do that - well so be it!

That is quite a tall order.
Family members are looking at Rochester as it’s 20minutes on the train to Kings Cross they say.

Large detached huge gardens four bedrooms around the corner from outstanding Grammars @£900-950,000 ish

They can’t get that in London. They looked in SE London and all over and were looking at paying more for less with a longer commute.

@IsMadl

Could you ask her to show you the houses they have in mind, so that you can do the maths together to make sure that it would work out financially?

At the end of the day, they are going to need a substantial mortgage as well as your gift of money.

She has sent plenty to the family group chat, maybe I'll go find a couple and post them here to see what people say - Mumsnet is so knowledgeable!

On the other hand, for £550k I live in a nice area of East London zone 3, with a not-massive garden but big enough for a trampoline, shed, patio and flower beds.

OP, it's all about location in London. If prices for similar houses can vary by over a million, your step daughter needs to look at areas within her budget, and you need to be a bit more rational. We bought our £550k house with £200k cash and £85k/year joint. You say you're not financially savvy - then get independent financial advice, before you regret it in 20 years. Decide with your mind, not your heart.

These are some of the houses SD has sent lately

www.rightmove.co.uk/properties/149723531

www.rightmove.co.uk/properties/145498664

Obviously one is already sold and I've sent two different areas as that seems to be where they are looking.

You sound like a lovely step mother. This girl lost her mum when she was 7 and I can bet you she sees you very much as her mum! Your family sound awful just because she's not blood related. This is the family you've chosen to be with so it makes sense to ke to out her needs first. Personally I think you're insane leaving your niece and nephew anything....they have their own parents, I certainly wouldn't be doing it especially since my parents expect it.

I think it’s doable. After a five minute search on rightmove there’s this.
Plan carefully and take your time.

@IsMadl I wonder whether your parents had assumed the money was going to your nieces and nephews? And had already told them or their parents. Awful if so but I probably, now the cat is half out of the bag best to talk to your parents and find out what people know or think they know.

Do it. You are financially secure, even if your DH ran off with the "woman next door". Worse case scenario you can buy a property and you have a good pension.

You don't have to leave money or property to blood relatives - one of my closest (elderly) friends has left her house to her god daughter in her will, she is not related by blood to that family at all, but they have done more with her, and for her, than her nieces and nephews ever have. They have a much stronger bond than she has with some of her blood family. Do what feels right.

@IsMadl
We used to live in Blackheath just south of Greenwich ie the first property you posted from rightmove but moved after having kids but we went North
However
Ive just checked out Rochester based on PP

20minutes into central London is amazing so I’ve found this for you and SD.
The garden is huge ( well to me anyway ) and there are extra rooms downstairs for wfh ( I think you mentioned that )

I think this is a nice idea. My brother is planning to leave money to his step daughter in his will, rather than to his niece and nephews (my DC), as he doesn't have any DC of his own. I'm fine with that. He's been a step father for most of his DSD's life.

Ask her how much more she would need for a deposit. You don't need to tell her why you are asking, just bring it up next time there is a conversation about house purchases. Once you have a clear idea, you can work out if selling your house will raise enough to close the gap or not. It will also give you an indication whether there will be any left over either for you or your nephew/niece.

I think it is a lovely thing to offer, but I do think getting some independent financial advice on the most tax efficient way to do it would be wise. I also don't mind paying my taxes, but if there are ways to maximise what my money can do for me, I am all for it.

Op, irrespective of what you decide to do.
I just want to say that you are a wonderful person and a great mother to your stepdaughter.
She is truly blessed to have a mother like you.

She is pretty much your daughter and it's up to you. Sounds like you have a great relationship too.

well said @Lampzade !

Going by these her budget would be between 1.1 1.3K.
Those houses are in good condition as well.
Even with your help they're looking at a mortgage of close to a million pounds!
I'm presuming 150K is what they (she and her husband) currently have? There isn't any more?

It's a lot IMO to take on as a parent of young children.

700-900K would be more doable.

Of course this depends on their plans for future work and salary growth.

I think it is a lovely and very kind idea but you don't say how old you and your DH are and the income from the house already supports your pension shortfall/lifestyle needs.

Yes it is tough to rent/buy in London but a) it is their choice to live there and b) you also need to look after your needs for the long term. There is nothing to stop you both gifting them a lump sum once you've figured out what you want to do.
She can currently inherit up to £500k from you without paying INT. Debatable whether a Labour govt will go after that threshold though.

You should take a look at the current capital gains tax you will pay on selling your house given that you will have not lived there for 12 years and it's not your primary residence. That may alter your thinking. I would take some financial advice on the best way to manage your assets to benefit your SD and any children she may have. If you are at retirement age, your parents may also pass on and leave assets to you. Or require financial support themselves in their latter years

I'd suggest prioritising your and DH's needs until death, SD and niece/nephew in that order.