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Original poster

Buying grandparents house from parents

11 replies

Teasforfears · 02/10/2023 23:17

Hi,

my parents were recently left a house from my deceased grandparents. They would like me to buy it for market value (90,000) and pay them 700 per month until value is paid off.

what would we need to think about please? Do we rent off them and then they gift it? Apologies, im I’m just trying to negotiate a minefield!

OP posts:
Nat6999 · 02/10/2023 23:23

Get some mortgage quotes, it could be less than £700 a month if you have a deposit. See an independent broker.

Original poster
Teasforfears · 02/10/2023 23:41

We are struggling to save for a deposit due to paying high rents, And also they would not charge us interest.

OP posts:
Monty27 · 02/10/2023 23:43

Hmmmm what do they think is a good idea about this? Have they made a will? What is your current situation?

cestlavielife · 03/10/2023 17:00

So you mean they will give it to you and you will pay them 700 a month for 10 years?

cestlavielife · 03/10/2023 17:00

What if life happens and you stop paying them ? What sbout their income tax situation ? You will be giving them an income

spidermonkeys · 03/10/2023 17:03

This sounds like a disaster waiting to happen. You and your parents need solid legal advice.

What if they die before it's paid off?
Do you have any siblings which will inherit them ?
Do you actually want to buy the house ?

Alarae · 03/10/2023 17:03

Your parents can get the debt against the house as a legal charge, akin to a mortgage.

I would not pay rent with the intention of it being gifted, as not only is it not tax efficient (your parents would need to report income and would then be a gift for IHT purposes) it doesn't offer you any protection from them in the future choosing not to gift it to you.

Go to a solicitor and get the legal charge set out out correctly. A few hundred quid now will save a lot of potential tears down the line.

TarantinoIsAMisogynist · 03/10/2023 17:06

Teasforfears · 02/10/2023 23:41

We are struggling to save for a deposit due to paying high rents, And also they would not charge us interest.

Would your parents be prepared to gift you the deposit (10% equity in the house), and you take out a mortgage for the remainder?

Your deposit doesn't have to be cash in the bank, it can be equity in the house - the Loan To Value will be the same regardless.

Gasp0deTheW0nderD0g · 03/10/2023 17:07

I am not a lawyer or a mortgage broker. I think you probably need to see a solicitor with your parents to get this drawn up properly so it's all legally binding, but what it looks like to me is:

They own the house now.
They are going to (effectively) lend you £90000 by allowing you to buy the house with no deposit, and they want the loan to be interest-free.
You need to get the title to the house transferred into your name so there can be no question that you own it.
You will then pay the loan back at the rate of £700 a month, until the capital is repaid.

They need proper advice because there are tax implications, e.g. inheritance tax in relation to their own estates. Repayments of a loan would not be taxable income.

Can anyone better qualified comment if this is right?

Sisterpita · 03/10/2023 19:57

Alarae · 03/10/2023 17:03

Your parents can get the debt against the house as a legal charge, akin to a mortgage.

I would not pay rent with the intention of it being gifted, as not only is it not tax efficient (your parents would need to report income and would then be a gift for IHT purposes) it doesn't offer you any protection from them in the future choosing not to gift it to you.

Go to a solicitor and get the legal charge set out out correctly. A few hundred quid now will save a lot of potential tears down the line.

This is spot on. Simple but protects everyone.

FSTraining · 04/10/2023 15:37

Teasforfears · 02/10/2023 23:17

Hi,

my parents were recently left a house from my deceased grandparents. They would like me to buy it for market value (90,000) and pay them 700 per month until value is paid off.

what would we need to think about please? Do we rent off them and then they gift it? Apologies, im I’m just trying to negotiate a minefield!

This could cause IHT problems. You should all check this out with a solicitor.

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