Selling PIL a life interest in a property

[MinnieMountain]

DH and I are visiting FIL and SMIL in Spain. They are retired teachers, Spanish residents and own a house here.

They have £30,000 to invest and have asked if DH and I would put up the rest of the money for them to buy a house in Wales (they have a specific town in mind) for around £100,000.

Their idea is that DH and I, or likely just me for tax purposes, would own the house from the start. They would have the right to live in it for as long as they want. To start with it would just be in June-August but eventually they will sell their house in Spain and move back.

We'll draw up a trust deed, they will get independent legal advice and we will all do property and affairs LPAS.

DH and I will take the money out of the savings in our offset mortgage account. So the interest on our mortgage would go up?

SMIL thinks they will let it as a holiday let initially. They will have full control of that.

From the outside, does this seem realistic?

And what would be fair in terms of paying the 3% land tax and splitting any rental income?

Sounds like you need some advice about whether you're being taken for a ride.Look through these google search results [[https://www.google.com/search?q=how+to+value+a+life+estate+interest+in+real+property&oq=how+to+value+a+life+interest&aqs=chrome.2.0j69i57j0l4.7299j0j7&sourceid=chrome&ie=UTF-8]]

If you split rental income then it's not the case that they would have a life interest. A classic life tenant receives all of the income from the property until they die. This will get very complicated (and expensive in legal fees) very quickly if you're not careful.

Good point about being taken for a ride Collaborate. I trust them but a quick look suggests at best £30k is worth 7 years' rent.

DH is an actuary, so he can work out a rough life expectancy. Looking at their parents, both could still be living independently age 90. Which is 25 years.

I really need to brush up on my trust law . In my defence, I'm on holiday.

I'm wondering if there's any other way to help them. It's frustrating that DH and I get called on to help rather than BIL as we were financially sensible earlier.

I was going to suggest you speak to an actuary but they're very expensive people to consult(!)

Your husband should be able to work out what percentage they need to pay for a 25 year interest.

I'd steer well clear of it if I were you. Either that or they get a 30% interest and pay you 70% rent.

DH did a very nice spreadsheet with various rates of return when I expressed my concern. He still thinks it will be worth it as he thinks I'm calculating the value of the life interest too simply

Thank you for your help Collaborate. They want it to happen in a few years, so we've got plenty to time to mull it over.